In a February 13 McClatchy article headlined “Will the stimulus actually stimulate? Economists say no,” reporter Kevin G. Hall claimed that “a range of economists” believe that the economic recovery bill “is short on incentives to get consumers spending again and long on social goals that won't stimulate economic activity.” Hall later suggested that economists on both “side[s] of the political spectrum” do not support the recovery bill. In fact, the only person quoted in the article whom Hall identified as being associated with Democrats or progressives was quoted by Hall as saying that “the stimulus bill is a necessary condition for economic stabilization and recovery.”

In the article, Hall reported: " 'All this is 25 years of government expansion jammed into one bill and sold as stimulus,' said Brian Riedl, the director of budget analysis for the Heritage Foundation, a conservative policy research group." Hall then added: “The view wasn't much more supportive on the other side of the political spectrum. In a brief on the stimulus compromise, William Galston, a senior fellow at the center-left Brookings Institution and a former Clinton White House adviser, warned Thursday that a bank-rescue plan being finalized will make the $789 billion look like 'pocket change.' ”

However, as the next sentence Hall quoted from a February 12 statement by Galston makes clear, Galston was not criticizing the bill; indeed, he called the congressional agreement on the bill a “much needed victory” for the Obama administration. Rather, Galston said what many economists have said, that a financial bailout plan is also necessary for economic recovery. Hall wrote: " 'While the stimulus bill is a necessary condition for economic stabilization and recovery, it is hardly sufficient,' Galston wrote. 'As the lesson of Japan in the 1990s shows, fiscal stimulus without financial rescue yields stagnation -- at best.' "

From Galston's statement:

With yesterday's agreement between House and Senate negotiators on an economic stimulus bill, the young Obama administration won a hard-fought and much needed victory. The compromise, which cut the overall cost of the legislation to $789 billion, pared back items dear to both liberals and the business community.

[...]

Throughout these negotiations, the administration has insisted that a stimulus bill of roughly $800 billion would “create or save” between 3 and 4 million jobs. Because the American public, while hoping for the best, remain skeptical about government's ability to improve their lives, the president would be well advised to dramatize the implementation of the bill. Through the spring, he should appear every week at a site where stimulus money is making it possible for “shovel-ready” projects to get started. The language of long-term investment is too anodyne for the moment: the mantra must be jobs, jobs, jobs if average Americans are to begin regaining their faith in the future.

While the stimulus bill is a necessary condition for economic stabilization and recovery, it is hardly sufficient -- and probably not the most important component of the overall program. As the lesson of Japan in the 1990s shows, fiscal stimulus without financial rescue yields stagnation -- at best. Treasury Secretary Geithner's initial sketch of a financial package failed to inspire confidence, either in Congress or in the markets. Serious observers believe that recovery cannot begin until we acknowledge that losses in the financial system amount to some trillions of dollars, rendering many institutions insolvent.

[...]

Sooner or later, the administration will have to level with Congress and the people, and then make the case for a financial rescue package the magnitude of which will make the stimulus package look like pocket change. However hard it may have been to get the stimulus to the finish-line, it will prove to have been easy in comparison to the task that lies ahead.

From Hall's February 13 McClatchy article:

The compromise economic stimulus plan agreed to by negotiators from the House of Representatives and the Senate is short on incentives to get consumers spending again and long on social goals that won't stimulate economic activity, according to a range of respected economists.

[...]

Another reason that some analysts frown on the stimulus is the social spending it includes on things such as the Head Start program for disadvantaged children and aid to NASA for climate-change research. Both may be worthy efforts, but they aren't aimed at delivering short-term boosts to economic activity.

“All this is 25 years of government expansion jammed into one bill and sold as stimulus,” said Brian Riedl, the director of budget analysis for the Heritage Foundation, a conservative policy research group.

The view wasn't much more supportive on the other side of the political spectrum. In a brief on the stimulus compromise, William Galston, a senior fellow at the center-left Brookings Institution and a former Clinton White House adviser, warned Thursday that a bank-rescue plan being finalized will make the $789 billion look like “pocket change.”

“While the stimulus bill is a necessary condition for economic stabilization and recovery, it is hardly sufficient,” Galston wrote. “As the lesson of Japan in the 1990s shows, fiscal stimulus without financial rescue yields stagnation -- at best.”

" . . . Serious observers believe that recovery cannot begin until we acknowledge that losses in the financial system amount to some trillions of dollars, rendering many institutions insolvent. The temptation will be to muddle along, hoping that these institutions can gradually regain strength without putting massive amounts of taxpayers' money at risk. If we go down that road, we are likely to end up with zombie banks whose balance sheets are riddled with near-worthless investments -- banks that cannot lend to credit-worthy customers and who cannot trust one another," Galston wrote.

With the economy in a tailspin, doing nothing isn't an option, however.