"They're hoping that investment will save the day, especially in 'green' technology, that increased government investment will produce attractive opportunities, and the investment community will step forward and that will compensate for a real pullback in consumption. … I wonder if he's going to have a timing problem," Smick says.
These doubts are among the factors increasing the likelihood of a second Obama administration stimulus package. Rogoff, a Republican, calls it "inconceivable" that there won't be a second stimulus about as big as the $787 billion legislation passed earlier this year.
Worries about the economic strategy are matched by brewing doubts about whether the administration is prepared to do enough to prevent a return to business-as-usual on Wall Street. In this view, the nation's largest financial institutions became too big and too politically powerful. Stiglitz, a longtime Summers critic, says the administration has made the too-big-to-fail problem worse by shoveling money at the biggest banks while encouraging weaker institutions to merge into larger entities. "The regulatory structure we're going to end up with is going to be less effective in dealing with the problem than we'd like," he says.
Administration allies, such as Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, bluntly dismiss such concerns and say political support remains strong for far-reaching changes in financial industry oversight.
Summers is certainly aware of the challenges ahead. "We've learned from the last two cycles," he says, "that memories are short and that when the good times start rolling, people get complacent and do imprudent things."