I think the debate over whether the Obama administration’s original stimulus bill was big enough is much less consequential than people realize. Imagine things had gone differently and the Obama administration had proposed a stimulus exactly as large as Christina Romer initially suggested: $1.2 trillion. And let’s say it passed at $1 trillion. That would have changed the eventual unemployment rate by a few tenths of a percent. Politically, that would’ve had little to no effect. The stimulus still would’ve been viewed by many, if not most, as a failure.

In January 2009, there was simply no way to design and pass a stimulus equal to the size of the problem because we didn’t yet know the size of the problem. The unemployment estimates that Romer and Jared Bernstein produced for the administration look bad in retrospect, but at the time, they were smack in the middle of the private sector’s consensus. The financial crisis was simply worse than the preliminary data suggested. A better political system would have adapted to the new information, but in our system, we basically got one shot at a big stimulus bill and that was that. The 2010 tax deal had some good stuff in it, but it was pretty ineffective so far as stimulus goes, and it would’ve been a whole lot better to cut payroll taxes in 2009.

For that reason, the interesting counterfactual is not “what would have happened if the stimulus had been a bit bigger” but “what would have happened if Barack Obama had been inaugurated a couple of months later?” By June, unemployment was over 9 percent, and the full scope of the emergency was a lot clearer. If that had been the context behind the initial stimulus, I think it’s plausible to think it could’ve turned out very differently.