Ok, so FDR took the US off the gold standard in 1933, which made the Fed more comfortable with monetary expansion. (Note that fiscal stimulus might be expected to affect cars and services in similar ways.)
So C. Romer states that the Great Depression is a poor test of the effectiveness of fiscal spending, since federal deficits were counter-balanced by state-level austerity measures.
That’s not to say that New Deal spending was a bad thing. Rather it seems as that there wasn’t enough of it.
Heh. Substitute, “FDR’s policies” for “New Deal” and my prior characterization holds up better.
In 1936, the Federal deficit totaled to $4.6 billion (Kindleberger, 1986, p272). GNP that year was $82.5 billion, so the deficit amounts to 5.6%. That may have been small relative to the problems the US was facing and relative to the contraction in state spending. But it hardly implies timidity. (I believe that I’ve seen charts of federal deficits as a share of GDP during the great depression, but I can’t seem to locate one now.)
Perhaps we all should be more careful with our characterizations. The simple right-winger implication that fiscal expansion is impotent has few or no serious defenders in the context of the Great Depression.
I didn’t know that, either. Because I would define “controlled Congress” as “having a majority or tiebreaker in both houses”, and last I checked, until January, the Senate is 49 Democrats, 49 Republicans plus tiebreaker veep, and 2 independents. When everything depends on how the independents break, I wouldn’t say that either party has control of Congress.
Contin: Then again, in other contexts some schools of economists argue against fiscal policy.
The OP:
What’s the best way to puncture these inflated expectations? Here’s some boilerplate: Remember that Obama had the most centrist domestic policy of the major candidates - we didn’t elect Edwards and even H. Clinton had a more liberal health care stance, as Krugman emphasized during the primaries.
Obama’s conciliatory instincts have been on display for a while. This is defensible: nothing permanent happens in American politics without bipartisan cover. Then address the specific matter at hand, contrasting Obama’s centrist approach with Republican GWBushism.
Frankly, I don’t know how well conciliation will work in 2009. In 1950-1992, Obama’s skill set would have been perfect. But the right wing was pretty relentless following the rise of Gingrich and talk radio. Whether we’ve entered a new phase now remains to be seen: the intellectual bankruptcy of modern conservatism is clearly not obvious to everyone.
And the bit about nothing permanent happening without bipartisan cover hasn’t been established to my satisfaction. I suspect that the claim is misleading at best.
To quote Obama’s favorite verbal tic, “let’s be clear.” The only statement I’m defending is that mainstream economists disagree over whether the New Deal was effective.
Whether it was (arguably) ineffective because it wasn’t big enough is entirely outside the bounds of what I’m trying to defend with my extremely limited knowledge of macroeconomics.
If I may intervene, I’m closely related to the OP and am very familiar with his views. In fact, I would deign to speak for him. The topic really isn’t inflated expectations. That was a tangent raised by Shodan (and in fairness, one of many tangents raised by others as well).
What the OP talked about was the absurdity of the notion that Obama is insufficiently assertive, and that he should take the reins of power before his inauguration based on the premise that Bush is no longer acting as president. What is surprising, the OP assures me, is that no one here has taken that point of view and argued it.
On the other hand, maybe it shouldn’t be surprising since Congress in particular is skittish about holding onto the red-hot handles of leadership. “Wah! Help! The big black man is supposed to lead us, but he’s acting like Bush is still president! Whatever will we do!”
There’s a reason why I don’t really visit places like Huffington Post or Daily Kos during non-election years. Their numbers surge when there’s real politics, but afterwards only the most annoying loonies remain. The rest of us enjoy the return to sanity and the lack of the daily outrage.
So basically I just ignore these assholes on the left-wing of the party who bitch and moan abotu the state of affairs. Obama will not be President until January, and everyone knows it. The thing about markets in general is that they price in all known information at a given time. Obama’s announcing his plans are all he needs to do. What else is he supposed to do? Give Bush a call and tell him how it’s going to be? Of course not.
I think he’s doing an excellent job of his transition. By all accounts he’s doing a bang-up job and is super-prepared for the job ahead. The guy may not be perfect and I’m sure he’ll do something that disappoints us, but I don’t think anyone will blame the man of being careless and lacking inquisitiveness like our current President. If Obama makes a decision you can rest assured that he’s done his due diligence.
Sure people will be disappointed and such, but they were going to be disappointed anyway. The beauty-part is that Obama’s sensible well-reasoned politics will seem so damn revolutionary after 8 years of Bush’s idiocy that it’s going to be hard to do a worse job. Obama is going to come off so well simply because his predecessor is so inept.
Actually I made the point that he is busy rolling back environmental rules. He is also entrenching his appointees to make them more difficult to extricate. Bush is aware he has no political capital to spend.
When people say that the Democrats “control Congress”, they mean, “control the caucus that has a majority or tiebreaker in both houses”. That’s the kind of control that cashes out as actual procedural control over what goes on in Congress. And since the two independents whom you mentioned caucus with the Democrats, the Democrats do control Congress in that sense.
Hey, Shodan- while you’re, you know, correcting ignorance and everything… could you tell us how many vetoes Bush made both *before *and *after *the Dems had the majority?
Eh, there’s procedural control, but then there’s also control of what actually gets passed, which I suspect is of more interest to most citizens. And Lieberman at least votes with the Republicans on a significant number of issues.
Having a majority in the House means you can get pretty much anything passed (as long as you have good party unity) and can block anything (the Speaker can prevent any bill from every coming to a vote). In the Senate, any party with 40 or more votes can block anything unless the majority is willing to wait them out. Having more than 50 is only useful if you are willing to break filibusters the old fashioned way, as they did during the Civil Rights era.
The Republicans have been much better at the filibuster game recently than the Democrats were. I am extremely pissed off about how timid the Democrats in the Senate have been over the last 8 years. They rarely used it when in the minority and even let the Republicans bully them by threatening to lower the votes needed for cloture during Bushes judicial nominations. They then proceeded to roll over for the 94 filibusters the Republicans have launched since the Democrats took over in 2007. They only challenged one, for one night and then withdrew the bill.