Economist's View: Off Message Watch: "I Don't Know That for Sure": The administration just cannot admit that it made a mistake in proposing a stimulus package that was too small. This is from a Q&A with Austan Goolsbee::
Q. Would our economy be in better shape right now if the initial stimulus when the administration took office had been bigger?
A. I don’t know the answer to that for sure. There’s a bit of a crystal ball in that. It obviously depends on what the things were.
The right answer here is "of course if would have been better," and to then talk about how Republicans blocked any hope of additional stimulus once it was clear the economy was doing much worse than anticipated. But because the administration refuses to admit its mistake and concede that the stimulus was too small, it cannot bring itself to argue that the economy needs more help from fiscal authorities. There were nods in this direction now and again, but the administration never really tried to make this argument, a strong push for a job creation program for example, and it has thus given up the chance to make clear which party is standing in the way of providing more help for distressed households.... Paul Krugman... is thinking along the same lines [as me]:
I know what’s going on: the administration decided, more or less a year ago, that rather than admit that its stimulus package was inadequate and call for more, it would put on a happy face and hope for better news. But here’s the thing: by now we know that this strategy has been a political disaster. So you would think that the administration would change its line. But to do that, someone at the top has to make the decision to change direction. And clearly, nobody has. I don’t think there was a deliberate decision to persist in an obviously losing strategy; I just think top management has gone missing. And so the administration drifts...
From my point of view things look a little more complex. On the one hand, administration economists are under message discipline to make idiots of themselves by claiming that the policies that Obama could get enacted were perfect policies.
On the other hand, the spinmasters are badmouthing the administration economists and saying that what went wrong was their fault:
*Richard Wolffe: The day before his party's shellacking in this month's elections, Obama sat down with his economic team to examine... whether today's high unemployment rate is structural or cyclical.... [It] may be a little late to try to agree on the root cause of today's high unemployment. This lack of agreement on economic fundamentals.... As one senior Obama advisor told me the day after the disastrous midterms: "It was hard to find a single economic message when the economic team couldn't agree on a single economic policy..."
And what the spinmasters are saying looks to me to be false.
The meeting was not to examine whether high unemployment was cyclical or structural and did not reflect disagreement on economic fundamentals: it was to review the reasons that the economic team was confident that an enormous share of excess unemployment was cyclical. The economic team did not disagree on economic policy: all thought that the economy needed (a) more stimulus now, and (b) credible plans now put in place to reduce the deficit by a lot after, say, 2015. The economic team's disagreements were over how to sell the message "more stimulus now, more deficit reduction later" to the politicians and the journalists.