Ron Suskind, in his book Confidence Men: Wall Street, Washington, and the Education of a President, provides an account of the development of the 2009 stimulus plan that reflects President Obama’s concern over what Suskind calls “the symbolic content” of the plan.
Suskind reports that concerns about political blowback led Obama’s team, in the days before Obama’s Inauguration, to opt for keeping the stimulus plan below $1 trillion. Suskind quotes Peter Orszag, who would become Obama’s first director of the Office of Management of the Budget, as saying “there was the concern that we would look wacko lefty.”
Orszag and others thus opposed Council of Economic Advisors chair Christina Romer, who wanted a stimulus of “Eight hundred [billion dollars], at least,” and pushed hard for a $1.2 trillion. “All of these stimulus options are set up to achieve eight percent unemployment,” Suskind quotes Romer as saying. “Since when is eight percent unemployment acceptable? We’ve spent the last few years at four percent!”
Suskind writes that Obama thought the stimulus need not break the $1 trillion barrier. “For [Obama], Suskind says, “it was more about the symbolic content of the stimulus,” before quoting the president as asking”What about smart grids?” and as saying “We need more moon shot” in the stimulus plan, perhaps because – as Obama put it on a call with the office of Rep. Nancy Pelosi, D-Calif. – “this stimulus needs more inspiration!”
The unemployment rate topped 8% in February of 2009. By June 2009, the number had jumped to 9.5%. Suskind quotes Obama in conversation with economic advisor Larry Summers. “Look, I hope [Moody chief economist Mark] Zandi’s right that we’ll have a quick bounce-back, but we clearly can’t count on that . . . But we should start talking about it, about a jobless recovery, so we’re out in front of this thing.” Suskind says that Obama ended the meeting with a promise: “Larry, if your arguments about a quick bounce-back turn out to be right, and I don’t think they will be, I’ll give you a $10 bonus.”
Summers’ arguments turned out to be wrong, which means we may never know if Obama would have paid for the bonus using unspent stimulus funds.