But how do you grapple with the political reality? Won’t Republicans just say no, or demand spending cut offsets that will negate any new stimulus?

It’s tough. The political reality is brutal right now. The single most effective thing we can do to create jobs is debt-financed spending and transfer programs. If you rule those out, you are ruling out the most effective things you can do. The second most effective thing you can do is go ahead and do those infrastructure programs and those transfer programs and then finance them by increasing taxes down the road on the well off. But of course, that’s not allowed either.

At some point you have to try to change the underlying political reality. Which, again, is tough, because it’s going to require a 180-degree pivot from where everybody has been for the past year and a half — deficit reduction, deficit reduction, deficit reduction. I don’t think we are going to see a big fiscal stimulus of the kind I’d like to see in the next year or so, but as far as I’m concerned this economy is very far from out of the woods. And if there’s another recession, if there’s another big panic, the political space will widen a little bit for actually doing something really aggressive on the economy. And we’ll need to be ready. And the way to be ready is by starting to say what will actually work today even if it not going to get through Congress in the next six months.

But I also think someone needs to be talking about things that can be done without congressional approval.

Like what?

One, there are a couple of vacancies on the Board of Governors of the Federal Reserve and Obama should be thinking long and hard about who is going to be his appointees for that, and they should be people who are really hawkish about trying to bring down the unemployment rate. We really need to shore up the faction in the Federal Reserve Open Market Committee that is for more monetary support to the economy.

But Obama tried, and failed, to get Peter Diamond — an economics Nobel Prize winner! — appointed to the Board of Governors. Do you think he should be recess appointing his nominees to the Fed?

Yes, I do. It’s definitely to the point where I think recess appointments are in order. It’s just sort of crazy that we have 9 percent unemployment and we have an economy that’s grown by less than 1 percent in the first six months of this year and we still have vacancies on that committee. These are important positions at this point in time. And at some point the president has to be able to have some authority to get who he wants in there.

Another thing that people have talked about is we can start trying to engineer a decline in the value of the dollar, especially against those countries that maintain a currency peg at levels that are bad for U.S. exports. China is by far the biggest offender in this regard. A strong dollar is not very good for the U.S. in this moment. We need to talk about serious measures that can help us to improve our exports. We know the Obama administration is not averse to talking about using exports to get out of the current problem of slow growth. They are always touting the need to increase exports. But then they usually end up saying we should sign a trade agreement with Panama, and that’s kind of ridiculous. Exports to Panama, regardless of what the trade agreement does to them, are not going to pull us out of this slump. Exports to the enormously large economies that manage an exchange rate peg against us, on the other hand, might do something to help us get out of the slow growth we’re in.

But is it realistic to expect the Chinese to make a massive adjustment in the valuation of the yuan? Wouldn’t that throw millions of Chinese workers out of work?

I don’t think a revaluation of the Chinese currency would do much harm to their economy right now. They have such strong demand growth that they are currently raising interest rates and restricting credit. Their problem right now is inflation. When our problem is not enough demand, and their problem is inflation, that is exactly the time to do an exchange rate revaluation. It’ll help their inflation problem, because they’ll have a stronger currency and imports will be cheaper for them, so they’ll import a lot of stuff and that will help our problem, it will help our exports and create some demand here.

What about helping people refinance their mortgages? Obama doesn’t need Congress’s approval to do that, does he?

My understanding is that Obama can direct Fannie Mae and Freddie Mac to loosen requirements for refinancing. I’m totally in favor of that. But I am a little skeptical about how big an effect that’ll have. The estimates that I’ve seen suggest that an aggressive effort on letting people refinance would get you maybe $20-40 billion extra per year in household consumption possibilities. We should definitely do that, if only because it would help out struggling homeowners who haven’t had a lot of help recently, but in terms of large-scale stimulus strategy I wouldn’t want to put too much weight on that.

There’s been a lot of talk lately about infrastructure spending, which always makes me wonder why there wasn’t more of it included in the first stimulus.

I think part of the reason why we didn’t have much infrastructure spending in general and almost nothing in terms of genuine public works is that all along people underestimated how long the slump was going to be. I mean if you go all the way back to January 2008, when we actually had our first stimulus package, the $150 billion checks sent out by the Bush administration, there was this mantra that people repeated over and over again, that it had to be “temporary, targeted and timely …” And the reason “timely” was so important was because if we did something that couldn’t take effect in the next six months we were going to miss the recession. And then we would be throwing money into the economy when we didn’t need it and we might even run the risk of overheating. If it took an infrastructure project, my god, up to a year to get running, that was supposed to be a real problem.

But a year from now, according to Goldman Sachs, we’re going to have 9.3 percent unemployment. So I think we need to stop worrying that infrastructure is going to come too late. It’s not going to come too late. There will be plenty of jobs that will be needed whenever it rolls out.

So what do you expect to hear tonight?

The latest reports are floating a price tag of $300 billion. But if that includes extending the payroll tax cut and unemployment benefits, at least $180 billion of that is just maintaining the status quo, and you’ll have a net stimulus of $120 billion. That’s a little better than I expected, but it is still really disappointing.

Let’s say it’s very well spent on stuff I want to spend it on — aid to states and infrastructure. You are basically talking about 1 and a half million jobs from a spending increase of that size if it is all done in one year. That’s nothing to sneeze at, but do you know how many jobs it would take to drive the unemployment rate back down to its pre-recession level? Eleven million.

The other part of it is that quite a bit of it is obviously not going to be spent only on the things I think are high-value stimulus. There will be tax incentives to business, more capital expensing, no capital gains taxes for small business. And all of that is worthless, it will do almost nothing to create jobs. So even if it was $180 billion in incredibly well-spent stimulus funds it would be well short of what we need, and I’m afraid a good chunk of it will be very ineffective.

But that said, if it really is $120 billion over and above the extenders, that’s better than I thought going in.