Paul Krugman, writing in the NYT, Failure to Rise, expresses a lot of disappointment in Obama’s response so far to our economic crisis. Krugman says, “Mr. Obama’s victory feels more than a bit like defeat. The stimulus bill looks helpful but inadequate, especially when combined with a disappointing plan for rescuing the banks.”
In Krugman’s judgment the stimulus package is not nearly large enough. He says, “For while Mr. Obama got more or less what he asked for, he almost certainly didn’t ask for enough. We’re probably facing the worst slump since the Great Depression. The Congressional Budget Office, not usually given to hyperbole, predicts that over the next three years there will be a $2.9 trillion gap between what the economy could produce and what it will actually produce. And $800 billion, while it sounds like a lot of money, isn’t nearly enough to bridge that chasm.”
Krugman says, “The plan sketched out by Tim Geithner, the Treasury secretary, wasn’t bad, exactly. What it was, instead, was vague. The effect was to kick the can down the road. And that’s not good enough. … So far the Obama administration’s response to the economic crisis is all too reminiscent of Japan in the 1990s: a fiscal expansion large enough to avert the worst, but not enough to kick-start recovery; support for the banking system, but a reluctance to force banks to face up to their losses. It’s early days yet, but we’re falling behind the curve.”
In Krugman’s view, Obama must become much stronger. “There’s still time to turn this around,” he says, “but Mr. Obama has to be stronger looking forward. Otherwise, the verdict on this crisis might be that ‘no, we can’t.’”
