Paul Krugman: The real story of this election is that of an economic policy that failed to deliver

[Better Believe It]

Op-Ed Columnist
Falling Into the Chasm
By PAUL KRUGMAN
October 24, 2010

The real story of this election, then, is that of an economic policy that failed to deliver. Why? Because it was greatly inadequate to the task.

When Mr. Obama took office, he inherited an economy in dire straits — more dire, it seems, than he or his top economic advisers realized. They knew that America was in the midst of a severe financial crisis. But they don’t seem to have taken on board the lesson of history, which is that major financial crises are normally followed by a protracted period of very high unemployment.

If you look back now at the economic forecast originally used to justify the Obama economic plan, what’s striking is that forecast’s optimism about the economy’s ability to heal itself. Even without their plan, Obama economists predicted, the unemployment rate would peak at 9 percent, then fall rapidly. Fiscal stimulus was needed only to mitigate the worst — as an “insurance package against catastrophic failure,” as Lawrence Summers, later the administration’s top economist, reportedly said in a memo to the president-elect.

To avoid this fate, America needed a much stronger program than what it actually got — a modest rise in federal spending that was barely enough to offset cutbacks at the state and local level. This isn’t 20-20 hindsight: the inadequacy of the stimulus was obvious from the beginning.

What we do know is that the inadequacy of the stimulus has been a political catastrophe. Yes, things are better than they would have been without the American Recovery and Reinvestment Act: the unemployment rate would probably be close to 12 percent right now if the administration hadn’t passed its plan. But voters respond to facts, not counterfactuals, and the perception is that the administration’s policies have failed.

The tragedy here is that if voters do turn on Democrats, they will in effect be voting to make things even worse.

Read the full article at:

http://www.nytimes.com/2010/10/25/opinion/25krugman.html?partner=rssnyt&emc=rss

[ixion]

1. All for lack of a robust jobs program...

If people were working, they'd be happier. It's pretty simple. But the "give to the banksters and let them trickle it down" method was enough to feed the banksters, but left Main St. on the hook.

[JustFiveMoreMinutes]

2. ... and being black... and MSM.... and TeaBaggers going unchallenged..

... yawn.

[ProSense]

3. Krugman: Divided We Fail

Divided We Fail

By PAUL KRUGMAN
Published: October 28, 2010

<...>

In this favorable environment, economic management was mainly a matter of putting the brakes on the boom, so as to keep the economy from overheating and head off potential inflation. And this was a job the Federal Reserve could do on its own by raising interest rates, without any help from Congress.

Today’s situation is completely different. The economy, weighed down by the debt that households ran up during the Bush-era bubble, is in dire straits; deflation, not inflation, is the clear and present danger. And it’s not at all clear that the Fed has the tools to head off this danger. Right now we very much need active policies on the part of the federal government to get us out of our economic trap.

But we won’t get those policies if Republicans control the House. In fact, if they get their way, we’ll get the worst of both worlds: They’ll refuse to do anything to boost the economy now, claiming to be worried about the deficit, while simultaneously increasing long-run deficits with irresponsible tax cuts — cuts they have already announced won’t have to be offset with spending cuts.

So if the elections go as expected next week, here’s my advice: Be afraid. Be very afraid.

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[Better Believe It]

4. Dean Baker: "we have an election based largely on nonsense."

Why Growth Still Feels Like Recession
Think the US economy's 2% growth is a good news story? Think again: it has to be 2.5% just to stop joblessness rising
by Dean Baker
October 29, 2010

This can't be emphasized enough. Missing the housing bubble was an act of astounding incompetence for an economist. This is driving the school bus into oncoming traffic; it is the kitchen cook burning down the restaurant; it is the computer technician causing a complete freeze of the company's systems.

None of these highly-paid, highly-educated people got fired or even missed a promotion. Instead, they are running around telling people earning $20,000-30,000 a year that they have to tighten their belts and accept lower social security benefits.

If politics and the media in the United States were not so corrupt, this would have been topic No1 in the election. Candidates would have been pushing plans to aggressively stimulate the economy and to throw the Wall Street crowd in jail. But a candidate who said such things would not get enough money to run a serious campaign, because you need to court the Wall Street types to pay for a campaign these days. And the media would have ignored and/or ridiculed such a candidate.

So, we have an election based largely on nonsense. People are rightly angry that their lives are being ruined by disastrous economic policy. But they have no idea where to turn. And the latest data tell us that the situation is likely to get much worse in the year ahead.

Read the full article at:

http://www.commondreams.org/view/2010/10/29-4

[indepat]

5. But, but, but pub campaign ads scream that the stimulus was a great waste of taxpayer money having

done no good and adding $44,000 debt per capital. Let's see: $800,000,000,000 divided by 300,000,000 people is less than $3,000 per capita, so the pubs are attributing all of the Gipper's, GHWB's and junior's cumulative deficit spending probably exceeding $10,000,000,000,000 to Obama's stimulus, a humongous lie, but not that big a lie, considering the number of monstrous lies pubs spew daily. :)