Some of the words of praise for the COVID rescue bill are veiled attacks on Obama from the left for the inadequacy of his stimulus. Is this justified?
While it is clear in retrospect that the 2009 Obama stimulus was too small, much of the after-the-fact criticism of it is unjustified, for the following reasons:
- The economy was in free fall at the time Obama took office. The output gap was skyrocketing. No one knew, in real time, exactly how large it would become. Biden, on the other hand, has inherited a stable, slowly improving economy. Conditions, therefore, are quite different.
- Biden has the advantage of seeing how the GOP reacted to the Obama stimulus legislation. In particular, he knows that getting additional money from Congress in the future is a tougher sell than Obama thought it would be. He doesn’t have to operate under any illusions about the GOP’s willingness to cooperate in the national interest. We’ve seen that movie before.
- Biden also has the advantage of knowing that some kinds of stimulus don’t work as well as they were advertised in 2009. Most notably, the public works portion of the Obama stimulus bill was not terribly successful, contrary to the nation’s experience during the Great Depression.
- The temporary expansions of the safety net in the Biden bill may not survive, and the Biden Bucks checks may cause the economy to overheat. It is too early to evaluate those portions of the legislation.