The Great C and its aftermath

THE FOUR MAJOR COMPONENTS OF AUTONOMOUS SPENDING ARE STILL 3% POINTS BELOW THEIR BUSINESS-CYCLE PEAK SHARES OF POTENTIAL GDP by DeLong

And that--plus extra drag from reduced consumption from the collapse of housing wealth and the underwater status of many homeowners--is why our GDP is currently 6 percent below the economy's productive potential and we have not had our V-shaped recovery.

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Without a stronger economy and thus capacity shortages we are unlikely to get a boom in equipment investment. Without a much lower value of the dollar and a stronger world economy we are unlikely to get much stronger exports. If we are not going to get a much lower value of the economy, then strong short-run growth hinges on: 

a reversal of government-spending austerity and a restoration of government spending to its proper share of potential GDP; 

a housing recovery; or 

both. 

What are the policies that could produce such an outcome? And why isn't the Obama administration proposing them?