I've gotten away from LS blogging, as he's done a good job of remaining in the shadows recently. Noam Scheiber talked to "a senior administration official who says that, 'The reality is that it’s not too hard to find a Wall Street analyst that says a second stimulus basically cancels itself out almost immediately because of the impact at this stage on government financing costs.' "
This makes no sense, of course, as Brad DeLong points out. but it does sound very Larry Summers-esque. $300 billion would make no difference to government financing costs, but it would boost GDP by about 3% over the next year.
Elsewhere, Matt Yglesias tries taking the piss out of Larry Summers-haters and those who say it would be nice if the administration were more liberal. Problem is, he says, is that even if you replaced Larry Summers w/ someone more liberal, they would still have to get things through Ben Nelson/Olympia Snowe/the 60th most liberal member of the Senate. And the 60th most liberal member of our Senate is likely to be a very confused individual.
This doesn't really apply to most of the criticisms I've had of Summers though. Had the administration announced a stimulus package of $975 billion to begin w/, the centrists would have cut it to $900 billion in order to flex their centrist muscles. Starting bigger would have changed the bargaining path. I'm not familiar w/ the inns and outs of the bank reform legislation, but I also suspect that much the same thing happened -- they should have had legislation to move through Congress for the day after the AIG pay scandal. They also should have moved to curb finance industry pay (something reasonable, like higher rates on huge pay packages), and had that move through the Congress the day after the pay scandal. The administration should also have gone for a second stimulus/bailout to the states after it was clear that more was needed. Although, actually, it was always clear that more was needed...
It's not that Larry Summers/the Obama Economic team lives on a different planet, but they probably don't know anyone who's actually been affected by this downturn.