Almost every economist will tell you the stimulus has to be massive to have any real impact. Even Marty Feldstein, who headed Ronald Reagan's Council of Economic Advisors, told Congress it had to be $800 billion. But a price tag like that scares Republicans and so-called "Blue-Dog" Democrats who worry about government debt.
So here's Obama's strategic choice. He can fight for the biggest stimulus possible -- twisting arms and counting noses to get a bare majority in the House and sixty votes in the Senate. That's how Ronald Reagan and George W. Bush got their huge tax cuts, and how Bill Clinton got his first budget through Congress.
Or Obama can go after the backing of a much larger majority than he needs -- including a majority of Blue-Dog Democrats and Republicans. Of course, to do this he'd have to settle for a smaller stimulus package -- one that may not be enough to immediately jump-start the economy.
Why would he ever choose the second strategy? Because his goal is not just to squeeze through the biggest stimulus package possible. It's to get a Congress that's mostly united behind whatever stimulus package emerges. This would help ensure that Republicans and Blue-Dog Democrats take some ownership of the package, and therefore responsibility for making it work.
And maybe if they feel ownership and responsibility, Obama can return to them later for more money and probably get their backing. Just as important, he might build bipartisan support for other things that have to be done in the next few months -- like keeping the U.S. auto industry afloat, reducing mortgage foreclosures, and devising new regulations of Wall Street. And he lays the foundation for a more united Congress capable of tackling a new health-care system and reform of Social Security and Medicare.
It's not the strategy his predecessors used to enact their economic plans. It's not hardball politics, it may not be the best move for the economy in the short run, and it's a gamble. But given the challenges our new president and our nation face, trading bigger stimulus for broad based support may be very smart politics and smarter economics in the long run.
--Robert Reich
