Last month, I spoke to Christina Romer, Larry Summers and Jared Bernstein on this question. The three of them were arguably the administration’s most persistent and consistent advocates for more stimulus. But they all said the same thing: The bigger the stimulus became, the harder it got to spend.
“We had a hard time spending $800 billion quickly, and with that much stimulus, the issue of diminishing returns could be important,” said Romer. “I don’t believe we could have efficiently and effectively put that large a stimulus to good use with requisite accountability,” Bernstein said. “It would not have been possible to move vastly more money into quick trigger infrastructure projects,” Summers said.
Ezra Klein needs to stop drinking the Washington Post’s water or something. If you gave Boston Mayor Tom Menino $500 million, he would find a way to spend it. Would all of it be perfect goo-goo, progressive-approved–and most importantly, utterly scandal-free stuff? Maybe not. But the city’s infrastructure needs a drastic overhaul, libraries are being closed and hours cut, and so much more. Likewise, you could easily throw $1 billion at the MBTA and it still wouldn’t be enough.
There was plenty to do. There still is plenty to do. And I’ve never heard of a politician who returns money because she can’t find a way to spend it. But the Obama administration was terrified that the Republicans would find any instance of graft or stupidity and pounce on it (of course, the graft would have been as likely to occur in Republican districts as Democratic ones). Because the Republicans only offer ‘fair and balanced’ criticism (to use a phrase), and only attack when it’s legitimate.
It wouldn’t have been hard for a new president, faced with a nation worried about jobs, to make the argument that even though mistakes will be made, the alternative would be keeping millions out of work.
The other issue is the whole ‘shovel-ready’ fetish. They clearly didn’t think that the loss of $8 trillion dollars of housing worth and the ensuing recession was going to be long-term (why I don’t know). If they had, it really wouldn’t matter if it took 12 – 18 months to get a project off the ground, since the unemployment would still be there.
The bottom line is that Obama, who always stressed deficit reduction, never was interested in infrastructure rebuilding. He was more concerned about deficits instead of jobs.
And that’s worked very well so far.