In the souk, they know how to do this.

February 22, 2012, 10:23 am

Jon Chait reads the secret Romer memo saying we needed $1.8t stimulus, and finds that the evidence shows the administration asked for a smaller and too-small stimulus on purely political grounds.

The counterfactual is what would have happened if Obama had proposed a much larger stimulus to begin with. His political team believed it would have risked delaying the bill or caused it to collapse entirely. Perhaps. It’s also possible it would have simply shifted the frame of the debate, so that “large” was now defined by $1.8 trillion rather than $800 billion, and the “centrist” position would settle in at, say, a trillion and a half or thereabouts.

This is what you would do if you were buying a car or a house. It is elementary bargaining. It is something that even the most lackluster of legislators does, or should, know. Why it is coming as a revelation now, I cannot imagine.

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