President Obama, at the height of his powers, gave us his best shot today: a $787 billion stimulus program that delivers about $500 billion in new spending in the face of trillions of dollars of lost economic activity since last autumn, and about 35% in tax cuts that yield $1 per day, or so, for most people.
I’d like to believe this plan will indeed work, but I doubt it, especially given the largely incoherent reform of our financial system suggested by “Chief Economic Spokesman” (and tax-cheat) Treasury Secretary Tim Geithner. Markets appear to agree: they have dropped about 10% since the plan was announced. And, hark!, the White House now says more stimulus may be needed.
Obama will indeed be judged by what works. If in the interest of non-existent bipartisanship he so limited his reforms that we come to resemble Japan — repeated stimulus attempts, markets down almost 90% from their peaks; housing price declines for 15 years in a row; a GDP declining by almost 10% — the consequences for his administration will be dire. Fortes fortuna adiuvat. Be bolder, Obama: reality will have its due.