The administration's biggest economic mistake so far was to badly underestimate last January how terrible the employment situation would become by fall. As a result, it low-balled the stimulus -- settling for a plan that, while avoiding even worse job losses, didn't go nearly far enough. Obama has to return to Congress, seeking a larger stimulus. Yes, I know. We're already in the gravitational pull of the midterm elections (look at the bizarre attention given to gubernatorial elections in New Jersey and Virginia, and even to a congressional election in the 23rd district of New York, as supposed harbingers of voter behavior a year from now!). So it will be even harder to round up the needed votes from Blue Dog Dems fretting over the deficit. And you can forget the Republicans. And yes, I know: Only about half the current stimulus has been spent, so it will be awkward to make the case that we need a larger one. But here's the problem. Everything else on the table -- a new jobs tax credit, more loans to small businesses, more help to troubled homeowners, another extension of unemployment insurance, another round of subsidies to first-time home buyers -- are small potatoes relative to the importance and likely effect of a larger stimulus. Some of these initiatives may do some good, but even combined they'll barely make a dent in the growing numbers of jobless Americans. More after the jump. --Robert Reich
