Even with a Congress gridlocked and neutralized, the Fed and the executive had enough power through their ownership of Fannie and Freddie, through the Federal Reserve act, and through the TARP to do everything necessary to guarantee a strong recovery.
But the problem I did not see in the summer of 2009 was that the stimulus skeptics were the operational managers of the government, while the stimulus advocates were staff without line responsibilities.
Hence nothing happened.
And Peter [ed. Orszag], Larry [Summers], and Christy [Romer] left.
And their successors–Jack [Lew], Gene [Sperling], and Austen [Goolsbee]–are very smart men and dedicated civil servants, but they lack the strong substance-matter knowledge and aggressive policy views of their predecessors.
I find a problem with this view: each of those mentioned above, Drs. Orszag, Summers, and Romer, on numerous occasions stated quite clearly that the amount of stimulus requested by the Obama Administration was exactly what they got and was what was necessary. Either they were wrong or they were lying.
I don’t subscribe to the once wrong, always wrong ad hominem fallacy but I think its converse is true: once wrong, asserting infallibility is a stretch.
Maybe he has direct, specific, personal knowledge to the contrary but I rather suspect that Dr. DeLong is resorting to something we might call the fallacy of intelligent agreement. The line of reasoning goes something like this. I’m smart. I think A. Anybody who doesn’t think A is dumb. I know that Person X is smart. Consequently, Person X must agree with me. Therefore, Person X must have been sidelined.
Contrariwise, I don’t think that every intelligent person, even every intelligent person in my own field must necessarily agree with me. No single person is in possession of all of the facts or will invariably draw the correct conclusion from the facts. Sometimes there is no singular right conclusion.
There is one more gold nugget in the post worth pointing out:
Three years ago I would have said–I did say–that Ben Bernanke was among the best available candidates for Fed chair and that Tim Geithner was among the best available candidates for Assistant to the President for Economic Policy.
Today I think they both suffer from the sunk-costs problem.
I think he’s being extraordinarily and uncharacteristically kind.