If President Obama had been doing his job, he would have immediately begun pushing for more stimulus the day after the first one passed. He should have been straightforward with the American people and said that the stimulus approved by Congress was an important first step, but that the severity of the downturn was so great we would likely need moreApparently if the President had only let Dr. Baker direct his speech-writers, both the public and Congress would have been won over to the watered down version of Keynes that Baker considers to be the revealed truth of economics. And apparently the President is such a political lightweight that he foolishly embarked on a silly discussion of the deficit instead of doing his assigned task of explaining stimulus to the public as Professor Baker clearly instructed him. The implicit racism of this pompous blathering is maybe not even so implicit- certainly Baker never adopted such a lecturing tone with Bill Clinton- but the political tone-deafness is a good clue to why this wing of the Democratic party never wins any elections.
The original stimulus bill only passed the US Senate with the votes of conservative Democrats like Ben Nelson and three Republican defectors. It had to be pitched to win those votes, because Congress allocates the budget in the US political system, no matter whether Dean Baker finds this fact an annoying triviality beneath his notice or not. And there is no magic speech the President could have made to change underlying political realities. Keynes himself noted that his policies were politically impractical until there was a world war, but this doesn't bother Dr. Baker who trots out the tired excuse that Keynsian economics is so "counter-intuitive" that it needs to be explained in small words to the dumb public by the President. Actually, it is pretty simple and the President explains it often during his speeches - but it's not a winning political argument on its own. It's not even true. Lite-Keynes is not a solution to our existing economic problems - and the President knows it even if the news has not come to Baker.
If Baker were correct, then we would have had an economic boom during the reign of George W. Bush who doubled the Federal budget and greatly increased state budgets with unfunded Federal mandates.
Keynes explanation of how government programs boosted the "demand side" of the economy is that government spending that created jobs put money into hands of unemployed laborers who then used the money to buy stuff. And the government or government contractors employing these people also bought stuff so they could do their work: shovels, bulldozers, steel, and so on. All this buying makes the businesses that sell this stuff hire more employees and invest in factories. That's the really subtle "counter-intuitive" theory that you need a Ph.D. like the very smart Dean Baker to understand. However, if the government hires security contracting companies in Iraq, none of this magic takes place. Same for when the government gives money to insurance companies for nothing - as in the Bush era Medicare Advantage program. Keynesian stimulus is not government spending, it's government spending that increases demand for products and services in the domestic economy. So there is a lot of room in the budget that President Obama inherited from the Bush years for increasing stimulus while not increasing spending! Amazing isn't it.
This week, the President signed the defense authorization act for 2012. Some liberal commentators have complained that its still at Bush war levels. Many more have screamed and cried that it contains provisions "codifying" the crappy civil liberties infringements of the Bush era. But nobody seems to have noticed that money saved from the war in Iraq is going to renewable energy, education benefits for veterans, and health care. That is, non-stimulative Bush era spending is being redirected to stimulative domestic spending. That must just be an accident because the ever so smart Dean Baker has assured us that the President is too dumb to understand economics.