By Paul Krugman, New York Times
Excerpt: The real story of this election, then, is that of an economic policy that failed to deliver. Why? Because it was greatly inadequate to the task. ... If you look back..., economies that have experienced a severe financial crisis generally don’t heal quickly. ... And that has been true even when, as in the case of Sweden, the government moved quickly and decisively to fix the banking system.
To avoid this fate, America needed a much stronger program than what it actually got — a modest rise in federal spending that was barely enough to offset cutbacks at the state and local level. ...
Could the administration have gotten a bigger stimulus through Congress? Even if it couldn’t, would it have been better off making the case for a bigger plan, rather than pretending that what it got was just right? We’ll never know.
What we do know is that the inadequacy of the stimulus has been a political catastrophe. Yes, things are better than they would have been without the American Recovery and Reinvestment Act:... But voters respond to facts, not counterfactuals, and the perception is that the administration’s policies have failed. (Read more)