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The Secret Romer Stimulus Memo
The New Yorker ^ | February 22, 2012 | By Jonathan Chait

Posted on 02/22/2012 12:45:29 PM PST by Oldeconomybuyer

Somebody came between Christie Romer and President Obama.

The largest question looming over Barack Obama’s presidency is what would have happened if he tried to push for a larger economic stimulus at the outset. Could he have gotten it passed? Did he think his plan was truly big enough, or just the biggest one he could pass?

In answer to that question, Noam Scheiber has acquired a major piece of the puzzle. While reporting his new book, The Escape Artists, which chronicles the administration’s response to the crisis, he got his hands on the fabled original version of Obama's economic team's 2008 memo, sort of the economic policy equivalent of the Blade Runner original cut . In the first version, Romer argues that a $1.8 trillion stimulus would be needed to fill in the anticipated output gap. But Larry Summers considered that figure unrealistically high — they would be laughed at by the political team — so the memo that reached Obama’s desk described an $850 billion stimulus as the largest possible option.

It’s a blockbuster find. It clearly demonstrates how Summers, an economist, censored the economic advice his boss received on purely political 

grounds.

Summers is shown here to be internalizing the calculations of White House political advisers, who in turn were internalizing the positions of senators who would be casting the decisive vote. Which is to say, the ultimate decision-making power here was where it always was: with Ben Nelson, Olympia Snowe, and Arlen Specter, the senators who stood at the decision-making point. It’s clearly those senators who were exerting the direct pressure to limit the cost of the stimulus, and the administration, including Summers, was responding to them.


(Excerpt) Read more at nymag.com ...


TOPICS: Business/Economy; Government; News/Current Events; Politics/Elections
KEYWORDS: election2012; failure; obamanomics; porkulus

1 posted on 02/22/2012 12:45:34 PM PST by Oldeconomybuyer
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To: Oldeconomybuyer

No matter the size of the stimulus it would never have been big enough. If it were 2 trillion the left would claim it should have been 3. If it were 4 trillion they’d claim it would have worked if only it’d had been 5 trillion etc...


2 posted on 02/22/2012 1:10:38 PM PST by Personal Responsibility (Obama 2012: Dozens of MSNBC viewers can't be wrong!)
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To: Oldeconomybuyer

You can’t raise the water level in a swimming pool by pumping water from one end to the other, no matter how big the pump.


3 posted on 02/22/2012 1:56:44 PM PST by Da Bilge Troll (Defeatism is not a winning strategy!)
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To: Da Bilge Troll

America has truly become a fool’s paradise as we create money to pay 99ers, food stamps, subsidized housing, student loans, cell phones, medicaid, and many many more.

My biggest gripe is that all this creates false demand on things raising prices for stuff I need to purchase.


4 posted on 02/22/2012 2:04:38 PM PST by nascarnation (DEFEAT BARAQ 2012 DEPORT BARAQ 2013)
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To: nascarnation
all this creates false demand on things raising prices for stuff I need to purchase

Well said. Kind of the flip side of saying that taxing a good behavior gives us less of it.

5 posted on 02/23/2012 11:09:15 AM PST by Da Bilge Troll (Defeatism is not a winning strategy!)
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