Read on Twitter
To summarize my recap of 2008-9 reasons for the stimulus size presented by Summers, etc to Obama-Biden: an astonishing number of reasons were aggregated. All were wrong. Some known to be wrong within three weeks, some by June, all by fatal mid-terms.
2/ The consequences of this blunder include a dreadful list of missed opportunities and the suffered disaster of Donald Trump, culminating in his failures of 2020 in which he clearly earned the abysmal record of worst president ever.
3/ But the fundamental failure of the advice was that they should have known that the consequences of seeking too small a stimulus would be terrible. I don't think that Summers, Geithner, Emanuel, Orszag really believed that. After all, they aimed at high unemployment as success.
4/ Since this failure of economic advice, and other mistakes made in Europe later generally called austerity, economic advisors have changed their tune. Summers too. Everyone realizes that crises have their own rules, require distinctive responses.
5/ This is why Summers' public reversion to deficit hawkishness is as odd as it is politically untimely. He cannot know anything about the future course of the pandemiconomy than anyone else does. The Biden advisers thankfully are, I suspect, telling the President:
6/ We don't have much insight into the future. We don't know when it will be safe to open offices, eat inside restaurants, fill every seat at the sporting events.
We don't know if the SA variant will require hundreds millions more boosters.
We don't know if the SA variant will require hundreds millions more boosters.
7/ Or if overseas travel must be restricted. Biden might be saying, you didn't know in December 2008 how long the banking crisis would last, but that was over by June. They would respond, this won't be over by June.
8/ That's why this time we don't want to give you a relief package that might be too small, like that stimulus was too small.
9/ And more: there has to be a source of steady, substantial growth. We have to do what's needed for building the physical platforms for a growing economy -- the clean power, broadband, electric transportation, clean water, and safe sewage platforms.
10/ This is the must-have bill #2, to be passed by 51 votes or as many more as can be obtained. Construction work can be done relatively safe despite the virus. It takes time to start. It needs to be well underway soon. This is what build back better is all about.
11/ And especially in energy sector, where public money can crowd in 3-4x private money, this is how to soak up excess savings, reduce unproductive consumption, guard against inflation if that's a problem. (And even Summers in his spanner-in-works opinion piece is ok with this.)
