Laying it on a Little Thick

Paul Krugman, whom I otherwise admire, is laying it on a little thick these days about how he was right all along in predicting the inadequacy of the fiscal stimulus package. He's also very proud of the fact that he was also right about the political ramifications of that inadequacy, namely that, should the stimulus plan prove too timid, the Obama administration won't be able to go back to an already reluctant Congress and ask for a second round of fiscal stimulative medicine.

I don't know about you but, to me, this whole line of reasoning sounds unhelpful at best, conceited and a bit disingenuous at worst.

First of all, announcing the stimulus plan before the Inauguration and having it passed a few weeks into the new presidency was itself a political, psychological and economic coup. It gave the country a much-needed psychological boost that translated into an unexpected and welcome rally in all assets (T-bonds excepted of course). Even if you ignore its effects on the financial markets (which Professor Krugman often dismisses as irrelevant), the plan also had an undeniable effect on the economy: the "green shoots", while a little overrated and maybe temporary in nature, were real enough.

Second of all and more importantly, the stimulus package is back-loaded, meaning most of its effects haven't been felt yet. In other words, it's way too early to pass judgment on it, especially when, according to the Government Accountability Office's report released two days ago, less than 10% of the $787 billion has been spent.

There is no need at the present time to start lobbying for a second stimulus package when the first has just started working its way through the economy and when many people are doubting its very efficacy.