Via Brad DeLong, more details of how the size of the stimulus package was determined, and how the administration's mistaken pivot to deficit reduction came about:
'The Escape Artist': Christina Romer Advised Obama To Push $1.8 Trillion Stimulus: Scheiber writes…. The $1.8 trillion figure was included in a December 2008 memo authored by Christina Romer (the incoming head of the Council of Economic Advisers) and obtained by Scheiber in the course of researching his book.
"When Romer showed [Larry] Summers her $1.8 trillion figure late in the week before the memo was due, he dismissed it as impractical. So Romer spent the next few days coming up with a reasonable compromise: roughly $1.2 trillion," Scheiber writes…. [W]hen the final document was ultimately laid out for the president, even the $1.2 trillion figure wasn't included. Summers thought it was still politically impractical. Moreover, if Obama had proposed $1.2 trillion but only obtained $800 billion, it would have been categorized as a failure. "He had a view that you don't ever want to be seen as losing," a Summers colleague told Scheiber….
The most persistent internal division inside the White House, however, was between the deficit hawks and those who believed more stimuli were needed…. Orszag, writes Scheiber, "worried that the sheer size of the stimulus could undermine the confidence of businessmen and money managers." In the subsequent year, when other advisers argued that an additional dose of stimulus would prop up a staggering economy, he downplayed the potential impact….Summers fought Orszag's pursuit of a deficit reduction commission…. He also pushed back on Orszag's idea of a domestic spending freeze, insisting the cuts would be too close to the bone.
"We're Democrats," Summers harrumphed. "We believe in these things." Besides, both ideas struck him as gimmicks unworthy of a president…. Orszag, in turn, so distrusted Summers' influence that, as Scheiber writes, he "enacted a special rule for Summers's deputy, Jason Furman: anyone receiving an unsolicited inquiry from Furman was to alert Orszag's chief of staff, Jill Blickstein."
In the end, however, only one economic adviser truly argued that deficit reduction should be put off for another day. And by the time the 2010 elections were over, even Obama's top political advisers were arguing that Christina Romer's position was utterly untenable.
[Top Adviser David] Plouffe urged the president to give [entitlement reform] a shot. "I said he [Obama] should be big on entitlements," Plouffe told one former administration official, by which he meant reining in these budgetary elephants. Sure, this would enrage the party's base. But the political upside with the rest of the country would more than make up for it ... "Plouffe is pretty big on accomplishments trump normal politics," said one White House colleague. "Plouffe's view is that big trumps the little."…
[W]hile internal staff disputes did play a role, Scheiber ascribes blame ultimately to the president. As he concludes:
[T]he Jobs Act punctuated the chronic confusion about the connection between politics and governing. Too often, the two activities were treated as an either-or proposition in the West Wing. Obama generally believed the way to pass his program was to engage earnestly with the opposition, not take his case public. A president never has more leverage with Congress than when he's riling up voters, but Obama rarely exploited the massive stature of his office as a tool for influencing legislation.
If Obama goes go "big on entitlements," it will be a mistake. People don't object to the benefits they receive. They like Social Security and Medicare. The worry is that these programs won't be there for them -- politicians have scared them into believing they might not be. After paying into programs like Social Security for so many years, middle class America feels entitled to the benefits they have been promised. But people have been made to believe that others are stealing this future from them -- lazy, schemers who live off the government in one way or the other -- and that's what they want eliminated, the "undeserving others". But keep your hands off their Medicare and Social Security.