"You won't have Miz Palin to kick around anymore."

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(Gann and Jarvis - the boys you can thank your IOU for today)

With California circling the economic drain, it's interesting to consider where this chaos all started. A little populist movement called "Prop 13" that captured the anger of California in 1978 and plunged us into the stone age as the result. It all centered around property taxes, placing a cap of 1% of the property's value as taxable. The anger centered around tax revenues being redistributed to other communities, rather than the community where the tax was being levied, not to mention tax rates increasing for everyone, not just new home buyers. The fear card was played that older home owners would be forced to sell their homes because tax rates would increase to the point of bankruptcy for most, and certainly this became the rallying cry.

The effect was almost instant, with a $5 billion dollar surplus evaporating in a short time with services and education funds slashed to practically nonexistent. Since it has been written into it's constitution, California has slid into depression almost continuously since then.

And Prop 13 has become the infamous "third rail" by which no one dares question - challenges to the laws validity have been struck down by the State Supreme Court and politicians caught even breathing Prop 13 revision have been hounded out of office, or threatened with it. The lobby surrounding the Prop 13 movement has a vice grip on the state legislature. So any thought of revision or modification is ignored.

But on June 9, 1978 the news was pretty much like it is now. Only now we have 31 years of failure to look at.

And we're left scratching our heads.

Krugman was right again. Instead of taking a strong leadership position and insisting on a larger package, Obama played nice with the so-called "moderates" of both parties (i.e. morons who would sell their own mothers to feed their swollen egos). And here we sit, in a stagnating economy that sinks even deeper in recession as jobs are flushed down the drain.

I'm reminded of one of my favorite business books, "Management by Baseball." Author Jeff Angus (who also has a great blog) says one of the most common management mistakes is when a manager assumes a strategy that has been successful for him as a player will apply to all situations when he's a manager. Obama's built his career on being a cautious incrementalist, but what's called for now is bold vision.

So what's Obama going to do about it? Krugman has some suggestions:

So what do we have to counter this scary prospect? We have the Obama stimulus plan, which aims to create 3 million jobs by late next year. Thats much better than nothing, but its not remotely enough. And there doesnt seem to be much else going on. Do you remember the administrations plan to sharply reduce the rate of foreclosures, or its plan to get the banks lending again by taking toxic assets off their balance sheets? Neither do I.

All of this is depressingly familiar to anyone who has studied economic policy in the 1930s. Once again a Democratic president has pushed through job-creation policies that will mitigate the slump but arent aggressive enough to produce a full recovery. Once again much of the stimulus at the federal level is being undone by budget retrenchment at the state and local level.

So have we failed to learn from history, and are we, therefore, doomed to repeat it? Not necessarily but its up to the president and his economic team to ensure that things are different this time. President Obama and his officials need to ramp up their efforts, starting with a plan to make the stimulus bigger.

Just to be clear, Im well aware of how difficult it will be to get such a plan enacted.

There wont be any cooperation from Republican leaders, who have settled on a strategy of total opposition, unconstrained by facts or logic. Indeed, these leaders responded to the latest job numbers by proclaiming the failure of the Obama economic plan. Thats ludicrous, of course. The administration warned from the beginning that it would be several quarters before the plan had any major positive effects. But that didnt stop the chairman of the Republican Study Committee from issuing a statement demanding: Where are the jobs?

Its also not clear whether the administration will get much help from Senate centrists, who partially eviscerated the original stimulus plan by demanding cuts in aid to state and local governments aid that, as were now seeing, was desperately needed. Id like to think that some of these centrists are feeling remorse, but if they are, I havent seen any evidence to that effect.

And as an economist, Id add that many members of my profession are playing a distinctly unhelpful role.

It has been a rude shock to see so many economists with good reputations recycling old fallacies like the claim that any rise in government spending automatically displaces an equal amount of private spending, even when there is mass unemployment and lending their names to grossly exaggerated claims about the evils of short-run budget deficits. (Right now the risks associated with additional debt are much less than the risks associated with failing to give the economy adequate support.)

Also, as in the 1930s, the opponents of action are peddling scare stories about inflation even as deflation looms.

So getting another round of stimulus will be difficult. But its essential.

Obama administration economists understand the stakes. Indeed, just a few weeks ago, Christina Romer, the chairwoman of the Council of Economic Advisers, published an article on the lessons of 1937 the year that F.D.R. gave in to the deficit and inflation hawks, with disastrous consequences both for the economy and for his political agenda.

What I dont know is whether the administration has faced up to the inadequacy of what it has done so far.

So heres my message to the president: You need to get both your economic team and your political people working on additional stimulus, now. Because if you dont, youll soon be facing your own personal 1937.

AP - Even for a nonconformist, Alaska Gov. Sarah Palin has defied political logic with her sudden, stunning announcement to leave office more than a year early.

AFP - President Dmitry Medvedev said he expected the visit to Moscow next week of his US counterpart Barack Obama to open up new prospects for US-Russia relations.

AP - The Founding Fathers left one legacy not celebrated on Independence Day but which affects us all. It's the national debt.