As the details of Obama's stimulus plan have dribbled out, I've been getting more and more concerned, and not for the reasons that bother other progressives.  I think it's not going to work.  I think Obama has tried to thread the needle, crafting a plan that is sufficiently big and stimulative enough to work, but also sufficiently small and centrist enough to be passed by large Congressional majorities.  Unfortunately, I am afraid that he has threaded the needle the opposite way, proposing a plan that is big enough to seem ruinously expensive to the federal balance sheet, but sufficiently small and poorly targeted enough to still fail. 

Progressives should be scared.  If this plan fails to work it could tip over a set of dominoes that end with the Republicans recapturing the White House in four years and putting a quick end to our new progressive era.  The dominoes are: the economy continues to worsen until the 2010 elections, the voters give Republicans a majority in at least one house of Congress that year, they block Obama's agenda for the rest of his term, and coast to victory in 2012 on the back of an economy that continues to be terrible.

Paul Krugman has an excellent post that explains in clear and simple terms the math that leads to this conclusion.  Everyone should read it.  In it he shows how even with quite optimistic assumptions the unemployment rate would still rise to 7.3% under Obama's plan, and concludes with his fear of a scenario that he feels is more likely, in which unemployment rises to about 9% in 2010.  He follows this with another post on a WSJ survey of economic forecasters whose predictions average out to a rise in unemployment to 8.4% in 2010, assuming passage of a stimulus plan.  The current rate (for November 2008) is 6,7%.

These numbers, if they prove to be true, would probably be electorally lethal to the Democrats in 2010.   Both Ronald Reagan and Bill Clinton went into their midterm elections with poor economies, and both suffered big losses in the House of Representatives.  They both went on to victory because the economy recovered by the time they ran for re-election, but neither faced an economy caught in a liquidity trap.  This trap is liable to prevent a spontaneous recovery of the kind that we all have become accustomed to, and if Obama can't get the results that everyone is used to seeing, then his election prospects are dim indeed.  

So there you have it.  There's an emerging economic consensus that this plan will not prevent the economy from getting a lot worse, and if that occurs then Obama is in big trouble.  How did this happen?

I'm a psychologist, and I look for psychological explanations.  Reports are that Obama's economic team got proposals from a wide range of economists for stimulus plans ranging from $800 billion to $1.2 trillion dollars, but are proposing something in the range of $675-$775 billion, smaller than the low end of what was proposed to them.  Why?  Well, the problem that I saw at the outset with Obama's team was that he appointed a group of people who are tremendously knowledgeable about the current economic crisis because they helped to create it.   This gives them an ego investment in believing that their actions have not done enormous harm, and that the intellectual reasoning that they have always relied on will continue to work, even though everyone else can see that this is wrong.  It is an extremely unfortunate fact of human nature that when ego needs go up against unpleasant realities, ego needs usually win.  Sadly, a high I.Q. is no defense at all against this process, because a high I.Q. just gives people better tools to help them rationalize away disturbing facts. 

Obama's economic team is apparently assuming that the Fed's monetary policy of low interest rates and increasing the money supply will work as it has in the past, and all we have to do is hold on until this happens, which a modest stimulus plan would allow us to do.  They appear to have not processed the emotional reality presented by a liquidity trap, because that emotional reality would be terrifying to them.  They are all monetarists to some degree, who believe that the Fed can always get us out of trouble if it tries hard enough.  But the reality of a liquidity trap is that it is self-sustaining and the Fed is helpless, truly helpless.  They don't seem to be able to accept that as possible, because it would create feelings in them of both helplessness and humiliation. 

This emotional incapacity on the part of his team has, I feel, has led to a major strategic error in combining economics and politics.  Obama's people were reportedly concerned about Congressional opposition from Republicans and conservative Democrats if the stimulus plan was too large, and were worried that a larger plan could not be passed.  Fine.  In that case, the correct strategy would be to propose a very large plan anyway, wait for the opposition, compromise on the smaller plan (meaning the current proposal) if necessary, and then be able to blame the larger plan's opponents if and when the economy still gets worse. 

That would be a political winner in all scenarios.  They would either pass the larger plan that is needed or be able to blame the conservative opponents if a smaller one doesn't work.  Also, that would shift the debate over what is necessary in the direction of the larger numbers that are needed.  With current strategy, the likelihood is that Obama will get what he wants, it won't be enough, and he'll be blamed. 

The most likely course of events seems to be that a year from now the economy will still be worsening.  Obama and his team need to either pass a plan now that will prevent that, or leave a political reality that will allow them to pass something additional later on if necessary.  I'm extremely worried that the current economic plan and political strategy will do neither. 

In 1992 Bill Clinton said, "It's the economy, stupid", meaning that a bad economy trumps everything else politically.  Well, the economy is bad now, in a way that we haven't seen since the Great Depression.  FDR took office in 1933, three-and-a-half years into the Depression, so no one blamed him for it.  The politics for Obama will be different, because things will be getting worse on his watch.  This could get really bad, both economically and then politically.  As Krugman said, I hope I'm wrong.  

Well, it's been a hell of a year.  All worked out pretty much the way I hoped.  I knew when I decided to run I had a pretty good shot, considering the competition.  When I got to the Senate in '04 and saw how little game all the Big Leaguers had, I figured I had to go for it.  The country's a big mess, somebody's got to fix it, and I didn't like the idea of leaving it to any of the others.  I try to stay humble, but it was hard to do that looking around at my Senate colleagues. 

And it went even better than I thought it would.  Hillary spent all her money on fancy hotels and didn't even bother to campaign in half the country, and McCain picked a VP that made Dan Quayle look like a Nobel Laureate and then couldn't stay on message for five minutes.  And all the others couldn't even beat those two.  Then Bush finally crashed the economy after years of trying, just in time for the election, and the close win I'd planned for turned into a rout.  Now I've got a mandate, but I'm really gonna need it to clean up all Bush's messes. 

The transition's going pretty well, too, except for this crazy Blagojevich business.  Boy, is that guy off his meds.  I came up clean through the cesspool of Chicago politics and made sure everybody knew it, and he tries to auction my seat to the highest bidder.  Then, pretty much everyone on Planet Earth tells him they won't accept anyone he appoints, so he goes and appoints someone.  Unbelievable.  Hope he enjoys his room in the Illinois Governors Wing of the federal pen. 

He won't be alone, though.  The big thing I have going for me right now is that the Republicans, instead of worrying about stopping my legislation, are too busy worrying about not going to jail.  The only Cabinet nominee they want to fight about is Holder in Justice, and that's just because they figure they won't look too good in ankle bracelets.  They want Barney Fife for AG, and any Democrat I name with a brain wave and a pulse is going to make half the Republican establishment lose bladder control.  Well, it's their own damn fault. 

I'm glad the public's finally getting fed up with corruption, really, it's about time.  When black voters start tossing out black guys for corruption, you know something is up.  Like that idiot Jefferson, boy, am I glad he's gone.  Ninety grand in his kitchen freezer.  Yeah, like if people come looking they'll definitely never find it there.  Even Charley Rangel, who's probably smart enough to have a storage locker somewhere, is starting to feel the heat now. 

What amazes me is, I'm the first black President, and still, Republicans haven't noticed how much blacks have changed.  Nowadays, most blacks go to work Monday through Friday, see a Tyler Perry movie on Saturday, and then go to bed early to get up for church on Sunday.  It's like "Leave it to Beaver" with melanin.  If the Republican ever stopped being racist, half the black vote would run right over to them.   But that'll never happen. 

But now it's up to me to fix everything.  Really, Bush just ran the whole damn country into a big giant ditch, and I'm not sure we've got enough horsepower to pull ourselves out.  The crisis really helps in a way, though, because I can toss half my agenda into a big stimulus plan and make the Republican look horrible if they say no. 

The big problem is that stupid filibuster rule in the Senate.  This would all be so much easier if it wasn't for that.  So now I have to play to the middle, because I need two-thirds of the country behind me to get to sixty in the Senate.  Looks like I've got it so far, in fact, even a lot of Republicans want me to succeed now, because they're so afraid of losing their money.  I can probably drive the stimulus plan through pretty quick, though I'll bet Mitch McConnell tries to stall and play for time, without doing a phone-book-reading type filibuster.  He knows if he tries that, the stock market will tank, and he'll have to cave. 

The problem is it might not be enough.  Even 800 billion might not do it, but if I start talking trillions people will freak.  I know what the Republican are hoping for.  That I get my package, the economy still sucks, they make a comeback in 2010 and block me until 2012.  If things are still horrible then, maybe they can take me out.  My best move is to accumulate every bit of political capital I can and spend it only on fixing the economy, until it bounces back.  If the economy rebounds, then I'm a hero, and I'll have enough political capital to push through everything else.  Until then a lot of other stuff may just have to wait.  

And foreign policy, that's gonna be trouble, too.  Bush said he was going to bring freedom and democracy to the Middle East.  So, what did he leave me?  War in Iraq, war in Afghanistan, the Taliban is back, so is Al Queda, Israel at war with Gaza, Iran building nukes, Pakistan terrorizing India, and to top it all off, we've even got fucking pirates there now.  Thanks a bunch, George.  Way to straighten everything out. 

But thank you, Jesus, that my middle name is Hussein.  That's going to come in handy.  I figure if I make a big, respectful speech to the Muslim world early on, I can move public opinion in some of those countries and put pressure on the extremists.  Those folks are all about honor and respect, if you give them some of that they love it.  Ahmedinejad in particular is just dying for me to pay some attention to him, and with no oil money coming in he needs a new friend.  If I can get him to play ball the whole region looks different. 

I think I can handle this.  I've played a lot of chess, and I've played a lot of poker.  If you can see a few moves ahead, and know when to bluff and when to call, then nothing's quite as hard as it looks.