Here's Jill Lawrence at Politics Daily:
After talking to five economists, I can give you the bottom line: Spending the money differently probably wouldn't have changed our circumstances much. But the economists took diverse paths to that conclusion, and they have varying opinions about where to go from here….
A bigger stimulus would have been better, several economists told me. "If there was an obvious problem with it, it was sheer size," said Josh Bivens, an economist at the labor-backed Economic Policy Institute….
David Madland, director of the American Worker Project at the liberal Center for American Progress, would have liked to see the administration "pour money" into Americorps, Teach for America and caregiver jobs. "The moment for that kind of major investment was right at the beginning," Madland said. "If they had pushed for much greater public service and direct care jobs, I feel pretty certain they would have gotten them."…
The overriding problem, Bivens said, was that "the non-recovery act economy just continued to stagnate" over the life of the stimulus. Businesses did not hire enough and bankers didn't lend enough. State and local governments cut back spending and so did average Americans….
Bivens said his no. 1 priority would be more aid to help state and local governments keep their workers. "We lost 48,000 jobs in July alone," he said. "That's an obvious hole that needs to be filled."
Last week, the Congressional Budget Office published an analysis of what the stimulus has done. It calculated that the package has lifted GDP by between 1.5 percent and 4.1 percent and reduced the unemployment rate by 0.7 to 1.8 percentage points. In other words, the stimulus has worked—but not well enough to produce an adequate recovery.
This came as no surprise. Earlier this year, the White House considered calling for reinforcements. But political caution again took precedence, and any further stimulus initiative was deemed unfeasible on the grounds that it wouldn't pass Congress and that the public would recoil at the added size of the deficit. The president kept quiet. The strategy adopted was to pass a series of small measures—a $50 billion unemployment bill, a $40 billion tax extenders bill, a $30 billion small business bill—that they judged should collectively produce a big effect.
Meanwhile, Douglas Schoen at The Daily Beast blasts "Obama's Too-Small Steps on the Economy" and argues for "expand[ing] lending through the Small Business Administration's loan program to encourage more startups and enable small businesses to hire and train more workers," "jump-start[ing] the economy by investing in green technology and create new jobs and make the United States a leader in clean-energy manufacturing, especially solar, and expand the innovation and development of renewable energy," and "expand[ing] the federal research-and-development tax credit to businesses that invest in research and development, and increase research grants to small businesses that are developing new technologies." Schoen also says declare a payroll tax holiday, don't repeal the Bush tax cuts, and "advocate spending cuts," which seems a bit contradictory to all his other proposals.
What does all this sort of chattering add up to? Not a lot more than wish fulfillment. The great contribution of Amity Shlaes' 2007 history of the Great Depression, The Forgotten Man, was its emphasis on how regulatory and political uncertainty froze the economy under FDR's tenure. As she told Reason:
Both the Hoover and Roosevelt administrations (but especially the Roosevelt administration) were so unpredictable. That hurt the economy very much, and when I went back and saw the extent I was astounded. Uncertainty is a factor that I thought needed to be explored. There were lots of people who said, "I will not invest 'til I know what's going to happen."
During the Depression, you heard the phrase "bold, persistent experimentation" all the time. We've been taught that was good. Somebody had to do something, was what we learned. But what I saw was this enormous cost, especially during the second half of the 1930s.
Read the whole Q&A with her here. If it's at all true that uncertainty—both economic and political—freezes people, then we're living in the equivalent of an ice age. Lawrence's large point in her piece is that Obama might have hurt the stimulus' effectiveness by also trying to do 50 other things at the same time (especially health care). And that's leaving aside the massive lack of evidence that stimulus spending has ever worked or is even theoretically coherent. (Don't be confused by the idea that the stimulus boosted GDP; government spending does by definition.)
Since then, we've seen only flips and flops on virtually every level, right up to the specter of Dems calling for tax cuts before the midterms (sure, but how long will they last?). And everybody but the dumbest chumps in the world knows that the housing market ain't near bottom yet. Indeed, desperately propping up housing prices, which the O admin has been trying to do, only makes the final day of reckoning that much vaguer (and more brutal).
I find the case for austerity persuasive, especially if it allows a quick dive to the actual bottom of a recession, but more than that, we're in the worst possible situation: an indecisive president (who can't even give a straight opinion on something as inessential as the Ground Zero Mosque & Bowl-a-Rama), a big swing election coming up, presidential economic advisers fleeing the White House like a plague ship, no clear sense of where the new season of Mad Men is heading.
In short, the number of "known unknowns" is multiplying faster than Jerry Lewis spanking fantasies and until we get some pols and policies in place that convince people they will follow a particular course of action for at least six weeks or a year or so, don't expect things to get better anytime soon. It's terrible to say that a bad policy that's certain is better than a good policy that may be changed constantly (especially since TARP, the auto bailout, stimulus, health care, etc. all qualify as bad), but even a rhesus monkey can tell you that predictable shocks are less ulcer-inducing than random ones.