Paul Krugman: Divided We Fail

[babylonsister]

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http://www.nytimes.com/2010/10/29/opinion/29krugman.html?_r=1&hp

Divided We Fail
By PAUL KRUGMAN
Published: October 28, 2010


Barring a huge upset, Republicans will take control of at least one house of Congress next week. How worried should we be by that prospect?

Not very, say some pundits. After all, the last time Republicans controlled Congress while a Democrat lived in the White House was the period from the beginning of 1995 to the end of 2000. And people remember that era as a good time, a time of rapid job creation and responsible budgets. Can we hope for a similar experience now?

No, we can’t. This is going to be terrible. In fact, future historians will probably look back at the 2010 election as a catastrophe for America, one that condemned the nation to years of political chaos and economic weakness.

snip//

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.

[Clio the Leo]

1. As always, Krugman underestimates Obama...

.... the man ... THE MAN ... Obama not Krugman .... has too strong of a desire for bipartisanship .... and the GOP will be under too much pressure to do something. That's a good combination. Without control of the Senate, they wont be able to pass anything too conservative. In order to accomplish anything, all sides will HAVE to come together.

I, like our fearless leader, remain eternally optimistic.

[Yavin4]

2. Next Tuesday Will Mark the Official Start of the Deflation Era

So far, Obama and the Fed have stalled worst of deflation. Now with the Republicans coming to power, deflation, and its extremely harmful effects, will be in full swing.