For some reason, Joe Biden said in an interview on This Week that the administration underestimated the economy's weakness. I'm not sure if that's really true. I'm wondering if Biden is setting the stage for a second stimulus? It's not the first time that someone from the Obama administration said that the administration underestimated unemployment (Christina Romer said it in April and frankly explains it better) but because Biden said it in this way (see the video below), it's taken hold.
Now we're getting the I Told You Sos from the left.
In that respect I can understand why Palin quit. Politics is a petty and thankless game of one-upmanship. It's always the left against the right and the left against the center and the right against the center and it makes it difficult to get anything done.
The reality is we destroyed the economy by living beyond our means. The economy has to find a new and healthy balance and that's going to take time and pain.
But equally problematic is Biden's assertion that "everyone" - not just the White House - was off in their prognostications. This is simply untrue.
Host George Stephanopoulos pointed out that "a lot of people were saying that you needed to do something bigger and bolder" when it came to the stimulus package. He named New York Times columnist Paul Krugman as one example. There are many others.
The prize-winning Columbia University economist Joseph Stiglitz not only warned that the stimulus was too small during its construction, the day after Obama signed it into law he predicted how its shortcomings would make themselves apparent.
"I think there is a broad consensus but not universal among economist that the stimulus package that was passed was badly designed and not enough. I know it is not universal but let me try to explain. First of all that it was not enough should be pretty apparent from what I just said: It is trying to offset the deficiency in aggregate demand and it is just too small," Stiglitz said. "The shortfall in state revenue [is] probably in the order of 150 to 200 billion dollars a year. And the states have balanced budget frameworks so if you follow the newspaper you know the drastic problems that California and New York are in, these are really serious problems and because of their balanced budget frameworks they have to reduce their spending... if their income comes down. So that would be a negative stimulus of 150 to 200 billion unless there is federal aid. And the stimulus package there was a little of federal aid but just not enough. So what we will be doing is we will be laying off teachers and laying off people in the health care sector while we are hiring construction workers. It is a little strange for a design of a stimulus package. You ask, why do you want to hire construction workers and fire teachers. I don't know what is the rationale behind that." HP
