Be careful what you wish for, Mr. Obama

Last week you said that "If Paul Krugman has a good idea, in terms of how to spend money efficiently and effectively to jump-start the economy, then we’re going to do it."

Well, here you go:

On Saturday, Christina Romer, the future head of the Council of Economic Advisers, and Jared Bernstein, who will be the vice president’s chief economist, released estimates of what the Obama economic plan would accomplish. Their report is reasonable and intellectually honest, which is a welcome change from the fuzzy math of the last eight years.

But the report also makes it clear that the plan falls well short of what the economy needs.

According to Ms. Romer and Mr. Bernstein, the Obama plan would have its maximum impact in the fourth quarter of 2010. Without the plan, they project, the unemployment rate in that quarter would be a disastrous 8.8 percent. Yet even with the plan, unemployment would be 7 percent — roughly as high as it is now.

After 2010, the report says, the effects of the economic plan would rapidly fade away. The job of promoting full recovery would, however, remain undone: the unemployment rate would still be a painful 6.3 percent in the last quarter of 2011.

Now, economic forecasting is an inexact science, to say the least, and things could turn out better than the report predicts. But they could also turn out worse. The report itself acknowledges that “some private forecasters anticipate unemployment rates as high as 11 percent in the absence of action.” And I’m with Lawrence Summers, another member of the Obama economic team, who recently declared, “In this crisis, doing too little poses a greater threat than doing too much.” Unfortunately, that principle isn’t reflected in the current plan.

So how can Mr. Obama do more? By including a lot more public investment in his plan — which will be possible if he takes a longer view.

[snip]

So my advice to the Obama team is to scrap the business tax cuts, and, more important, to deal with the threat of doing too little by doing more. And the way to do more is to stop talking about jump-starts and look more broadly at the possibilities for government investment.

While Thomas Friedman is still closing his eyes to H-1B abuses by American corporations far too much for my taste, there are areas in which he doesn't have his head up his ass, and his December 23 column about how this country is essentially General Motors writ large right now was largely spot on. The Republicans are already singing that old Reagan song again, despite the fact that nearly three decades of Reaganism in various suits of clothing have brought this country to its economic knees.

The idea that a small business is going to keep on a $40,000 employee and his $13,000 family health insurance coverage in exchange for a $3000 tax credit is absurd, especially when there is no market for that company's product because no one can afford to buy anything. It's time for Obama to stop caving in to Republicans and their disproven ideology which is even more of a religion for them than their professed Jesus-worship and start doing something to get this country back on its feet.