The gist: The Obama team came into office thinking a lot about how recoveries in the aftermath of financial crises were liable to be much worse and drawn out than normal recoveries, and yet it didn't attack the problem with the requisite gusto.
Sure, there was the $800 billion stimulus. And the Fed took unprecedented measures to bolster the economy. But it wasn't enough, and there was no thinking ahead that the economy might need even more beyond the initial push. This is despite the fact that some of Obama's advisors clearly had anticipated the possibility that things might be much worse than realized.
Leonhardt notes that in the early days, Obama and his aides were reading the work of economists Carmen Reinhart and Kenneth Rogoff, who were about to publish their famous book: "This Time Is Different," which spelled out the gory history of post-crisis recoveries.
In my interviews with Obama advisers during that time, they emphasized that they knew the history and were determined to avoid repeating it. Yet of course they did repeat it. After successfully preventing another depression, in 2009, they have spent much of the last three years underestimating the economy’s weakness. That weakness, in turn, has become Mr. Obama’s biggest vulnerability, helping cost Democrats control of the House in 2010 and endangering his accomplishments elsewhere. Read more....