Paul Krugman: Debt Ceiling Deal Is Going To Make Unemployment Worse

[Donnachaidh]

http://www.politicususa.com/en/paul-krugman-debt-ceiling-deal?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+politicususa%2FfJAl+%28Politicus+USA+%29

When asked about the spending cuts in the debt ceiling deal Krugman said,

We shouldn’t even be talking about spending cuts right at all now. We have 9% unemployment. These spending cuts are going to worsen unemployment. It’s even going to hurt the long run fiscal picture, because we have a situation in which more and more people are becoming permanent long term unemployed, and if you have a situation in which you are going to permanently raise the unemployment rate, which is what this is going to do that’s actually going to reduce future revenue, so these spending cuts are ever going to hurt the long run fiscal position let alone cause lots of misery, and then on top of we’ve got these budget cuts which are entirely, basically the Republicans we’ll blow up the world economy unless you give us exactly what we want, and the president said, ok. That’s what happened.

Krugman laid out the scenario for America if we cut spending and don’t increase revenue,

We’re looking; I mean we used to talk about the Japanese and their lost decade. We’re going to look to them as a role model. They did better than we’re doing. This is going to go on. I have nobody I know who thinks the unemployment rate is going to be below 8% at the end of next year. With these spending cuts, it might well be above 9% at the end of next year. There is no light at the end of this tunnel, and the revenue debate in Washington, which is all about gee, we’re going to make this economy worse, but are we going to make it worse on 90% of the Republicans’ terms or 100% the Republicans’ terms and the answer is 100%.

More (including video) at the link --

[DCBob]

1. no deal would have made unemployment even worse.

much worse.

[AmericaIsGreat]

4. That's obviously not what we're talking about

We can't keep treating ourselves to a false dichotomy. At some point we have to be able to expect the 3rd option: the progressive version of the deal.

[DCBob]

7. progressive verion of the deal is no deal at all... right?

just raise the debt ceiling and dont worry about the debt... isnt that the progressive version of reality? That would likely cost us our AAA rating and all the negative effects that go along with that which would also ultimately kill jobs.

[AmericaIsGreat]

10. No, it isn't.

The REAL, progressive version would be end both wars immediately and use the teens of billions a month on American infrastructure and job creation, reverse Bush tax cuts, close tax loopholes, raise rates for millionaires, raise corporate tax rates, make cuts to defense and crazy, government contracts.

The lame, castrated version that progressives could have had, at best, was this current agreement but with revenue. That was the fair compromise. Spending cuts AND revenue. It's not that complicated. And instead we've ended up with just cuts.

[DCBob]

11. most progressives just wanted a clean debt ceiling increase.

[OhioChick]

2. Rec n/t

[Kolesar]

3. People get elected to Congress, but they don't know squat about economics

The republicans run on guns, abortion, and low taxes. They cannot understand why we need public spending.

[Autumn]

5. Krugman is right.

It will get worse K/R

[andym]

6. Cutting spending in a weak economy is not a good idea

Look what happened to FDR and the USA when he tried it in 1937.

[RegieRocker]

8. 2.4 Trillion dollars is going to make it worse.

:rofl: Anywhere from 3.5 trillion to 16 trillion has been spent on bailouts. Trillions more are needed. That is what this is about.
They need the money to pay for the scam derivatives to foreigners.

[neverforget]

9. Austerity instead of jobs and people are applauding this bullshit

Unbelievable.:puke: :argh:

[thecrow]

12. How can it get worse for me?

I've been unemployed for three years now. They don't even count me.
There are millions of us who are no longer paying taxes and we are just invisble to them.
I cannot believe what this country has become.

[mmonk]

13. I know Paul but we don't live in another country.

We have two parties for cuts and a fooled populace.