Academic fights are so vicious, they say, because the stakes are so small. The narcissism of small differences, Freud said. But at times the stakes can be big, and the fighters can think they are still in the faculty club. It is a week before the congressional elections, Barack Obama is talking himself hoarse trying to rouse the Democratic base--especially impressionable young people, the un"likely" voters who made all the difference 2008--and Paul Krugman has decided this is a good time to stick it to Larry Summers just once more for good luck.
The real story of this election, then, is that of an economic policy that failed to deliver. Why? Because it was greatly inadequate to the task... If you look back now at the economic forecast originally used to justify the Obama economic plan, what's striking is that forecast's optimism about the economy's ability to heal itself... Even without their plan, Obama economists predicted, the unemployment rate would peak at 9 percent, then fall rapidly. Fiscal stimulus was needed only to mitigate the worst -- as an "insurance package against catastrophic failure," as Lawrence Summers, later the administration's top economist, reportedly said in a memo to the president-elect... Could the administration have gotten a bigger stimulus through Congress? Even if it couldn't, would it have been better off making the case for a bigger plan, rather than pretending that what it got was just right? We'll never know.
This is not so, or at least not in the categorical way Krugman is presenting things. Summers argued often during the winter of 2009 that in matters of stimulus one never knew just how much was enough, but "the risk of doing too little is greater than doing too much." As for the Congress, Henry Waxman--one of the House's most progressive representatives, and no wimp--told NPR just last week that Rahm Emmanuel was right to propose what he did, that he had carefully counted the votes in the Senate and the package passed was the best the president could get.
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