Is there anything that Obama could have done, that he didn't do, that would have significantly lowered the unemployment rate in November 2010? This includes actions that would have made it through the Senate, but would have been pretty unpopular in themselves.As it happens, the argument over this has broken out again in the blogs today. I'm on Ezra Klein's side on this one: I think the main constraints on the administration as far as the size of the stimulus was concerned were (1) the Senate and (2) the practical question of how to spend money quickly.
That said...
Process stuff: I have no idea whether Barack Obama could have done anything to make it happen, but the Democrats would have been helped a lot had Ted Kennedy resigned in early November 2008, with a special election to replace him scheduled for January 2009. The administration could also have pushed Harry Reid to seat Al Franken in January 2009 instead of waiting patiently for the process to play out for six months (he was seated in early July). The Massachusetts seat would have been a clear plus; the Minnesota seat would probably have been a plus, although it's at least possible that a backlash would have hurt the chances of Arlen Specter supporting the stimulus and then switching parties and hurt the chances of the Maine Senators working with Obama as long as they did.
Also, Obama should have been aggressive from the start with exec branch appointments, thus making it easier for his Fed appointments (see below) to get confirmed rapidly.
Substantive stuff: Of course as Richard knows I'm no economist, but I am completely convinced that the direct and indirect effects of state budget austerity were a huge story in 2010 (and 2011). And while I don't think that the Senate was prepared to sign off on a larger dollar amount of stimulus in winter 2009, I do believe that a state budget fix bill was at least potentially been able to pass. Such a bill would have sent money to the states during hard times and recovered money from the states during good times, and would have (if passed and implemented) prevented hundreds of thousands of state and local government layoffs, the indirect effects of those layoffs as out-of-work teachers and others didn't spend the salaries they no longer had, and the real indirect effect of all those other still-employed teachers and prison guards and others sitting on their money because of the realistic fear of layoffs. That, and aggressively filling Fed openings with people who placed a higher priority on economic growth.
How much of a difference would all of that make? I have no idea! My guess is "a lot", but you'll need to find an economist to run a Question Day to get a better estimate than that.
Agreed. Also while it may have been impossible to get a bigger stimulus, it certainly might have been possible to get a better designed and therefore more effective stimulus. By compromising in advance to try gain un-winnable GOP votes and making the stimulus heavy on tax cuts, the President undercut its effectiveness.
ReplyDeleteAlso if the President had 1) made Fed appointments a high priority and/or 2) nominated somebody other than Bernanke and 3) publicly jawboned the Fed to do more to help growth and lower unemployment repeatedly that could have had a real effect on inflation expectations which would have caused people to spend money instead of saving it which would have led to higher growth etc. etc.