"Let's Just Go Build It!"
After Obama's election, Depression scholar Christina Romer delivered a freak-out briefing to his transition team, warning that to avoid a 1930s-style collapse, Washington needed to pump at least $800 billion into the frozen economy and fast. "We were in a tailspin," recalls Romer, who is about to step down as chair of Obama's Council of Economic Advisers. "I was completely sympathetic to the idea that we shouldn't just dig ditches and fill them in. But saving the economy had to be paramount." Obama's economists argued for tax cuts and income transfers to get cash circulating quickly, emergency aid to states to prevent layoffs of cops and teachers and off-the-shelf highway projects to put people to work. They wanted a textbook Keynesian response to an economy in cardiac arrest: adding money to existing programs via existing formulas or handing it to governors, seniors and first-time home buyers. They weren't keen to reinvent the wheel.
But Obama and Biden also saw a golden opportunity to address priorities; they emphasized shovel-worthy as well as shovel-ready. Biden recalls brainstorming with Obama about an all-in push for a smarter electrical grid that would reduce blackouts, promote renewables and give families more control over their energy diet: "We said, 'God, wouldn't it be wonderful? Why don't we invest $100 billion? Let's just go build it!' "
See high-end homes that won't sell.
See pictures of the recession of 1958.
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