Days of Fear, Years of Obstruction

Why did the slump last so long? Cynical, bad-faith Republican politics.


Comments: 227

  1. We need to listen to Dr. Krugman and President Obama as they set the record straight about recent financial phenomena, then vote accordingly. Otherwise, unfortunate history will repeat itself.

  2. The blighting of American lives hasn't ended even though unemployment is much lower. There are people whose lives have been ruined because they were unable to find new jobs or jobs that paid decent wages. Employers continue to complain that they cannot find people especially in STEM fields. There are plenty of people out there. Employers don't want to hire anyone who will cost more than an entry level salary. They want 30 years of experience from a 25 year old.

    Housing costs are still too high in many areas. If the costs are low the jobs aren't there. Employers don't want to pay to relocate people. Medical costs are beyond the reach of plenty even with insurance to pick up some of the tab. The GOP is adding to the burden even if its supporters don't see that. The richest corporations and families don't need more tax breaks. All that does is shift the burden to those who cannot afford it, 95% of us who are not rich by any stretch of the imagination.

    If the GOP thinks that most of us like being unemployed, without savings, in a state of chronic stress perhaps they ought to come and live our lives for a few months without any financial assistance from friends. See how it feels to work hard, to be unable to plan a week ahead, to realize that your hard work means nothing to an employer and that your landlord/bank can evict you for any reason at all. Oh, and that your employer can fire you for no reason at all.

    We're living the American nightmare.

  3. @hen3ry, thanks for thinking of our youth and mentioning their struggles. Do not worry, the youth are the most enlightened ones today and they wish to own their future. All we need to do is give them a listen. If you missed doing that in the 2016 election season, you have an opportunity now....do not ignore our youth. They are fighting for their lives (think gun safety) and their livelihood (think medicare for all, free higher education, raising minimum wages). Don't be like Paul Krugman who refused to listen to our youth, although he is supposedly an educator.

  4. Or as Republicans might describe it, “The Gilded Age”.

  5. @hen3ry What makes you think that they care. Like trump, they will throw you a roll of paper toweling, walk away and tell themselves "Well Done".

  6. The Great Recession hasn't ended yet for millions of Americans and their children who were just starting out at the start of it, and since.

    Blame goes to Republicans, first. They are the ones who, when taking over the House of Representatives in 2010, began to force austerity on as much of the nation as they could. The damage Republicans did before Trump can be measured in ruined lives. Those of my generation who weren't lucky enough to hang on to their "good jobs," will probably die working. As it is, every so often, we read about older folks who are still working menial jobs well into their 70s. That's what awaits those of us in their 50s who didn't make it out of the Great Recession.

    But we cannot place all of the blame only on the GOP. Democrats focused only on getting the banks bailed out and that is where Joe Stiglitz is right. Homeowners should also have had their bailout. They didn't and as a result we have housing crises everywhere in the US, with California probably going through the worst of it.

    More should have been done to shore up small and mid-sized businesses at the start of the recession. The banks refused to lend and we suffered as a result.

    There is also the issue of the cycles we have been going through, with each subsequent recession being worse than the previous one.

    Which brings me to the Tax Scam Bill... The next recession will be a depression.

    1of2
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    Blog#42's 'Things Trump Did While You Weren’t Looking' https://wp.me/p2KJ3H-2ZW

  7. On the cyclical nature of downturns:

    There is a current debate between Joe Stiglitz and others on the nature of secular stagnation. It is a theory that explains the cyclical nature of our downturns. Here is my definition in language non-economists can absorb.

    Defining Secular Stagnation

    "When we think of economic downturns, we generally think of them as flat up or down. We are all familiar with terms like recession. That is what we are now very slowly getting out of. We know, from our parents and grandparents, what the utter devastation of a depression is. We know, from our most recent experience, the Great Recession, what that feels like. Some months back, a term was added to the economic conversation: secular stagnation. Though the concept isn’t a new one, it has recently been reintroduced.

    Secular stagnation isn’t as intuitive as any of the terms I list above. It also isn’t a flat up or down kind of feeling. Imagine a 3-D graphic that describes movement: it’s got depth and is more akin to a creep, with sudden jerks, followed by more creeping, more jerks, going in widening concentric circles, until that cycle is broken, either with a period of growth, or another sudden slump. The theory is that each crisis is deeper, longer, and more severe than its predecessors."

    https://www.rimaregas.com/?s=secular+stagnation

  8. Your read of recessionary cycles is flawed. The 73-74 and 81-82 recessions were worse than the 1990-91 and 2000-02 downturns.

  9. @Rima Regas writes, "Democrats focused only on getting the banks bailed out..."

    Obama sent 9 jobs bills to help the middle class to the house. They all died without a trace.

  10. Scorched earth policies indeed, Dr. K. - we know from John Boehner's bragging speech of Sept. 15 2011 that GOP'ers were engaged in a 'capital strike' under Obama, unless/until they got tax cuts for 1%-ers and corporations:

    https://www.huffingtonpost.com/robert-s-mcelvaine/capital-strike_b_96540...

    following GOP'er Master of the Universe Paulson getting down on one knee in the Capitol at Nancy Pelosi's pantsuit hem in 2008, begging her to round up all the Dems to vote to keep 'this sucker from going down' (Dubya's words) without 1 single supporting GOP'er congressional vote:

    https://www.theguardian.com/business/2008/sep/27/wallstreet.useconomy1

    Awesome.

    Now, the GOP'ers are planning yet another heist, since the $1.5 Trillion$ tax heist of December 2017 left too much behind for Jane/Joe Sixpack:

    https://www.nytimes.com/2018/07/31/opinion/editorials/100-billion-tax-cu...

    The only thing vultures know how to do is voraciously pick over more carcasses - and come up with new snake oil P.R. schemes to paper over what they are about.

  11. @R. Law
    Vultures and snakes are absolutely necessary for our ecosystems. Republicans are not.

  12. 2of2

    By making it legal for corporations to no longer participate in our nation as any other citizen does, through taxation, the burden of all of the gimmes given through the Tax Scam Bill will fall upon what's left of the working and middle classes. The future should look bleaker today than any other time since the Great Depression.

    The current GOP is the legislative arm of America's corporatocracy. Absolutely every single one of the departments in the executive branch has been busy rolling back everything they can in favor of corporations, regardless of the human toll those rollbacks will cause.

    On the environment, nothing was too horrendous to roll back and they're not yet done. Asbestos? No problem. Coal mines dumping toxic materials into the drinking water? No biggie. That particular rollback was one of the very first pieces of legislation sent to Trump. Claire McCaskill and Joe Manchin both voted yea, by the way.

    On education, predatory lending and predatory schools are back. DeVos has a personal interest there. She's also rolled back some of what President Obama and Congress did to alleviate the debt burden on our young.

    Everything the Trump administration and the GOP are doing now is designed to clean us completely out. I've used the term "Ferengi economy" in previous comments. That is the age we now live in.

    ---
    Notes on ‘Capitalism, Socialism, and Unfreedom’
    https://wp.me/p2KJ3H-345

  13. @Rima Regas

    Remember that it was the liberals who gave us Kelo that lets corporations kick us out of our homes. You are half right. One side works for the corporations, but so does the other.

  14. Dr Krugman I remember your calls for a larger stimulus package saying it was not enough. But I clearly remember Republican opposition to any and all stimulus because of their newly found concern for deficit. Strangely they weren't concerned about deficits when W was president.

    Our recovery from the Great Recession took far too long and too much of America has yet to recover from it. Republican politics have been holding this country hostage.

  15. Now that the deficit is on track to reach 1 trillion in the near future thanks to the Trump giveaway to the mega rich aka tax cuts, will the punditocracy and the average disengaged American FINALLY get it through their heads that the Republicans have not been the party of fiscal responsibility for a very long time, if indeed they ever were?

    I’m not holding my breath.

  16. Infrastructure spending & the resultant jobs would have helped. We are failing miserably with our bridges & roads; they are in terrible shape. Right there was a means to do what needed to be done and to, in the process, boost the economy. It did not happen - it is still not happening even though the Twitterer made promises to pass such projects during the campaign.

    Guess he'd rather give money to corporations and wait to see if they create jobs or trickle down some of their windfall in the form of raises for ordinary working folks.

  17. @Anne-Marie Hislop
    Really, we still fall for that trickle down Laffer curve poppycock.

  18. @Anne-Marie Hislop, infrastructure spending, here in MA we did take advantage of the stimulus. Despite, lo and behold, communities in Andover, North Andover and Lawrence lived the night on the streets because of gas explosions due to faulty gas pipelines that badly needed repair. Here in MA our MBTA, transport system needs a major overhaul, our subway being among the oldest in the country. We try to do our best, we have a cooperative Republican governor, yet, if we do not focus on efficient rebuilding of infrastructure, our communities will suffer, wholesale. Yesterday we got a sad glimpse of why we need more attention on our own rebuilding repair construction projects.

  19. Gary Cohn signed on for two purposes while he was on loan from Goldman Sachs: tax cuts and privatization of the infrastructure program. A "public/private" infrastructure partnership would have been a way for Goldman to skim off billions in management fees for essentially doing nothing, which is their business model. Coming in, Cohn had no notion of just how colossal an idiot he would have to deal with in Trump; I'm willing to believe he was as snookered as the most benighted Trump voter, but quickly realized that infrastructure was a non-starter. Once he got his tax cut, he cut bait, several hundred million dollars wealthier. Nice work if you can get it.

  20. It's true that the GOP impeded the recovery. But they couldn't have stopped the Obama administration from prosecuting financial criminals and ensuring that bailouts went to Main Street as well as Wall Street.

    Instead, CNBC's Rick Santelli dog-whistled the blame at "irresponsible" mortgagors (read: the poor and minorities) rather than on bipartisan deregulation. That rant gave rise to the Tea Party, and eventually, to Trump.

    It was during the Clinton administration that Commodity Futures Trading Commissioner Brooksley Born warned about toxic derivatives, and her SOS was duly shot down by Dep. Treasury Sec. Larry Summers, who accused her of fomenting financial crisis. How wrong he turned out to be, but expert that he is, he went on to become one of Obama's chief advisers.

    For as Wikileaks has shown, Obama's cabinet was vetted by Citigroup. Geithner has since gone on to make big bucks in private equity, and Atty. Gen. Eric Holder's seat at white collar defense powerhouse Covington & Burling was kept nice and warm for him.

    Although the White House boasted in 2012 that it had criminally prosecuted 530 financiers since the collapse, a subsequent investigation by the DOJ's Inspector General revealed the real number to be only 107, with real restitution to the public less than $100 million, and not the boastful billion.

    This is all a matter of public record. Maybe the Democrats will start winning elections once they start switching their allegiances to Regular Joe and Jane.

  21. @Karen Garcia I wish I could give you comments 100 recommendations. The failure of the Obama administration to hold Wall Street to account dramatically increased the cynicism of the average Joe and Jane. They knew that the Republicans didn't care, but hoped that at least the Democrats in power would have their back. When that proved to be a false hope, out of desperation they turned to Donald Trump as their last, if totally misguided, refuge.

  22. @Karen Garcia
    Yes, agree. Citigroup should have failed except for their "ins" with the Whitehouse. And Geithner himself nixed other punitive measures directed at Wall Street. I remember being disappointed in Obama's initial cabinet choices; they seemed to come all from the financial establishment.

  23. @Karen Garcia

    Really good work Ms. Garcia.

  24. I am beginning to think that the main category of economic's and the difference between major macro economic plans isn't between Keynes, Hayek, Robinson, and others. Rather what drives one's theoretical choice is really a question of how we sublimate , in Nietzsche's terms , the natural human need to punish. Liberals generally rationalise taking from those who have surplus and redistribute it . And they use things like data and evidence and concepts like the public good to justify this. They also note how many, many rich are born on third base thinking they hit a triple and work to accumulate more , often producing great amounts of negative externalities for the wider society. Conservative/ libertarians want to punish the weak, the sick, women , and other traditionally oppressed groups, because hey, the winners proved there worth by hitting triples. I invite readers to look closely at the smug satisfaction of the hard core right wing Republican Party when they throw people off of medicaid, or make food stamp recipients take drug tests, while blowing up the deficit so they can write off their private jets. It's not enough that they line their pockets with gold snatched from the public purse, they need to villainize and crush the poor, single mothers, hungry kids as somehow deserving their lot. Look at the faces in the rose garden reception after the house voted to kill Obamacare. Tell me beyond all the social science and numbers that Nietzsche isn't onto something.

  25. @Brendan This is just silly. I want to breathe clean air and drink clean water. I want to enjoy block parties with my neighbors. I’m not interested in punishing anyone. Yes, we have to protect ourselves from people who pollute the air and water, and some of their actions are due as much to vandalism as they are to greed, but Nietzsche is essentially a philosopher of failure, and probably the last person we should look to for an understanding of our present world.

  26. @Brendan "Liberals generally rationalise taking from those who have surplus and redistribute it ."

    Or... Liberals believe in fair distribution of wealth? That's not about punishing anyone.

    Time to get over your false equivalencies. Republicans are scoundrels. Full stop.

  27. @Brendan - While I wholley agree with the premise of your comment, I take exception with the word "taking":

    "Liberals generally rationalise taking from those who have surplus and redistribute it."

    Taking would indicate theft, as though this surplus was rightfully and legitimately obtained by those who have it.

    Liberals do not believe in thievery.

    Many, certainly not all, but a vocal majority of those with surplus as you put it, use it to buy those who make and enforce our laws.

    When those laws enable them to steal from those who have no voice or means of protection, it is they who take.

    Because they're not going to give it back willingly, liberals want to take it back and restore to those it belonged to in the first place. In that context, the word expropriate might serve better.

    Sorry - just nitpicking.

  28. So the Republicans were responsible for the slowdown of the economy and long lasting slump during the Obama years because they wouldn't let Democrats spend money we didn't have. Got it.

    Now, thanks to President Trump and a Congress following his leadership, we let people keep more of their money, remove burdensome regulations, approve the Keystone Pipeline, renegotiate trade deals, etc., etc., and we have a roaring economy. Who gets credit for that?

    Also, why do progressives only worry about deficits when calls for tax cuts, but not when we have stimulus spending bills?

    Also, when will you be writing your thank you column to President Obama for giving us this excellent economy? Finally, if the economy continues to grow in the next few years, will Trump get any credit for it? Asking for a friend.

    But...but...what about the deficit exploding

  29. @Jay S.: You have it backwards. Government has to stimulate the economy during a recession, to prevent a collapse and depression, and you have to reduce the deficit when the economy is booming, fund infrastructure renewal and strengthen things that we all need such as education and job training, social safety, affordable health care and a clean environment, because then you have the money to do so, instead of showering it on the wealthy who do not need it.

  30. @Jay S.

    In typical fashion, a trumpian view of the world that doesn't fit the reality.

    You talk of the democrats spending money we don't have, to stimulate the economy that the republican party destroyed. You forget that when Bush took office there was a surplus of money, and the Clinton balanced the budget for 6 of the 8 years he was in office.

    You also forget that the tax break that corporations got, and the rich 0.5% and the 1% got, you'll pay for, and yet you continue to assert that you have benefited from it, really. And the rolling back of environmental regulations you've benefited from those too, how. Sure you say, well our wages have grown 2.9%, really adjusted for inflation, your still making 2007 dollars in a 2019 economy. Now your saying well companies gave bonuses, really, so out of the hundreds of billions they "repatriated" at a discount, a very small part of it was given to employees, and then it was a graduating schedule, only the longest tenured employees got the maximum "bonus". The other 4 trillion was spent where, oh right on buying back their own stock, and you've benefited from that how? unless your one of the 10% that owns 80% of the stock you haven't benefited from it at all. The CEOs who's pay is based on stock value as opposed to the long term growth of their company, that's who benefited from it.

    Essentially the GOP gave the gold mine to the rich and corporations, the rest of us got the shaft.

  31. @Jay S. The Trump economy is the poster child for being born on third and being convinced it's there by hitting a triple. The momentum of an economy the size of ours is like that of an ocean liner. The economy was moving full steam ahead in 2016-17, and we would have had a roaring economy right now even if Trump had not been elected. What Trump gets credit for is not having completely screwed it up, yet.

    As Anna pointed out, the Republican approach has it exactly backward. Cutting taxes when the economy is already expanding does little to nothing to increase long-term growth. It creates the economic version of a sugar rush. And cutting spending when the economy is contracting simply exacerbates the contraction. That might not be basic economics in the GOP bubble, but it is in the real world.

    You imply that the federal government should not have spent money "it did not have" to stimulate the economy during the slump. If a storm tore off the roof of your house, and you didn't have the cash on hand to repair it, would you just sit there in the devastation, or would you borrow to make the fix, and pay it back when times got better?

  32. Leona Helmsley said that only little people pay taxes. She forgot to say that only little people pay the price for tax cuts, for financial mismanagement by politicians and corporations, and for other problems in America.

    Where is the money to rebuild our infrastructure? Candidate Trump promised the nation that he'd fund this. It would create new jobs for plenty of people.

    Where is the plan to make America great again? What about putting America first or is that only for the richest Americans?

    What see and hear are lies from the very top that we're supposed to believe. Every nation is cheating us. Every trade deal made before Trump was sworn in is bad for America. Doing anything to protect the environment, protect endangered species, keep our air and water clean is bad for business. But it's okay if we die because nothing is done or regulations are rolled back.

    What the GOP, Trump, and Kochtopus are doing benefit them, not us. They live in an America that has nothing to do with 99% of us. In their America jobs don't matter because they don't have to worry about paying the bills. We do. What we need to do is end welfare for the rich so that there's something there for all of us, not just the richest. Then again, there was the French Revolution, the Russian Revolution, and, more recently, the ending of apartheid in South Africa.

    Revolutions and social change occur in spite of politics and rich people.

  33. @hen3ry end the cororatocracy

  34. "The very same politicians who piously declared that America couldn’t afford to spend money supporting jobs in the face of a deep, prolonged slump just rammed through a huge, deficit-exploding tax cut for corporations and the wealthy even though the economy is currently near full employment."

    When their man Trump says that people will get tired of winning, its worth keeping in mind there are at least 3 wins for the right in the quote above.

    1) they prevented the gov't from bringing back jobs, a win since preventing the gov't from acting prevents demonstrating the gov't can help

    2) the economic pain helped drive voters to the man who said "I alone can fix it" and carried on about the rigged system.

    3) cutting taxes now while the economy is booming gives them the trifecta. When the inevitable downturn comes and deficits balloon they will cut social programs like Medicare and Social Security; after all everyone will agree that raising taxes during a recession will prolong or worsen it.

  35. Dr. Krugman succinctly recounts unscrupulous Republican actions. But while Republicans have damaged the country, the problems we now face have developed over decades. The increasing effects of a globalized economy have played a major role. It is now more possible than ever for companies to offer jobs with inadequate wages and insubstantial benefits packages, and this situation has come about not only as a consequence of decades-long attacks on labor unions (again, by Republicans) but also because jobs are sent to places where labor costs are low.

    Do the Democrats have any more answers than do Republicans? Until there are programs for jobs that are permanent and not part of stimulus packages, we will remain stuck in a downward cycle. Yes, the Republicans are unscrupulous, but I have yet to see substantive economic plans from Democrats.

  36. @A

    So people keep repeating the globalized economy, how well do you think the US economy and corporations will do, without the global economy, even the Trumplican party gets it, they call it free trade.

  37. The report that the US spent $895 billion more than it took in last year explains the booming economy. Give me that credit card limit and my economy will boom too.

  38. @terryg The U.S. spent $895 billion more in the first 11 months of FY 2018 than it took in. There's still another month to go.

  39. I guess Krugman's love affair with the ACA prevents him from acknowledging the damper it placed on hiring and wages. Eight years of overregulation played a part as well, but no mention of any of that here.

    Had Obama's first two years of complete control of Congress concentrated on jobs instead of revamping the entire healthcare system that affects every single american, Krugman would have had nothing to write on this topic.

    But Obama clearly doesn't read Krugman as he took credit from the current good economy in a speech based on his own economic performance, which he must regards as excellent.

  40. @kwb

    It would help this observer, whose formal economic education consists of a 2 semester college course in Economics 101, in assessing this comment to have even a brief elaboration on "the damper [ACA enacted in March 2010] placed on hiring and wages."

    A similar elaboration on how a concentration on jobs - with a definition - was foregone but would have solved substantially all the economy's problems, which seems to be an appropriate interpretation of Prof "...Krugman would have had nothing to write on this topic."

    On reflection, something a good deal more weighty than brief elaborations to prevent the comment from being merely unsupported assertions.

    This is not to say that the assertions cannot be adequately and appropriately supported. Further, while I don't have any standing to invite the commenter to do so, the Times as solicitor of comments appears to have such and I respectfully urge it to do so. Whereupon I pledge to thoroughly review the support and issue an assessment.

  41. Uhh, @kwb, according to statistics that even tRump touts, there was full employment when tRump came in and there is still full employment now. I.e. full employment started under Obama in spite of Republican tricks and lies.

  42. @kwb How the ACA of all things put a damper on jobs and hiring is beyond me. Employers hire workers to make things they can sell. The housing sector blew up in the Great Recession. Homeowners facing foreclosure don't buy stuff. No housing starts means no construction jobs, no lumber, no household appliances, no furniture, etc. So if stuff isn't being bought, why would employers hire?

  43. President Obama could not get congress to approve more spending for one simple reason, the continuing ideology of St. Ronnie. Less spending means smaller government, it means as we are now seeing the reduction in agencies that we taxpayers have lobbied for years to establish. The SEC, FDA, EPA, FTC, all the regulatory commissions, it is the goal of the GOP to remove as many regulations from business as possible. They want to return to a buyer beware society. It will be your responsibility to see that your meat does not contain toxins, or for you to filter the air from that coal burning plant. Any thing that costs their friends money is a target.

    They call allowing banks to borrow from the FED at 8% to bolster their reserves a bailout. It prevented runs on the banks and a 1929 type crash, the recession was deflation, it was fueled by unpayable debt and greed. Those collateralized debts were like candy to the investors, until they turned sour, then there had to be blame, and those responsible got away with it. Mr. Obama appointed a commission instead of allowing congress to hold hearings. On it he appointed some knaves who sabotaged it, The GOP has obstructed recovery means ever since.

    Smaller government means a Libertarian type government. Those with the gold set the rules, the rulers give the workers just enough to keep them from revolting. Rockefeller was a piker compared to today's merchant kings.

  44. There is a challenge to all the GOP congressmen and senators to provide justification for what they did when Obama was President and what they have done now with massive tax breaks to rich. They must address what happened to their concerns for deficit.

  45. @Mir "They must address what happened to their concerns for deficit."
    ...And if the Republicans fail to do so, they will be re-elected, unmercifully.

  46. You notice that Republicans don’t excoriate Democrats within galaxies as much or as intensely as Democrats excoriate Republicans? Re-play the speeches made over the years of Barack Obama’s presidency by Nancy Pelosi and Harry Reid, then the speeches made by Mitch McConnell, John Boehner and Paul Ryan. It’s like night and day. And Dr. Krugman sees fit to lambaste Republican unwillingness to cave to liberal programmatic boondoggles that never solve real problems but merely assuage the guilt of elites and provide pretexts for electing liberals. The Democratic threesome, Obama, Pelosi and Reid, made NO serious attempts to work with Republicans for YEARS on moderating the effects of the crash and Great Recession – not even Obama, who claimed to but was revolted at the notion that he needed to get into the trenches and DICKER with his ideological adversaries to make wholesome sausage.

    It’s Democrats who created the polarized mess we’re in and who summoned the Tea Party. If Obama and a Democratic Congress 2009-2010 had been willing to listen to Republicans’ cries for attention to the private sector on excessive regulation and taxation, we might have emerged from that recession to typical sharp growth YEARS (and profound misery) before we did. After 2010, it no longer mattered, because we had entered our own Dark Ages of useless government. But no such willingness manifested, and instead the nation focused on funding public sector jobs that were lost anyway as soon as …

  47. it was Mitch McConnell and the Republicans who vowed to make Obama a one term president.

  48. Still crazy after all these years and all the evidence, eh?

  49. @Richard Luettgen

    “ Republicans don’t excoriate Democrats within galaxies as much ...”

    Really? Don’t you watch FOXNews? Or read Ann Coulter’s books or those of Laura Ingraham?

    When you start your comments with such lapidary statements so obviously contrary to fact, you already vitiate everything else you have to say.

    It would help if you replaced the usual empty rhetorical salvos — “Programmatic boondoggles”, “guilt of elites”, “wholesome sausage”, etc., by something resembling fact and argumentation.

  50. "Why did the slump last so long?"

    For a start, many people lost faith in the system and grew despondent. Many of those damaged by the collapse had done nothing wrong and, indeed, everything right, and yet they approached retirement with nothing to show for all those years of effort.

    The unfairness within the system and the despondency of individuals affected could have been easily avoided -- or jolted back to normal -- had a few score of these bankers actually spent time in jail. It was fraud, after all.

    When no one is held to account, people despair. It's normal.

  51. @James Devlin... While I entertain revenge fantasies as much as anyone, I also think it’s important to recognize that most of the “it” wasn’t, in fact, fraud. There was certainly malfeasance, but collateralized debt obligations and mortgage-backed securities were all perfectly legal. The problem was—and is—systemic: The multi-million-dollar SEC is no match for the multi-trillion-dollar financial giants. Proposed regulations have been shot down and enacted regulations have been watered down. While I’d be as happy as anyone to see an AIG or Lehman CEO marched off in handcuffs, revenge really needs to happen at the ballot box.

  52. James Devlin--The slump lasted so long because the rich refused to shoulder their responsibility to the nation. Republicans, in control of Congress, refused to should their responsibility to the nation. Then, when things began to look profitable, they cut taxes for the rich. They obstructed Barack Obama, at every turn. Republicans will create the next financial crisis, as they did the last, which is just around the corner.

  53. @James Devlin

    Timmy the Taxcheat, Panic Paulson, et al took care of their own, on our backs. Some belonged in jail, they all belonged on the street selling pencils.

  54. The slump isn’t over yet and the worst is still to come because the system is corrupted to the very core.

    It is the last moment for the individuals like Mr. Krugman to step down and give chance to the people who understand the problems and know how to solve them.

    It’s getting very late. We might be run out of time if we stayed on the wrong course….

  55. @Kenan Porobic – And those who "understand the problems" better than Mr. Krugman would be ..?

  56. @Kenan Porobic

    And that would be who, you, the GOP, who exactly. Since Krugman holds a Nobel Prize, that leaves you, Trump, well short of the education needed to understand economics. Remember the GOP just blew up the deficit, and is now subsidizing corporations, that you have yet to benefit from.

    You're probably going to say, well the economy is booming, to that I would say, thank you Obama. The tax cut for the rich and corporations are short lived, and when the next recession comes, (one comes every time a republican is in office, there won't be any gifts to give to corporations, they have gotten everything that the government can give them, at you, your children, and your grandchildren expense.

  57. Immigration isn't a good thing if the USA spent $895 billion more than it took in last year.
    Maybe someone needs to take a look at the official government statistics to see if bringing in immigrants extended families is uneconomic. Maybe do what Singapore does - only let in temporary workers and visitors who have to leave once they've finished the job and been paid. That way government doesn't get ripped off by new immigrants who take more out of the system in government payments than they put in with taxes. Common sense - what's the use of giving permanent citizenship to a new immigrant if they end up bringing out there extended families who cost the government an arm and a leg in government payments and hospital care etc and welfare. It's uneconomic to bring in millions of permanent residents from third world nations that don't have a welfare system.

  58. @CK
    In addition to your point being almost entirely off-topic, you fail to mention that the President's in-laws just got citizenship by being the "extended family" of Mrs. Trump.
    Where is your outrage about this?

  59. If you think immigration is the biggest problem our country has you are clearly not paying attention, nor have you digested the article here. Conservative Republican lies and hypocrisy, including their immigration policies, are the destroyers of our democracy.

  60. @CK Let's correct the record, shall we?

    (1) The U.S. doesn't bring in "millions of permanent residents from third world nations." Hyperbolic statements with no basis in fact don't help your argument, which needs a lot of help in the first place.

    (2) Multiple studies actually have looked at the "official government statistics per the economics re both documented and undocumented immigrants. These studies have resulted in metrics that clearly indicate that the government does not "get ripped off by new immigrants who take more out of the system in government payments than they put in with taxes." Indeed, the metrics indicate exactly the opposite---immigrants measurably increase economic growth and GDP. As an aggregate, they contribute far more money to the economy than they take out. Why do you think the Kochs are so pro-immigration?

    And, now that we have corrected the record, let me ask you why you felt the need to deflect attention away from the critical obstructionism of the GOP per the economy under Obama---and the sudden willingness of the GOP to mortgage the futures of my children and grandchildren in order to create more wealth/capital at the very top---and focus it on immigration?

    Our immigrant communities were/are not the problem. Republicans simply use them as straw men to distract attention from economic policies that, in creating exponentially greater inequality, present an existential threat to our social fabric.

  61. The Federal Reserve saved the world. They provided literally many trillions of dollars in liquidity to both US financial institutions and European banks. There is a new book out entitled Crashed by Adam Tooze which was just showcased on the PBS NewsHour. It explores the global links of the crisis and how the entire planet almost went down the drain. We came to the edge of a true financial apocalypse.

    Meanwhile, the Republicans went on a moral hazard tirade and blamed the whole thing on poor people taking out loans they couldn't afford. The remedy is then to just spend less and shut of the money. This was absolutely the worst thing to do.

    Federal Reserve did save the global economic system by saving the banks. They are equipped to do that. They are not equipped to save millions of lost jobs. They dropped interest rates to zero, but that had no effect under such dire circumstances. Only fiscal stimulation would help and that requires legislation. All the monetary stimulation possible was applied.

    Republicans don't know what fiscal stimulation is. They think it's a component of socialism. But they do know what tax cuts for the rich are. That they can do. But they won't spend money on the 99%, especially the bottom 50%.

    That's why the recovery has taken 10 years. The economy crawled back out on it's own with little help from from Congress. The result is millions who ended up voting for Trump and got more tax cuts for the rich and nothing for them.

  62. @Bruce Rozenblit

    The Federal Reserve saved Wall Street and the banks. That is not the world. Panic Paulson saw the world ending because HIS world was ending. I would have been fine. We would have had a sharper but much shorter recession with stronger rebound had we let the imprudent and improvident go under.

  63. This is why Krugman is a Nobel Prize winning economist. And he's right. I'm sure there are many Trumpists, that would say the opposite. But its true, more stimulus was recommended, but never delivered.

    This isn't the actions of a political body that is expected to do the right thing by all Americans at a time of crisis, what the GOP did was to not only hurt blue states, but their own constituency, in red states where they are complainig that they were left behind. It was all to make Obama a one term president then open the money spigot, and let it flow, so the assumed Republican president would get the credit for fixing the economy that the republicans we so willing to throw off a cliff.

    This is what the Republican party always has been, at the onset of the Great Depression, caused by the republicans, the public was told to be "patient" among other things. Had Roosevelt not been elected, the depression would have been much deeper much longer.

    Luckily, Roosevelt was elected, and created infrastructure jobs, so that people would have money to spend, and grow the economy.

    Obama, wanted to do the same thing Roosevelt did, which was to create infrastructure jobs, building dams, bridges, roads. Which is what the Chinese to today, in economic downturns, they create infrastructure jobs, until the economy picks back up.

    Maybe that's the approach the US should use to fix our infrastructure, that would be better a than giving it to corporations to profit from out tax dollars.

  64. I'm actually a little surprised to see this column. The contents are so transparently true to even the casual observer that it almost goes without saying.

  65. @S
    It obviously can't be said enough, since so many Americans seem not to get it, hence "Trumpism" and the incredible fact that these same Republicans control Congress.

  66. There's a lot to unpack here. Republicans have now espoused the same core economic policies for nearly forty years. Times have changed, as have the circumstances of the American economy. And unlike when Reagan was elected, we now have a lot of data about the effectiveness of supply side economics.

    History has proven that the economic policies the GOP has pushed for forty years are great for wealthy people and big business, and that they can create short term booms in the stock market, but they're terrible for anybody without enough money to invest in a significant stock portfolio. The evidence is the failure of average wages to keep up with inflation over the past few decades.

    Yet Republicans stick to the same economic playbook, because it works for their patrons, by which I mean their donor class. Rank and file Republicans go along with these policies too. One wonders if Republicans will ever have a new idea about how to promote economic growth, much less one that will benefit every American, not just a select few.

    Do twenty-something Republicans look at the math behind GOP economic proposals with a critical eye, or do they just accept the putative wisdom of these policies as one might the dogma espoused by the clergy at their preferred place of worship? Maybe the new generation of Republicans assume that they will one day sit among the wealthy patricians of previous generations and take advantage of these tax policies.

  67. If Democrats toughened up and fought as aggressively as Republicans do, things would be much different in this country.

  68. Not only the Republicans enabled unbridled greed to occur, but Democrat leadership involved in the banks bailout failed to give the mortgage holders the bailout money to to pay down their debt while saving the banks with the same taxpayers tax dollars that made up the bailout money. Now the banks are wildly wealthy and being deregulated once again allowing unbridled greed and away we go again and the mortgage holders are once again paying taxes and mortgage interest. There are indications of another real estate crisis brewing as written of here. The drive to unlimited profits will bankrupt everyone, including the wealthy invested in finance.

  69. Borrow and spend at the bottom. Contract at the top. Politicians of both parties still don’t get it. That a vacuous boob like Little Timmy Geithner would fail to grasp the need for stimulus at the bottom shows the lack of intelligence of the elite. Since he took his marching orders from the big bankers in nycity it is clear either they forgot to study or really did want to destroy the middle class. Destroy they did. Prediction. The next downturn takes the rest of them out. Welcome back to the dark ages. Serfdom and royalty, nothing in between. Stick a fork in it. This turkey is done.

  70. For a nation of laws and not men, how is it the criminal greed and reckless risk-taking for private profit and public liability that's been meticulously documented -- Former California Treasurer Phil Angelides's financial crisis commission made numerous referrals of prominent bankers to the DoJ based on evidence of malfeasance -- produced neither indictment nor civil litigation?

    Too big to fail banks paid billions in fines and penalties but as Angelides has pointed out it was actually paid by shareholders of the banks like pension funds and university endowments, not the bankers nor their unindicted co-conspirators like the Republican financial overseers during the Bush Administration who looked the other way.

    Wall Street came through the Category 5 credit catastrophe unscathed and within a year or two bank CEOs were collecting the highest levels of executive compensation once again.

    The adage "Commit the crime, do the time" seems to have morphed into the Republican Get-out-of-jail card.

    Today Willie Sutton wouldn't rob banks because it's where the money is. He'd run for office as a Republican or a Wall Street Banker because they rob not just banks but an entire nation and laugh their way to the Cayman Islands and back.

    It not only pays to vote this November, it'll cost you big if you don't.

  71. @Yuri Asian

    That is what the old mob did. They took their assets and moved into financial crimes. The gangsters like Gotti were already anachronisms.

  72. Let us review once again the words of South Carolina Senator Jim Demint on the night of January 20, 2009, in a smoke filled DC steakhouse before a cabal of elected Republicans, including Bob Corker, Paul Ryan, Kevin McCarthy and recently appointed senator Jon Kyl:

    “Our goal is a complete gridlock for the next two years. There is no place for bi-partisanship, compromise, only acceptable outcome is total victory and any politician that disagrees will be treated as a traitor. This is war.”

    This is why conservatism needs to be outlawed in this country.

  73. It's really a given that Republicans adore the wealthy and accomplished who are the Captains of Industry and the very wealthy, with a proven record of financially subsidizing the Republicans ascension to power and their ability to hold it, even now a Constitutional Crisis in which we will have one party undemocratic rule in conflict with our Constitutional principles.

    So what do we make of the Republican belief in "Survival of the Fittest"? I could write even more of that inhumanity. But the facts remain, only people with sinister minds would resort to accomplishing the Kings and Serfs nation we now have. This is a lone selfish power struggle by the unloving Republicans who seek limitless profits for them and their benefactors in order to hold power, now nearly absolute, only now waiting for the confirmation of Kavanaugh.

    The Republican economic principle is Trickle UP and OUT, not Trickle down which could be expounded on separately as a lie. While garnering support from the gullible followers, the Republican leaders institute policies that take their wealth. Giving free reign to the banks through deregulation was an act of unthinking greed that resulted in unbridled orgies of capital lending that brought down the economy. And once again, the Democrats had to clean up the mess, profoundly embarrassing the Republicans and their principles, if you want to call them that. But actually, Greed and deregulation are indicative of a lack of principles by the party of Pirates.

  74. Blame your neighborhood Republican, for he (mostly, not she) is to blame, not only for the fake deficit hawkishness when we needed stimulus, but also for fake plans to "replace" healthcare with anything, fake thoughts and fake prayers to shooting victims, fake voter fraud, a free pass to fake schools that seek profit over knowledge, even fake wars like the one against weapons of mass destruction that did not exist. Just today, the Republican Party's head honcho touted fake death tolls in Puerto Rico. The problem with all this fakery? Stagnant wages are real. Cancer that you can't afford to treat is real. Gunshot wounds, hurricanes, getting out to vote only to discover that your name has been stricken from the rolls, debt collectors, dead civilians and soldiers--all real. No matter what Republicans say.

  75. What I don't understand is why the Democratic Party hasn't scorched and salted the earth under the Republicans and their plutocratic sponsors in return, in the past two years! Surely, two can play at that game?

    Dr. Krugman is restrained in his analysis of what happened.

    We can call the period from 1980-2018 "The Great Theft."

    It's been one, long, conservative, Republican, plutocratic attack upon the United States Government (remember how Reagan convinced everyone how "lazy and inefficient big government employees were"? "Welfare moms driving Cadillacs?" [giving rise to Aretha Franklin's popular song in the '80's] Etc.???), and upon the citizens it is supposed to represent.

    The only slight slowdown in the process was when it became clear the days of Republican Shadow Governments were temporarily over, during Barack Obama's Presidency -- probably the last real Presidency this country will ever have. And there, as Paul indicates, the plutocrats dug their heels in every step of the way, to prevent anything being done for anyone but themselves.

    And here we are on the other side, with the Republican Coup complete. Tyranny, poverty, police state brutality and disenfranchisement every direction you look.

    Long before the French invented the more humane guillotine, there were still plenty of other ways to deal with oppression, as history has shown from Cromwell's time to our own.

    It's only a matter of time.

  76. @Steven - You are right that Democrats could engage in obstructionism just as well as Republicans can, but there are probably several solid reasons for not doing so. First, it wouldn't work out as well for Democrats, partly since they don't have a media arm as large and committed to deception as Republicans have in Fox. Second, it the people Democrats have traditionally represented - the lower, middle, and parts of the modestly wealthy classes – would probably be the only ones to actually suffer from Democratic obstructionism: The super wealthy can and do thrive equally well in a downturn as well as in a roaring economy. Third, and I could be wrong about this as well as the other two reasons, it's hard to imagine targeting and pulling off boycotts big enough to make major dent in their corporate sponsors without hitting many other businesses with severe collateral damage as well, although legislative actions such as requiring companies receiving federal subsidies to pay a living wage would help.

    In short, I like your idea of fighting fire with fire in LBJ style, but I'm afraid in a world of scorched earth Republican tactics, any backdraft from more of the same would end up harming those it was intended to help.

  77. Persuasive on the wholesale corruption and dishonesty of the Republican Party -- the evidence is abundant -- but not on the "centrist" technocrats like Geithner who determined the response to the subprime mortgage collapse and the subsequent economic crisis.

    It took Democrats as well as Republicans to demolish Glass-Steagal and set the stage for boom and bust money-grubbing by the financial services industry.

    I sure as heck want to see the Democrats retake the House of Representatives in November. But the longstanding bargain between so called "centrists" on both sides of the aisle is really about serving different flavors of the one percent.

    Again, Mr. Krugman is plainly right that the Republicans are much worse than the Democrats on any factual basis. But the worst does not excuse the somewhat better, when the latter also spends most of its time coddling the rich, feeding the military-industrial complex at the expense of basic human needs, and pontificating about "comprehensive immigration reform" that will only further strengthen the cheap labor lobby.

    Maybe after the November election, I hope with a Democrat-led House, Mr. Krugman can recalibrate his target to include the Democrats who have also been working, wittingly or unwittingly, for regressive policies.

  78. I totally agree with Krugman's opinion about the Republicans bad faith. No way were they going to allow Obama and the Democrats a better recovery. In fact the worse the recovery the better for them politically. Remember the Tea Party? But Obama made two mistakes. The first was having so many Wall St. types in the Treasury Dept. Having them oversee their own professional friends and ex-colleagues was not good politics. The second was not having some Wall St. CEO's take the perp walk. The two mistakes led to the accusation from feckless Republicans of a "bail out", and put Obama on the defensive, and he never really recovered the trust of the American people.

  79. @Joe Smith Obama did not make any mistakes. He owed his presidency to corporations and banks who funded his campaigns in both Chicago and for Senate and the presidency. His rhetoric never matched his actions. His actions for 8 years were pro banks and corporations. He never got the FBI to go after the bankers, and he looked the other way when people were defrauded and forced out of their homes. Some of those foreclosures were done by lenders who did not actually own the titles, but he did not make the slightest effort to arrest these crooks. He assisted Countrywide, the worst of these lenders, by helping it to get bought up by Bank of America.

  80. McConnell saying his #1 job was making sure Obama was a 1 term President;
    Sequestration;
    Absolutely no republican cooperation.

    If not for the Fed.....
    and now the Fed has no arrows in its quiver
    and the republicans are cutting taxes, regulations and increasing spending like there's no tomorrow.

    Maybe there is no tomorrow for republicans.

  81. In the last line of this excellent article, Mr. Krugman should be more specific. He states that Republicans--through obstructionism-- "were willing to sacrifice millions of jobs rather than let anything good happen to the economy while a Democrat sat in the White House". In fact, the GOP was "unwilling to let anything good happen while an AFRICAN-AMERICAN Democrat sat in the White House".

  82. @MGerard
    To update, "while a woman Democrat should sit in the White House"

  83. It sickens me to hear Trump brag about the growth of the economy when the GOP Congress did all it could to slow economic recovery under Obama. As GOP leader Mitch McConnell said "The single most important thing we want to achieve is for President Obama to be a one-term president"."

  84. Could I offer an alternative explanation why the slump has lasted so long?

    Everybody betrayed you – your presidents, your generals, your free press, your politicians across the spectrum, from the extreme left to the extreme right.

    Everybody in position of power is self-centered and egoistic, from this very columnist who failed to foresee the Great Recession but never thought for a single second to step down and give the chance to the individuals who predicted everything correctly – that the wars in Afghanistan and Iraq would be futile and open the Pandora Box, that the housing bubble was unsustainable because it’s theoretically impossible that everybody gets wealthy overnight by selling each other our homes and that the taxpayers would be stuck with the full bill, that the export of the US jobs overseas would not create the better paid jobs here in America but undermine the negotiating power and standard of living of the middle class, that the journalists would betray their readers and viewers because their advertising income made them subservient to the global corporations, and that the reckless tax cuts wouldn’t fill up the federal treasury but skyrocket the national debt.

    Over the last few decades there was no single free press outlet in America willing to publish the truth and the facts.

  85. @Kenan Porobic
    "Extreme left"? Not since the 30s, if then. Finally we have a few candidates that identify as "Social" Democrats; thanks to Bernie.
    What is "extreme" about better health care, better education, better environment, better infrastructure and better wages?
    The funny thing is that most Americans agree with these goals.

  86. Raising the debt limit is useful only when the economy is in recession and a complete nonsense once the GDP has fully recovered.

    2008-2009 : economy is in recession, it makes sense to inject trillions of public money into the system to protect the most impacted and vulnerable citizens.
    2010 : economy recovers from the recession, it makes sense to inject small amount of public money into the system to help the most vulnerable to come back on track.
    2011 and beyond : GDP is back to pre-2008 level and growths continuously, no reason to inject public money into the system, the one and only priority for the administration is to generate a public surplus to decrease the astronomical debt.

    Only selfish people with no kid or stupid people supported the idea of raising the debt limit in 2011.

  87. Wrong. The debt limit is an artificial line in the sand. The money under that limit has already been Appleby and needs to be paid out. Anyone who cares about their children would never vote conservative Republican. As Krugman delineates, they are always the problem.

  88. @Erwan You're wrong. See Paul's argument. The economy being in a technical recession isn't necessary to think about a stimulus - even if it is performing not as well as desired, a stimulus may be warranted. Even now, the right kind of stimulus would be useful.

    Besides, do you know what the debt limit is?

  89. @Erwan
    I think Erwan intended to say "depict spending" not "debt Limit".

  90. Dr Krugman,
    In 2013 you participated in a panel discussion with the Late Tony Atkinson the foremost authority on inequality and Chrystia Freeland one of your greatest fans. Freeland had just published Plutocrats: The Rise of the Global Super Rich and the Fall of Everyone Else.
    Neoliberalism needs a government to cut down on excess redistribution of wealth and power regardless if it Republican or Democrat. A Democracy is dependant on a strong and vital middle class. History may record that Obama saved the American economy but fail to save the country and its democracy. America is rich enough but can it be led to understand it isn't the economy that all important.

  91. We're supposed to be proud to eat Ramon noodles under a bridge in order to be worthy of the great Walton children.

  92. “The single most important thing we want to achieve is for President Obama to be a one-term president…..
    It is possible the president’s advisers will tell him he has to do something to get right with the public on his levels of spending and [on] lowering the national debt.... If he were to heed that advice, he would, I imagine, find more support among our conference…”
    Senator McConnell 2010

    Paul is exactly on the money. The Republican hypocrites made the national debt the big issue during the Great Recession, then no sooner do they get in power they drive the national debt into the stratosphere with a tax cut for big business and the filthy rich.

    The Democrats really need to get control of the House this November, so please vote.

  93. Deficits are always bad when Democrats are in power. The rest of the time they’re fine it seems.

  94. Not to relieve the GOP of its responsibility, another reason for the slow recovery is that, unlike prior recessions, governments--state, local and Federal--didn't add back public jobs during the recovery.

  95. "Specifically, policy failed because cynical, bad-faith Republicans were willing to sacrifice millions of jobs rather than let anything good happen to the economy while a Democrat sat in the White House."

    You forgot to append "African American" in front of "Democrat". That qualification had a lot to do with it, too.

    (As do the Calvinist underpinnings of the Social Darwinist, "the poor are lazy and unworthy", "if you're so smart, why aren't you rich" attitude of so many Republican libertarian oligarchs, who see themselves as the Elect and anyone without capital means as undeserving of any help at all, leading them to try to contract any attempt on the part of government to expand what they see as 'welfare' while more normal viewpoints would see those government efforts as adding to the commonweal. But that's a different rant.)

  96. At the beginning of the crisis, the Democrats controlled the house and the Senate.

    In 2009 they had the presidency, a super majority in the Senate and the house - they could literally do what ever they wanted and they promised change.

    Instead they continued the Bush (worst president ever) administration finance policies and enacted Mitt Romneys Massachusetts health care plan from a decade ago. There was less than a half hearted attempt at a larger stimulus and single payer.

    The predicament we are in now stems from that failure to deliver any meaningful change that people overwhelmingly voted for.

  97. @Tom: Your impressive store of knowledge must contain the nugget that although the Dems held the Senate, the GOP launched an unprecedented number of filibusters: during Obama's presidency, they numbered more than all the filibusters launched since the birth of the nation.

  98. @Tom
    On January 20th, 2009, 57 Senate seats were held by Democrats with independents Sanders and Lieberman, which gave Democrats 59 votes, one shy of filibuster-proof “total control.” Republicans held 41 seats.

    The 59 included Kennedy and Franken. Kennedy had a seizure during Obama's inauguration and never returned to the Senate. Franken was not seated until July 7 because of a vote recount demanded by his opponent.

    The real Democratic Senate number in January, 2009 was 55 Democrats plus 2 Independents, which equals 57.

    That was when Obama’s “stimulus” was passed. No Republicans in the House voted for the stimulus. Democrats didn’t have “total control” of Senate and relied on Snowe, Collins and Specter to break a filibuster insuring it’s passage.

    Then in April, 2009, Republican Senator Arlen Specter became a Democrat giving them 58 votes.

    In May, 2009, Sen Byrd got sick and returned to the Senate in July. Even though Franken was finally seated and Byrd returned, Democrats still only had 59 votes.

    Kennedy’s empty seat was temporarily filled by Paul Kirk in September.

    Control of Congress by Democrats lasted from September 2009 through February 2010 when Scott Brown, a Republican, was sworn in to replace Kennedy.

    Did Obama have “total control” of Congress? Yes, for 4 months, which is when Obamacare was passed with 60 all-Democratic votes.

    Republicans own American misery and lies, big and tweeted, can't change that.

  99. @Tom, Bear in mind many of the Senate Democrats were not much different on economic and health issues as many Republicans. Also, the 'super' majority you mentioned was only in effect for about five months.

  100. Put in plain language; The Republican powerful are robbing the nation and stashing the wealth in foreign businesses, bonds, and secret bank accounts off shore, right next to their other homes in foreign lands. They call it, "Globalization".

  101. @Waves of Brain

    Not only do they have a low propensity to spend their marginal dollars, but what they do spend is more likely to be spent outside the U.S. Thus, little or no stimulus from a tax cut for the wealthy. I'm not sure anyone factors this in.

  102. As written of in the NYTimes, another housing crisis looms ahead. There is a trick the banks are using to get even wealthier; remember that the first years of mortgage payments are mostly interest that the bank keeps with little equity owned by the debtor. Seductive offerings by banks have culminated in the reality that the banks are earning not only the mortgage interest, but the homes themselves through foreclosures. I wouldn't want to pay interest to the bank for years and lose the house. And then what happens? The banks resell the foreclosed homes continuing the cycle. Only truly well to do consumers succeed in holding equity in a home. Banks sucker in lower income groups into their trap.

  103. The gang in the gray flannel suits supported the men in the nation's board offices back in the day.

    Now, with the fear factor added in, the 49% just has to continue to figure how to hold its own. The one percent and congress aren’t about to stand up to the Executive branch. It's almost as if the two party system is dead as well as the concept of separation of powers.

  104. Don't forget the example of why stimulus was the right solution: Of all the western democracies effected by the Great Recession, the US rose fastest compared to those who chose the austerity the right was preaching.

  105. @Andrew Ross

    Australia didn't even experience a recession. Partly because our banks were stronger and not as unregulated, but mostly because our treasury secretary advised our progressive government to "Go hard, go early" with a stimulus package and this advice was followed. That didn't stop our conservative opposition from complaining loudly about our increased debt burden as a result. Typical.

  106. The Republican Party has had a chance for the last 17 years to rebuild our nation's infrastructure. They've blown it. They didn't do it under Bush. They obstructed Barack Obama throughout his 8 years in office, not wanting him to get credit for anything positive, including infrastructure. They've shown no interest or inclination in building anything except military weapons since Donald Trump came into office. This is a party that destroys, not builds. That so many Americans don't appreciate this or don't care never ceases to amaze me. Such inaction coming from the party that claims to love America more than the Democrats.

  107. @Larry
    And yet I keep reading that Trump has declared, over and over, "It's Infrastructure Week!"

  108. @Larry

    Thank you, Ralph Nader.

  109. @Larry

    Larry, I think recent foreigh travel by many young Americans has for the first time made a majority of votors aware that we are a 'third world country' when compared to most other modern countries with their new transport systems.

    The US has ignored infrastructure at the Fed. level for many decades and now forces states to plan together in groups with no overview. Trump and his group have no interest in public transportation , same was true with Bush and Congress in OB years.

    Long term Fed projects programs financed by taxes are urgently needed to bring us back to first world class.

  110. And here's the 'best' part....the 2008 meltdown was created by Bush-Cheney and the Republican Party in the first place, and then they refused to clean it up and happily blamed their horror show on that black guy in the Oval Office.

    The reckless Bush-Cheney tax cuts gave the rich extra gambling money to juice Wall St., the ratings agencies became unregulated, corrupt rubber stamps for junk securities and sliced and diced junk mortgages, and the Bush-Cheney Administration specifically prevented states' Attorneys General from investigating banks handing out no-documentation, no-interest, no-income mortgages under the idiotic 'free-market' mantra of 'financial innovation'.

    In 2003, during the height of the predatory lending crisis, the the Office of the Comptroller of the Currency (OCC) under Bush-Cheney invoked a clause from the 1863 National Bank Act to to preempting all state predatory lending laws, thereby letting financial predators run wild.

    The Bush-Cheney OCC also issued new rules that prevented states from enforcing any of their own consumer protection laws against national banks.

    The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, unsuccessfully fought the new rules.

    The 2008 mortgage crisis wasn't something that just 'happened'.

    It was a manmade Republican public policy disaster.

    Voting Republican is always an act of nationally-assisted suicide.

    November 6 2018

  111. @Socrates
    Yes, and now this irrational deregulation is on steroids. Take the environment for example. We have opened pristine and rare ecosystems to development and explotation by big monied interest. Once these areas are compromised the original qaulities can not be brought back. It was brought to my attention that ephemeral ponds can now be filled without any prior goverment approvel. Each of these ponds is important habitat for the planets amphibian species. The ponds also contain many other species that have become rare and unique. Lets save those things can never be recovered.

  112. @Socrates

    He shows up again and again. Wherever there is cancer in the body politic the biopsy identifies Dick Cheney as the cell that began the malignant process. Truly, I wish Mitch McConnell
    was not so good at emulating him.

  113. @Socrates Good stuff, but let's remember who was president, and who appointed the Chair of the Federal Reserve that oversaw the repeal of Glass-Steagall. I am afraid the deregulation that made 2008 possible cannot simply be laid at the feet of republicans.

  114. While one Democrat said notoriously that a recession should not be wasted, the GOP acted on that maxim. An adequate stimulus was obstructed; and resistance to relief for mortgage holders was expressed by a commodities trader with an atavistic snarl that birthed the Tea Party. Then came Trump with a promise of tax relief for the middle class--a promise he broke with boastful alacrity.

  115. If the USA government had to bail out the banks and ended up with a $700 billion deficit in 2009 because of their Corporate Welfare bailout then that was the wrong thing to do. What the government should've done was let the banks fail and start up a government pension and health scheme. That was an opportunity missed for the government to nationalise the health and pension scheme. Big business privatises it's profits and socialises its losses so more government is better for the economy. Also, all USA governments, past and present, are wrong for weakening the Glass-Steagall Act; Consumer Protection laws and the Dodd Frank Wall Street reform legislation. What would Lincoln think of all this!

  116. @CK Lincoln who?

  117. And yet the people most hurt by Republicanpo9licies continue to vote Republican. Burn me once, shame on you. Burn me twice, shame on me.

  118. @AP18 Yes, it is a special kind of stupid which confounds all of us who watch in ever increasing dismay. We so need this nightmare to end.

  119. We need a $1 tax on every stock market transaction. Maybe once a quarter there is a free transaction day for regular people to make changes to their portfolio. Exempt IRAs and 401k.

  120. Dr. K,

    Every word of what you write in this brief history is true but since at age 70, I was very much hurt by the credit crunch and had to liquidate in order to avoid becoming homeless, I followed the events and the recovery program very carefully. The "fiscal headwind" as Mr. Bernanke called it was created by the efforts of some very serious people, who are still with us, who felt that our problem was debt.

    It makes me ill because our best could not grasp that debt was the result of revenues dropping like a stone.

    Republicans were empowered by the bad Obama policy response that gave priority to controlling the long rising costs of healthcare.

    A young, very bright, very well liked economist, Peter Orszag, Director, Office of Management and Budget recommended to the President that he should initiate the health insurance initiative, The Patient Protection and Affordable Care Act and Mr. Obama, accepted the recommendation. It was passed by the Democratic Congress and I don't believe that it received a single Republican vote in the Senate.

    Remember, before the election, polls showed that Americans overwhelmingly were for a single-payer system with the objective of reducing the rising costs that Mr. Orszag had been tracking as a staffer.

    This initiative provided the energy and Big Money to mount the Tea Party movement within the Republican Party, which was the major contributor to the Democrats losing the House in 2010 and essentially ended the Obama Presidency.

  121. I find it interesting that somehow, no matter how bad a situation is, Republicans can find a way to make things worse.

  122. So it was a financial crisis, but a financial crisis of the middle class, not of the banking institutions or their insurers. In fact, the middle class financial crisis had been going on much longer due to stagnating wages, but was being financed through the property bubble. What brought it all crashing down was in fact the oil boom of 2007. Suddenly, that $500,000 suburban home 70 miles from work (and 12mpg Suburban vehicle) didn't seem so attractive anymore when gas was >$5/gallon. Family budgets collapsed and suburban mortgages with them. The reason it's taken so long to get back to anything like normal is because wages are still stuck in the doldrums and family budgets are going nowhere. It won't take a lot to send it over the edge again, when families are living on a knife edge.

  123. "Tim Geithner, the Treasury secretary, dismissed it as “sugar.” Beyond that, efforts to fight unemployment had to deal with a bizarre Beltway consensus that despite high unemployment and record low interest rates, debt, not jobs, was the real problem."

    It is important to realize that bizarre Beltway consensus was the Democratic Establishment position, not just Republicans. Tim Geithner actually proposed that he be replaced as Treasury Secretary by Hillary Clinton, a big supporter of his adamant support of that bizarre consensus.

    None of them were willing to do stimulus spending to save innocent workers or homeowners from the long-spreading economic disaster, only to "print money" to give at near-zero interest to bankers to save only them, save them from their own mistakes.

    Now we see that bizarre consensus rallying in DC, claiming the election was stolen from them, and trying to get us back to that same bizarre consensus.

    It should be no wonder that something, anything won other than that. It should be no surprise that attempting to blame Trump, who came along 8 years later, does not seem to save those of the bizarre consensus from the derision of voters who no longer believe their fluff and excuses.

  124. Once again, Paul Krugman is onto something quite serious. One need only recall the infamous 2009 Republican seance at the swank Washinton, DC steakhouse, The Caucus, (close to the peak of the financial panic, when many midde class families were flocking to McDonald's in a desperate effort to salvage their homes) where they colluded on a single overriding congressional agenda over the next four years.

    It was not, as one might think from their self-righteous hyperbole, to pass legislation to help people suddenly thrown out of work. Rather it was to concentrate exclusively on thwarting, at all costs, anything that the Democrats might propose to advance the cause of the stricken middle class with the explicit goal of preventing President Obama from achieving a second term in office.

    While it cannot be denied that during past periods of Democratic control of the levers of power, they proffered their own bags of d∂irty politics in an effort to hold Republicans at bay, nothing approaches the shear callouness of that Republican resolution of pure self-interest during our time of great national peril.

    This November and again in 2020, we'll be at critical juctures for reclaiming our democracy. We'll need, as so often in the past, to roll the dice. Let's hope that this time, given the Republican track record of promising to shower us with gifts but dumping five lumps of coal named Trump, McConnell, Ryan, Tax Cut, and Health Care Repeal on us, the Democrats will prove up to the task.

  125. @Peter G Brabeck
    Thank you for putting it so clearly. In 2008, when faced with a desperate financial situation for all Americans, Republicans crafted a strategy to serve their own political agenda. The plight of American citizens was not on their agenda. The political machine, and in this case I'm referring to the republican machine, has no interest in its constituents.

  126. I agreed with you then and still do that a significantly greater stimulus paired with tax cuts was needed, together with less of a blind rush to regulate and a fairer apportionment of pain between Main Street and Wall Street, although I think you are too kind to the party in power between 2009 and 2011. Management of the crisis initially was, in my view, mostly sound. But the failure of nerve (or vision) later, which might have blunted the return of the deficit hawks and the resumption of partisan gamesmanship that continues to be our essential gift to civilization, still seems to me where most of the blame must be laid.

  127. Government, monetary systems, stock and bond markets are “confidence” games. People must choose to participate and they can’t be forced. When people lose faith in government or business, the system takes a big hit. The election of Donald Trump is Exhibit A.

    Our economic system runs on individual consumer spending, then business spending. After the 2008 Great Recession, even people with money and whose jobs were not in jeopardy stopped spending because they were shocked and frightened. Also, not spending money became virtuous, whereas being seen replacing all the windows in your house when so many others were suffering seemed both bad and possibly tempting fate. Simply put, there was a collective drop in “confidence”. It takes time to build, and ultimately overbuild, “confidence” in the system. Even now a bubble is building somewhere, in the U.S., China or Europe, fueled by the need of governments and societies to live beyond our means. We just can’t help ourselves.

    One question of Mr. Krugman: If it was within the power of government to quickly right the economic ship and get it sailing full speed again why didn’t the Obama Administration push the necessary legislation—with sufficient funds aimed at the right projects—through Congress without Republican interference or input, in the same way Democrats passed Obamacare without a single Republican vote? After all, the Democrats had control of the Presidency, the House and the Senate for two years after Obama was sworn in.

  128. Thank you Dr. Krugman for providing an article that allows us to pontificate about how abusive the GOP is toward most Americans. Even as the Republican Party has spent decades protecting gun manufacturers and the nasty weapons produced from regulation so we find the same protection from regulation provided to the carbon and auto industries and health care and banks. Protecting business at all cost outweighs any other consideration. Assurance of quality health care for most Americans or responsible care of the environment as the oceans warm or less greedy interest rates on student loans or supporting tariffs that wreck havoc on small businesses ... are ignored to benefit a few. Yes, it is a Party to be condemned for its ruthless actions against so many.

  129. From reading the comments it is clear Professor Krugman is preaching to the choir. I have nothing to add to the excellent comments.

    I always believed the great turning point in American politics was the S&L scandal. When the oligarchs and their Republican
    allies got past that with no political fall out, they realized they could get away with anything, and so they did.

    Feed a third of the population the red meat cultural issues they crave for personal justification, and they'll let you eat their lunch everyday.

  130. @goofnoff: The Fed's manipulations of interest rates under the "dual mandate" wiped out traditional banking where banks held loans in their own portfolios, and paved the way to loan securitization and derivatives plays. Volcker's interest rate spike made the S&Ls insolvent.

  131. "What we needed [was] increased government outlays and tax cuts for lower- and middle-income families, who would be likely to spend them."

    There were so many opportunities to substantially increase spending like infrastructure repair & start building a nationwide network of highspeed rail system as well as beautification of inner-city areas throughout the country; the latter would bring down inner-city crime rates when the youth are busy rebuilding their neighborhoods. When the interest rate was near zero, the cost would've been so low.

    Tax-cuts for lower-income groups could be achieved best by cutting payroll tax, which was done for 2 yrs. but it could have been done permanently by say, cutting payroll tax on the first $10K to 1% & on the second $10K to 2%. A good way to strengthen Soc Sec trust fund is by lifting the cap on it but then again cut it to 1% beyond say $150K to be less unpalatable to the rich.
    (Both tax-hike & tax-cuts ought to be modest/moderate, unlike how it was at the tax-reform of 1986, when the top rate was cut to 28% when the bulk of tax-revenue came from the middle class. Prior to that, the rich were squeezed too much with a top rate 70% on over $215K, $650K now- if it were on over $25 million, that wouldn't be too bad)

    I would say another higher marginal rate of 50% is necessary, but only on the highest 0.05% incomes FROM ALL SOURCES. That would bring in hundreds of $billions annually to significantly reduce the deficit.

  132. While we're talking about Republican bad-faith, why not discuss how Republicans pushed through massive tax cuts, while destroying the social safety net, by lying and pretending that the wealthiest got poorer after the financial crisis? Republicans deliberately misrepresented income inequality and then conflated it with wealth inequality. Income inequality is massive, and any recovery gains were gobbled up by those at the top. While average Americans never recovered from the "Great Recession," the rich regained all losses in income within only a few years, and then surpassed them. Further, the wealth of the richest Americans radically increased almost immediately. The reality of inequality in America after the 2007 financial crisis was that the very rich quickly became much wealthier than they were before, even if for a very short time they made slightly less income. The reason why wealth inequality in the U.S. dramatically widened after the financial crisis is pretty simple; the markets where the rich make their real wealth have been booming. Most Americans are not in the highest income bracket, and are also in lower-wealth brackets, so they largely, or completely, missed out on what was a stock market recovery. This is exactly what Thomas Piketty wrote about in "Capital in the Twenty-First Century." Thanks to the Republicans, the rate of return on capital is increasingly greater than the rate of economic growth. The result is increasing concentration of wealth at the top.

  133. I seem to remember a LOT of uncertainty and volatility during the Obama years with respect to possible financial contagions, a commodity crash, and successive emerging market debt crises, culminating in the 2015 global recession.

    Arguing that the U.S. could have spent its way out of these global headwinds is probably a revisionist view.

    Especially given the magnitude of QE conducted by the Fed.

  134. @Mmmyou remember wrong

  135. @Mmm,
    Farewell to the TPP, as the Asian Bridge continues to grow and we regress.

  136. Republicans have had only one goal; make the United States government much smaller except in matters concerning the military, and corporate subsidies. In fact, the obscene military budget, and the trillions wasted in Iraq and Afghanistan, is all about aiding corporate adventurism and securing the free, and cheap, movement of goods around the globe, at the expense of workers everywhere and the benefit of corporatist.
    The political reality in the United States, however, is that the government services that Republicans hate are actually well liked by the public. Government does work. In order to overcome this the Republicans have employed a three pronged strategy. First is to spend the United States into insolvency so that we have no choice but to eviscerate popular programs. Second is to erode the trust in the American people in government generally. The underfunding, and mismanagement of FEMA that led to glaring failures under both Bush, and now Trump, is a glaring example of this. It is amazing to see the functional difference of just that one agency under Democratic vs Republican regimes. The third prong is to do everything in their power to prevent a Democratic administration from looking good. Under Clinton it was endless investigation, under Obama it was an open declaration that they would deadlock the legislative process to prevent him from doing anything in that realm. In the first case it was to de-legitamize, and in the second to emasculate. They are succeeding.

  137. The Republican obstructionist who arguably did the most damage to recovery from the crash was Tim Geithner, per David Dayen's recent article in The New Republic https://newrepublic.com/article/151159/tim-geithner-resistance-inside-ob...
    and previously in the American Prospect
    http://prospect.org/article/needless-default.
    Dayen presciently warned that the wiping out of the wealth of many million working and middle class Americans would "haunt Democrats." Their sense of betrayal was a major factor in the 2016 election catastrophe.

  138. If the economy recovered, the chances of making Obama a one-term president went down.

  139. There has been about one recession per year since WWII. On aveage they last less than a year. And recovery then follows. The economy cycles but one thing is always true. The other guy caused the recession and our team ended it.

  140. One per decade

  141. I get it as do millions of others yet to recover. Unfortunately, by the time the next economic crisis hits--being fueled now by Trump and his enablers' reckless policies--again blame will be at the Democrats feet and they will be the ones to clean up the mess.

  142. @Ann

    The Dems won't even be able to clean up the mess if they aren't in office. So tell it to "the base" -- if you can get through to them.

  143. Everybody with a single neuron firing knows Republicans hampered recovery from the worst recession since the Great Depression with obstructionism, and RLS is doing a great job of explaining how they've managed to rig elections to keep their hold on power. Despite their spite for the aptly dubbed “precariat”, burning questions remain of how to resist the vultures feeding on the better angels among us.

    All of us have known bigots and greedy people in our lives, and though we didn't allow them to overtake the student council or elect them “Class Favorite” in high school, we have elected the crookedest of thugs to govern us and to loot the people by denying them fair pay, or opportunities for education like most of us took for granted. I'm tired of quoting facts from the CDC about how much a single-payer system would save people, rich and poor alike, or from esteemed economists such as Professor Krugman, only to be shouted down by people I once looked up to, all of whom have matured into “adults” with intellects and discernment below that of a well-educated 6th grader.

    Yes, we remember the GOP's response to the crisis like it was yesterday, and we've seen that they can continue hitting new depths of hate, shame and foolishness. Call me bitter, because I am, but relief will only come when the crooks in Congress are driven out en masse, and that will only happen if they figure out that super-rich con artists and not their neighbors are robbing them blind.

  144. @Gary Henscheid
    'Yes, we remember the GOP's response to the crisis like it was yesterday' - because tragically, yesterday' for so many, is still 'today.'

  145. @Gary Henscheid - The biggest blunder in the comment above was saying I was tired of quoting to deaf ears the CDC rather than the CBO on how much money a single-payer system would save taxpayers, but I was thinking of something much less glaring, at least to me, until just now. My parents both vote Republican, so I guess it's in my genes to overlook the obvious and to have priorities all messed up, but in their case, in politics, and in mine, in my own writing.

  146. "So if you want to understand why the great slump that began in 2008 went on so long, blighting so many American lives, the answer is politics. "...has a notion. With no intention to interfere in US political controversies, I'd like to describe the picture I see. (I) Political consent at that time, that might be still the case partly, was very much concerned about the enviroment. Much eager to perceive any kind of economic growth as evil. That was the rationale. (II) On the other hand there is a reality not to be overseen. Christians have the largest population on the planet. Christian culture, may have some problems with consumer society. Christian values were and maybe still are on the rise on political level. A certain combination of these two shaped the political reaction (financial regulations) to the Lehman case. Since these two issues in Europe were more intense facts, the economic results of such became also more intense in Europe rather than in the US. GDP gap between US and Europe widened at such time in favor of US. President Trump deregulated, and it seems that the gap is continuing to widen. I totally agree that politics has much responsibility on that issue. But I think it's beyond the sides of politics. It looks more like a general political consent which shaped financial rules at that time and still has supporters not to undermine.

  147. Barack Obama sat in the Whitehouse for eight years.
    Even when I was at odds with one decision or another I thought he had a first rate mind and a deep sense of social responsibility.

    I have not felt that way about Mitch McConnell or Paul Ryan—ever. The column makes it plain that fiscal conservatism was just a convenient tool to beat up on the then President and make the rich a lot richer.

    My God, how did we get here? I am hoping November will offer us a way out.

  148. @Warren Shingle What you fail to understand is that the Democrats, in deference to the same wealth that the Republicans bow to, offered us only fiscal conservatism-lite, offering cuts to Social Security, Medicare, freezing federal employee pay, "rescuing" home owners with the failed HAMP.

  149. I came of (political) age when Reagan was president but didn't realize for years that his policies did more harm to the social commons than helped.

    Then I learned that Republicans have been against the New Deal that included Social Security and Medicare ever since it was launched.

    I still do not understand what ideology Republicans stand for except "each man for himself". They don't even follow that when they're in power, and instead pass policies that benefit only like-minded people like themselves.

  150. @Warren Shingle Respectfully Warren, your not understanding "how did we get here" is part of the problem, and why we are doomed to repeat history as long as people like you (and me) don't understand. Have a nice day

  151. I'd like to hear more from Mr Krugman about the disconnect between increasing profits of financial institutions and the health of the overall economy. Banking was once a sleepy, unsexy business whose main purpose and social justification was the efficient funneling of capital into the 'real economy' and multiplied its benefits. Financial manipulation has become an end in itself, that skims enormous sums from the accelerating movement of capital and concentrates wealth toward a progressively smaller part of the population. I hope there are some economists out there who will go further into the social, political and moral role of finance in the overall economy.

  152. @Joel Try reading the excellent economist John Kay,
    "Other People's Money"

  153. The connect becomes obvious when they crash.

  154. I second your request, and concern. It seems to me, and evidently you, that we have the most profitable area of the economy today composed of brilliant people who do nothing productive in the sense of producing real wealth, or of improving people's lives, but who rather make obscene fortunes by their cleverness in swapping paper. To compound this, they then drive up the prices of services and irreplaceable resources, such as land, for the rest of society.

  155. Sad, but true. Unfortunately, the mother of all recessions awaits on the horizon.

  156. If the GOP retains control of Congress after the midterms, expect to see heated performances about "concerns over the deficit" accompanying proposals to cut support programs. They got the tax cuts. If they hold Congress, massive cuts to certain types of spending are next.

  157. When are we going to fully admit none of these policies were borne of anything other than the GOP donors demanding their purchased politicians doing exactly what they were ordered to do? Harming the working and middles classes was the purpose both of the meltdown and the failed recovery. Note Krugman says those at the very top recovered almost immediately while millions of working and middle class folks will never recoup their losses. The billionaire donor class was simply reminding the rest of us that they can do these kinds of things with impunity. Next up is the full repeal of all labor laws, the social safety net, and the end of free elections.

  158. All very good points . I wish Dr krugman would take the farther step to name the big players of the donors class who dictate to national republican politicians how to vote.
    Republican politicians did not write the tax bill, they voted on it with little idea of what it contained. The donor class wrote the tax bill.

  159. The injury to the economy, to jobs, to household wealth, to property values - they destroyed the housing "market" - caused by allowing Lehman to go under - and we know now it could have been avoided - is still going on today.

    People who lost their good paying jobs, were never able to replace them, or the income that went along with those jobs; the trillions in household wealth that was destroyed are not growing on trees waiting to be plucked - that money is gone; some people - many people - are still underwater on the houses they bought before the meltdown and can't refinance them with our low interest rates because they have no equity.

    We won't get into the human costs of all this economic perfidy: it's too depression at this hour of the morning.

    Think positive: Vote Democratic so this doesn't happen again (and it can).

  160. The part of dealing with the recession that led to the current constitutional crisis is the lack of any prosecution for the underlaying fraud plus making the bankers whole.

    Bailing out the banks and bankers by having the costs spread to the general economy was the trigger for a lot of the last 10 year's politics.

  161. If Republicans retain control of both the Senate and the House after the 2018 elections, Social Security, Medicare and Medicaid will be on the chopping block especially if there is another economic downturn. There is an old saying among Liberals that our progress toward social equality takes two steps forward and one step backward. With Trump and right-wing Republicans still in charge after the 2018 election, we may well take two or three steps backward
    . The progress we've made since the great depression of the '30s in providing a safety net may be wiped out. The thought of our elderly population being without these services is frightening. But guess what Republicans will also probably do if they retain control: How about another round of tax cuts for the wealthy!

  162. Republicans acted the way they did because their hedge fund constituents were cashing in on the foreclosure boom. The funds ordered the Majority to 'slow walk' the recovery so they could continue to cash in on the housing crisis.

  163. Even with a 60 vote Senate, democrats couldn't eliminate the carried interest loophole for wall street criminals. It's naive to put all this on Republicans.

  164. Taking care of wealthy people is always the first order of business. Making it look like you are taking care of the rest of society is the second order of business. The real problem is something always comes along to refocus attention on the first order before the second task is complete. So it's kind of like a massive fire affecting an entire region. The fire department puts out the wealthy homes' fires. Then, while heading over to the average homeowners' houses in flames, the firefighters get a call to return to the wealthy homes to put out a few hot spots. And to manage all the fires, the localities agree to increase the flow of water in the pipelines. And the hoses are always connected to the hydrants in the rich neighborhoods. And the less affluent are told over and over that there is plenty of water in the pipeline, to just sit tight. We will get to you. Problem is the hoses never seem to get connected to the hydrants in those poorer areas. Because a proportionally few residents have tapped in on their own. And the other homeowners are told the reason they don't see any help is the people downstream from them are stealing their water. While full water pressure is always at the ready upstream from them. It always amazes me how eager people are to buy this argument. While their own hoses burn to the ground.

  165. Dr. K.

    You are being too kind to the republicans / conservatives and their owners when you say that they did not want anything good to happen to the economy when a Democrat was in the White House. They don't want anything good to happen to the 99% no matter who is in the White House.

    They want to keep us under their thumb. If I remember my political philosophy correctly, it was Eric Hoffer who pointed out that dictators keep their own people in poverty for a reason. If you are so busy trying to simply get enough to eat (or in America trying to pay for medical care or worrying about what appliance will break down next and wipe out the little savings you've been able accumulate) you will not pay attention to the fact that you are being robbed.

    A crumb here and there and an occasional distraction are all that's needed to control a vulnerable population.

    Sound familiar?

  166. If I recall correctly you were an enthusiastic supporter of the government’s TARP bailout plan, which in my purely humble layman’s opinion is the reason why the banks and corporations still control our legislative process.
    The only corporation that felt the full brunt of the TARP program was GM where shareholder equity was wiped out unlike their financial contemporary’s such as AIG, BOA, and Citibank, which reserved shareholder equity.
    The beneficence of the government towards AIG specifically came back to bite them when Maurice Greenfield decided to file a lawsuit to recover lost monies he claimed the government’s bailout actually cost him.
    Moreover Bernanke's Depression lesson was his decision to omit the perceived mistakes of a the Financial Reconstruction Corporation by deciding the TARP bailout would omit the transparency of the aforementioned depression era’s Financial Reconstruction Corporation
    In contrast to our bailout, Iceland made the decision to allow their banking industry to fail, and nationalized the industry. The decision by Iceland to nationalize their failing banking industries, while not prefect, hopefully eliminated the wealth and power of the existing financial CEO’s and I hope they were reduced to street corner selling of apples and pencils. ..
    Finally, the fiscal stimulus here in the US was primarily used by states to balance budget shortfalls in their state budgets as opposed to rebuilding our crumbling infrastructure. On point, IDK!!!!!

  167. Professor, you need to remember what the word "but" stands for. It is the exception to the rule/proposition, and it is the guaranteed tool of any cop-out anywhere.

    You've used it 10 times in your article. It is still used by Republican commentators to show why deficit scolding does not apply today.

    If you think the Republican party as it exists today is *an* opposition (/governing) party, you need look at only one thing : Their approach to voting (and its suppression.)

    Since it is actual unstated policy, there is no other logic that you need to put forth for why they are not a legitimate party.

    I have said for at least 5 years on your columns that the only thing preventing Democratic losses in Presidential elections is turnout.

    If you can get the turnout past 60-62 percent, you will never lose.

    You can blame the Democrats later for their wimpishness and the likes of Tim Geithner for toeing the Goldman Sachs line. (Because they will only do a little, not much, better.)

    We are way past time for logic and honest protestations.

    We are the enemy. It is we who fail to turn out for our candidate. As umpteen articles showed after 2016, we heard what people said ("Nothing is going to change").

    No professor, as much as us, you have learned nothing. You are *again* barking up the wrong tree.

  168. Paul spent the Obama years telling us we will never grow at 3% again, because, well, it’s very technical.

    Now, Obama’s abysmal record on the economy is all due to Republicans.

    Yet, people can compare and contrast without Paul’s help.

    Which economy do you think they prefer?

  169. Krugman consistently refuses to place the proper amount of blame where it belongs - right on President Obama. Whether he sincerely believed that Republican light was the correct policy, was bought off with the lure of fantastic wealth for serving the 1% like the Clintons, or was just gutless, the fact remains that it was his total lack of forceful leadership that allowed the middle class to be decimated. Had he forcefully confronted the Republicans, let his Justice Department indict some of the criminal bankers responsible for the massive fraud, and gone directly to the American people with the true facts and pushed an aggressive policy, things would surely have gone differently.

  170. Conservatives/Republicans always care more about power and the people who wield the greatest economic power than their fellow citizens. How they get that power and how they wield it once they have it is irrelevant to them, lying cheating stealing is all acceptable to them.

    This unfortunately puts liberals at a disadvantage in the political arena we believe in fairness and honesty how do you combat a opponent that says the rules are for you but not them. The media is supposed to call them on this but we have a major media company that programs 24/7 of 100 percent propaganda to support conservatives and their followers eat it up.

    Maybe just maybe Trumps personality disorders and pathological lying is turning off just enough of the fence sitters to clean house this year but I’m not holding my breath.

    The next financial crisis is out there just waiting and one can only hope that Republicans are nowhere near the levers of power when it arrives.

  171. The Great Recession in the financial sector ended quickly. Sure, because the policy makers who ended it came from the financial industry - they definitively took care of their own, regardless of the rest of the economic impact thereby left addressed. Then Republicans took over Congress, and any fiscal policy was stalled (can't let President Obama 'win' anything) and Republicans fought "to prevent huge deficits". Of course, deficit spending would have been precisely the correct economic prescription *then*. After the Republicans stymied President Obama for the remainder of his two terms, we get Trump, and oh, those deficits? Well, nevermind... let's blow up another $1.5 Trillion in debt, precisely at the wrong time, when the economy is finally roaring along. When the next bust comes, who's going to clean that up...? You got it - another Democratic president, who will have to fight Republican 'deficit hawks' every bit of the way. Republicans - no shame, no honor, and no end to their hypocrisy.

  172. This is all the more apparent because the danger of large deficits is in a developed economy a complete sham with competent financial mangement. To see this look at Japan with a debt to GDP ratio of twice the U.S. The Japanese Government went it wants to stimulate the economy issues debt, the debt has no private buyers but the Central Bank buys the debt and the government pays debt to itself because the Central Bank is a government agency and interest paments are returned to the government. This debt burden is zero and the government prints money at will or rather when the economy needs public investment. Its interesting and telling that this solution is not discussed here even by liberal economists. While the Japanese economy may have problems its not inadequate infrastructure and lack of gernment spending!!

  173. When Mitch McConnell declared that the objective of Republicans in the Senate was to make Barack Obama a one-term President, he meant it. He and John Boehner deliberately undercut EVERY policy Obama proposed. When the GOP proposed policies and Obama endorsed them, McConnell and Boehner would immediately reverse themselves and oppose it, along with their caucuses.
    In both Houses, the GOP had heartily endorsed George W. Bush's deficit and debt exploding policies, reversed themselves when a Democrat became President, then reversed themselves AGAIN when Trump was elected.

    Because it has ALWAYS been about power and creating a permanent feudal-type of rule where one party and the corporate interests rule over the needs of 99% of the nation.

    That's the problem.

  174. I will never forget the psychological terror of those years, the economic damage it inflicted on our family (although we came through it with our home and our business intact), or the spectacle of millions of decent, innocent victims of grim economic forces and greed-conspiracies that had been hatched on Wall Street and unchecked by the Bush administration.

    The "banksters" were never punished and by now it's clear that they will never be. That leaves the Republican office-holders whose cruel and hypocritical efforts did so much to prolong and worsen the crisis. They're the only malefactors whom we still have the ability to punish in at least one way: by driving them out of power.

    Let's drive them out of power beginning on November 6th!

  175. I could not agree more! Republicans have built an infrastructure where they think they can make some of themselves rich at the expense of the rest of us. Fools that they are, lots of the Republicans that assume they are going to be among the rich, will not. They will be among the rest of us.

    I hope enough wake up soon enough to vote the Republicans out. But the job does not end there. There are plenty of Democrats that will need to go next. The middle class has been in a steady decline since about 1970, thanks to both Republicans and Democrats. But I'll bet if we defeat many Republicans many Democrats will get the message. Maybe we won't have to vote all of them out, just quite a few.

  176. The Tea Time chapter in Jane Mayer's, "Dark Money" is enlightening. Americans for Prosperity (hah!) and Freedom Works (or doesn't) coordinated "No Stimulus" and launched the Tea Party. The House Young Guns and Mitch McConnell had a no cooperation strategy with the goals of a one term presidency for Obama and a government so dysfunctional that the party which ruined the government would run the government.

  177. Voters have known for decades that Republicans don't care in the least about fiscal responsibility, but they continue to elect them. Most GOP voters are mean-spirited and suicidal. They would rather bring America down than tolerate people they don't agree with. We will not have a free America, until sane people outnumber them at the polls.

  178. It has been tragic that the Republican Party has prevented the needed stimulus package to revitalize our economy due to its rigid ideology and its policy of obstruction. They prevented taking advantage of a rare opportunity to improve our dated infrastructure at very low interest rates. Yet given our absurd politics they were rewarded with total control of our government and with Trump. Then we got a tax cut favoring the extreme wealthy and corporate interests and leading to enormous deficits. No wonder social and income equality are at gilded era levels. No nation could have worse policy choices forced on them by a heavily financed minority party. Just pathetic!

  179. "No, they haven’t abandoned their commitment to fiscal responsibility; they never cared about deficits in the first place."
    Praise the Lord! Brother Krugman has seen the light!
    The Republicans have been lying about everything except their love of the rich.

  180. American "conservatism" is an unholy alliance between a relatively small, cynical - and sociopathic - anti-democratic economic elite who don't believe in anything except their next dopamine hit (from learning that their stocks have risen, for instance) and an expansive anti-secularist, anti-modern, anti-American fundamentalist religious right who believe in dogmatic untruths to a degree and extent not comparable to any other religious community of any other contemporary Western nation. Both are disinclined for secular democratic (and Democratic) American governments to rule and succeed. The US, the West and Humanity requires that there be a "Night of the Strong Handcuffs" to deal with these people. Too bad the American left is so weak and the Pentagon only believes in climate change, and not doing something about it, and only defending the interests of the United States overseas.


  181. Re: comments that assert Democrats had a super-majority in the Senate and control of Congress for the first 2 years of Obama's Presidency:

    On January 20th, 2009, 57 Senate seats were held by Democrats with independents Sanders and Lieberman, which gave them 59 votes, 1 less than a filibuster-proof “total control.” Republicans held 41 seats.

    The 59 included Kennedy and Franken. Kennedy had a seizure during Obama's inauguration and never returned to the Senate. Franken wasn't seated until July 7 because of a vote recount his opponent demanded.

    The real Democratic Senate in January, 2009 was 55 Democrats plus 2 Independents, which is 57.

    That was when Obama’s “stimulus” was passed. No Republicans in the House voted for the stimulus. Democrats didn’t have “total control” of the Senate and needed Snowe, Collins and Specter to break a filibuster for its passage.

    In April, 2009, Republican Sen Specter became a Democrat giving them 58 votes.

    In May, 2009, Sen Byrd got sick and returned in July. Even with Franken finally seated and Byrd back, Democrats still only had 59 votes.

    Kennedy’s seat was temporarily filled by Paul Kirk in September.

    Democratic control of Congress lasted from September 2009 through February 2010 when Republican Scott Brown replaced Kennedy.

    Did Obama have “total control” of Congress? Yes, for 4 months, which is when Obamacare was passed with 60 all-Democratic votes.

    Republicans own American misery and lies, big and tweeted, can't change that.

  182. @Yuri Asian

    Thank you for that timeline. It won't dent the Republican nonsense claim that Democrats had "total control for 2 years" but for anyone interested in actual facts and accurate history, it is very helpful.

  183. It's the same story over and over; uninhibited speculation fueling a financial bubble and when the bubble bursts, the victims of the swindle are left to suffer while the enablers of the fraud empty the Federal coffers. Somehow the victims also end up being the culprits, because, well, they're "losers" anyway. The cycle of greed, cynicism and hypocrisy keeps repeating itself.

  184. Why does Obama get off the hook so easy? The cynic in me argues that, from the beginning, he was worried foremost about who would pay for his library. He had that famous meeting with Wall Street CEO's after the crash and told them he was the only thing standing between them and the pitchforks - then, inexplicably, proceeded to give away the store. He asked for nothing in return and got less than nothing; with Geithner and Holder as his helpmates he didn't even need the GOP to undermine him. It was clear with whom his sympathies lied and if you need any more proof, follow his post-presidential behavior. Obama wasn't out of office two weeks before he was snapping selfies with a succession of billionaires (I know, it was only with the "good" billionaires). It turned my stomach. He has also made several, highly remunerative, Hillaryesque speeches to Wall Street firms as former president. OK, the man is free to do whatever he wants but you cannot cavort one moment with plutocrats and then stump for candidates the next as a populist - without looking like a hypocrite to everyone.

    Now we are supposed to regard Obama as the Anti-Trump, because he is an intelligent, thoughtful, well-informed man, but it was his desperate urge to be liked by the wealthy and ultimately be part of their club that gave us Trump. Not everybody could see through him and his lofty rhetoric, but looking at his anointed successor Hillary was like wearing x-ray glasses.

  185. @stan continople lol love it

  186. @stan continople Paul Krugman has once again laid out the facts which run contrary to this attempt to sanitize the obstructionism led by Mitch McConnell. The President was fully prepared to negotiate and compromise with Congress to put the interests of the country first. MCConnell and his minions would have none of it and still put party and their political machinations ahead of the well being of the country.

  187. @stan continople
    I always thought he looked like he was doing a hostage tape.

    Stop confusing my spell check.

  188. Obstructionism+negativism+cynicism+hypocrisy equals yesterday's, today's and most likely tomorrow's Republicanism. The human toll created by these policies equals a moral depression the likes of which we have seen before yet somehow continue to repeat. Ditto for our habitual proclivity for lengthy wars in faraway places with no exit strategy. While more's the pity, voting against such ongoing behavior is a definitely positive solution.

  189. Just as 9/11 gave the neo-cons the crisis they needed to get America to invade Iraq, the Business wing of the GOP saw the financial crisis as a way to get America to turn the keys to the government over to them.

    Tax cuts and interest rate cuts for the rich, wage and benefit cuts for everyone else.

  190. @Ronny, it is all an incestuous relationship. John Bolton inserted himself into the Trump National security foreign policy team and betcha he had the blessings of George W Bush, Condi Rice who want to make sure that they are never ever held accountable for the wars in Iraq and Afghanistan and the subsequent distraction from focusing on real domestic issues like infrastructure health care education jobs social security etc etc. Witness now, John Bolton with Trumps blessings, seeking to abolish international crimes tribunal. It is the only way we will never ask George W Bush why he led the country astray into 2 unfounded and unfunded wars which had global implications far and wide. Witness the destructions in Iraq Syria Yemen those people never had a chance.

  191. A government needs to do three things first;

    1, Ensure that all citizens receive quality education,
    2. Ensure that everyone who wishes to work can, and
    3. Ensure everyone has access to affordable health care.

    After that worry about the other stuff, but these three need to come first

  192. @Thomas

    Since governments exist, guaranteeing national security has always been their first job.

    It's what is called the "monopoly on violence", in political philosophy: instead of burdening citizens with having to find their own local militia to keep them safe, all violence that is not ordered by and implemented by the government becomes illegal.

    Having a central power able to enforce this law is how for more than 2,000 years now having a state or government is defined.

    Once you have a state, those in power can decide to install a constitutional democracy, or a dictatorship.

    The reason why a democracy is supposed to be the best political regime is precisely because it has been proven to be the best guarantee to obtain, as ordinary citizens, all the other crucial things that we do better collectively than if we let the wealthiest take as much as they can for themselves: education, work, healthcare.

    Today's Republicans never studied history, and - at best - still believe that the Ancient Regime, where all political power is concentrated in the hands of the financial elites, will some day miraculously end up benefiting the other 99% too.

    They never really embraced the idea that a government has to ensure that each individual can freely pursue happiness. Their violent worldview makes it impossible for them to understand how of course, governments CAN create equal opportunity for all citizens.

    And then we're even not talking about the current, totally corrupt GOP yet.

  193. I agree but it assumes that our present government cares about the country, they don't.

  194. Had my old business school professor, Arthur Laffer, not drawn his famous curve on a cocktail napkin, we might not be in the trouble we are in today. In postulating that a lowering tax tide raises all ships, he gave Republicans a mantra which has survived for decades following the Reagan era.

    The problem with it is that in its simplicity, it ignores, or causes its adherents to ignore, myriad other complicating factors in our economic environment, many of which conspire to neutralize, at best, or altogether destroy, at worst, any politically expedient benefits that it purports to deliver.

    No matter that it has evolved into leaving out huge swaths of the population who now feel abandoned, taken for granted and disenfranchised. For whatever reason, they seem unable to unburden them from the shackles of delusion that tax cuts are designed primarily to help them, which they clearly are not.

    The problem with Republican politics today is that it revolves around hollow bromides designed to deceive average Americans into believing that they are the party's primary concern, while the real goal is gaining the support of the wealthy and corporations in order to stay in power. It is a combination of Three-Card Monte and a shell game.

    With all due respect to Professor Laffer, who I genuinely like, there are simply not enough cocktail napkins in existence to clean up the economically soggy mess that strict adherence to his curve leaves on our nation's table.

  195. @Quoth The Raven
    If taxes are at 90%, his theory works...

  196. Good analysis but stops short. Republicans, libertarians, entrepreneurs prefer high unemployment because it reduces their labor costs. Why is this seldom included in liberal critiques of policy? Low unemployment is not a goal shared across party lines.

  197. Same with immigration of skilled labor, my salary as an engineer has not increased in more than 10 years adjusted for inflation. one thing is certain there no shortage of US engineers (as corporations claim to justify massive granting of B1 visas)

  198. Puertorico not adequately rehabilitated yet and North Carolina is being devastated as we write.These and other past and potential future developments require heavy public financial commitments.The commitment is practiced in the form of rehabbing life via erecting durable, resilience prone Infra-Structures, urbanization,hurricane or storm, for the most part,neutralizing barriers( these measures by the way create more skilled work force). All these necessitate introducing some degree of respective higher tax so as to distribute the financial burden of the unavoidable cost.Selectively practicing tax reduction,especially to those who need no subsidy,goes counter to securing long term National, even global Economic gain.Moreover,as one can confirm,by engaging multidisciplinary Math Scientists,in a serious discussion the afore mentioned public resource commitments potentially require introducing integrated scientific approach towards erecting and sustaining a durable vibrant Nation(s), in the process most aspects of knowledge are made to flourish too.TMD.

  199. The Republicans continue their mantra. In the congressional race in my adjacent district (VA-02), the RNCC is running an ad showing a car careening first across the center line and inevitably off the highway onto the left berm, claiming "Elaine Luria is against the tax cut giving $1,300 to the average family" and that she is "too far left" compared to her opponent, Scott Taylor, who votes overwhelmingly for whatever Mr. Trump hacks up for his base. The "average" tax cut would be nice if evenly distributed but it clearly skews to those who need it least of all. Furthermore, the ad fails to mention any "gift" to the middle class vaporizes in the near term and the benefit to the entitled is permanent.

    Hogwash is still hogwash, however slickly packaged.

  200. @Douglas McNeill
    "Average" is the key word here. Remember the parable that tells us that Bill Gates walks into a bar and the "average" income among the customers becomes millions.
    My husband and I have an income of about $80,000 per year. Our tax guy tells us that we will pay $1,600 less this year in taxes. The amount goes down the lower you go on the income scale. The "average" family income is now $61,000. Think about what that means.
    The problem is made worse by the fact that recovery varies according to location. A few places are booming; others are still caught in the economic doldrums and nothing is being done to change that.

  201. I can contribute a data point in support of Republican bad faith, at the state level. I live in Florida, and the state turned down federal money for transit and road work.

    Now that there is a R President, they are digging up everything! Road work seems to be on all major roads, certainly the I-4 corridor is being rebuilt.

  202. The root causes and penitential cures of the 2008 financial crisis will probably be forever above my head. What is clear to me however, is that we were very close to a total collapse of the world wide economic structure. At the very last minute bankers and congress managed to plug up the drain with billions of dollars of loans (all of which were eventually paid back).

    While watching a recent retrospective on these dark days I had a frightening thought. What if Trump had been the president during this crisis? Would the USA survive a complex crisis with DT and his acolytes in the White House. Be afraid.

  203. @Aaron F. Kopman, M.D.

    "Be afraid." I would only add to that "Be very afraid."

    I have had this same thought many times. We were only saved from complete disaster by the Bush administration's willingness to put aside it's libertarian beliefs in order to save the economy. (Aside: Are you a hero if you save someone from drowning after you threw them in the water?) Will Trump have the same pragmatism, or will he say that banks aren't really failing but that news of such is just a Democratic plot?

    The really terrifying thing is that I think we know the answer.

  204. Not only I think I understand why the slump lasted for such a long time, but I also understand that it brought us Trump to the WH.

    Now the suffering is increasing since there is further will to sacrifice more: disaster victims, illegal immigrant children, Americans with health preconditions and even Trump supporters who are suffering from this administration and this GOP Congress governing.

  205. In Feb. 2009, in the midst of the Great Recession, crucial tax credits and tax cuts for the middle class and small businesses (= the biggest job creators in this country) made up half of the Recovery Act, and yet, Republicans massively decided to vote "no".

    When most of those tax cuts expired at the end of 2010, WHO blocked their extension?

    Republicans.

    Obama and the Democrats being highly competent negotiators, they nevertheless ended up getting the GOP to vote for an extension.

    What did the GOP ask "in return" (because of course, when a Republican does something for the middle class, he's not satisfied yet, he believes he needs something in return)?

    The extension of the Bush tax cuts for the wealthiest citizens - tax cuts that were never paid for in the first place.

    THAT, to me, was the first truly eye-opening moment, when it comes to clearly seeing that the Grand Old Party no longer existed and was now replaced by the most corrupt and cynical people belonging to the financial elites, and who clearly abandoned everything that the word "elite" since the ancient Greeks already referred to: highly virtuous people, with strong moral character.

    Only 3 Republican Senators have voted for the Recoery Act: Sherrod Brown and the two Sen. of Maine (after lots of political concessions by the Democrats). John McCain, now the face of "the last Republican with moral values", failed to vote for it.

    From then on, they blocked ANY attempt to help Main Street or America as a whole.

  206. @Ana Luisa Sherrod Brown is a Democrat.

  207. Totally agree edith you. One thing though, Sherrod Brown is a Democrat. Arlen Specter was the 3rd Republican vote.

  208. Where is all of the money supposed to come from? Let immigrants in regardless of their financial status and we pay for their health care etc. Medicaid spending is out of control. NY state spending is orders of magnitude higher than other states. My taxes are enormous. Yet democrats want me to pay more more more without ever demanding responsible behavior from those that do not pay, and without restricting who can come into this country. You are right though- it is about color.... not black or brown, but simply green. I am tired of paying paying paying for others without getting anything in return from them.

  209. Getting nothing return? You get society in return. You get an educated populace, a healthy populace. Just because you can't easily apply a price tag on that doesn't mean it's not worth anything

  210. NY Surgeon, would I be correct in guessing that you're an upper income urban professional who owns stocks and benefitted from the tax cuts and rise in the market?

  211. @Ny Surgeon

    My financial status does not matter. What people do not seem to realize is that many people feel this way, and if I am wrong, nobody has done a good job communicating to my why I am wrong. hence, Trump.
    But, I do not think I am wrong. What I am saying is that we need to demand responsibility from people who receive payouts, much like responsibility is demanded from me.

  212. What effect does 10,000 people a day retiring and collecting and spending soc sec benefits have on the economy? Is this an infusion of money into the economy? What if these people collect and continue to work?

  213. @observation

    We're at full employment now, so if these people continue to work, younger people, raising a family and building a house etc. will be out of work.

    Allowing older people to retire is a necessary condition for allowing the next generation to thrive (apart from the fact that of course, it's also the most morally responsible thing to do).

  214. My elderly neighbor lived on $16,000 last year. He received back from the IRS $540.

    So much for tax breaks for the poor, working and middle classes.

  215. I tend to view Republican actions over the last couple decades as engineering the biggest theft in the history of mankind by taking earnings from average Americans via tax law and diverting those earnings to billionaires with the same tax law.
    The last tax cut amounts to a fully legal raid on the treasury that commits future generations to turning their lifetime earnings over to the billionaires.

  216. @TheLifeChaotic I often wonder how many mob bosses stare at the walls in their prison cells at night - or even in their mansions, those who didn't get caught - and wonder how much more successful they could have been if they'd become bankers, lawyers, robber-barons, and other licensed thieves who steal things with contracts, mergers and acquisitions, and campaign finance donations instead of with guns and baseball bats.

  217. "What the crisis called for, then, were policies to boost spending, to offset the effects of the housing bust."

    So, Paul, am I too understand the the current admistration, which just cut taxes thereby pushing deficts to 1 Trillion dollars a year for the foreseeable future has corrected past Republican efforts to constrain deficits, hence, slowing growth?

    Republicans, now that they are running the kind of deficits that Obama ran for five years are now on the right track?

    hmmm........maybe something is wrong with your picture of fantastical deficits as a way out of a (admittedly Republican) created economic mess?

    Maybe Dwight Eisenhower's approach after WW II might be looked at again? He brought government spending under control, balanced the budget, and, presided over a real economic boom that ended up ERASING the WWII debt. What was wrong with that approach??

    Has printing money worked for Zimbabwe??

  218. @Michael

    With all respect, you don't get it.

    Nobody except for Republicans are claiming that tax cuts are ALWAYS a good thing and help America as a whole thrive.

    And under Obama, Republicans systematically blocked tax cuts for the middle class and small businesses (the biggest job creators), so the only ones claiming this kind of stuff don't respect their own theory at all.

    What Krugman is saying is that cutting taxes for the middle class stimules the economy only in ONE particular economical situation: a great recession, where consumer demand is very low because people lost tons of money.

    That, moreover, is also the only circumstance in which TEMPORARILY increasing the deficit to pay for a one-time tax cut is justified, as a recession means much lower tax income, which in itself strongly increases the deficit, so the first priority here, ALSO from the point of view of deficit reduction, is to get the economy going again.

    And it worked: Obama came in with a -8% GDP and record and structural $1.4 trillion deficit inherited from the Bush administration.

    When he left, GDP had been at 2% for 6 years in a row, and Bush's deficit was already cut by two thirds.

    What is needed now is a continuation of those policies: no new tax cuts, no new spending bills that aren't fully paid for, and deficit-reducing bills.

    The GOP is doing the exact opposite: huge, unpaid for spending bills, massive tax cuts when GDP is positive so no stimulus is needed, and doubling the deficit...

  219. The deficit currently being run by the GOP has never been slightly touched by any previous congress-dems or repubs.

  220. @Michael What you and so many others conveniently forget is that Eisenhower had much higher tax rates on the rich to work with, and an economy that worked for everyone.

    Strong unions helped workers get their fair share of the wealth they helped create and the pay gap between the shop floor and the board room was a lot smaller. Real anti-trust action kept corporations from becoming too big - having more players in the game instead of a few giants created more opportunities, more innovation, and more competition.

    And let’s not forget the massive government investment in people through the GI Bill. It expanded the middle class, put people through college, and into homes.

    Republicans have been working to reverse all of that for decades. They have succeeded - and they’re not stopping.

    Greed knows no limits.

  221. To their credit, the people involved did what they could at the time considering the limitations created by politics, but in the end, we are worse off than when we started. The financial firms that created and profited from those risks are bigger than ever, inequality is as bad and maybe even worse, and politicians are more likely than ever to work to lines the pockets of the wealthy and the corrupt. That said, some of the choices that these men made were self-serving, treating Paulson's old firm Goldman Sachs better than other firms, or making choices that favored the wealthy over others via Geitner. Much good was done, but even for the positives, bad choices were made that will be impossible to undo. The harm inflicted on small debtors was and continues to be damaging, and should have been unconscionable.

  222. I know, right. It is almost as if the Republican Party is intent on creating a hereditary aristocracy in the US by beggaring the lower classes and reducing them to permanent serfdom.

    And by lower classes this means you, dear reader.

  223. Because they have wiped out the good, solid Middle Class with globalization and automation.
    And by discovering that, without unions, it was no longer necessary to share profits with employees, beginning the obscene boom in the inequality phenomenon.

  224. Really? Most wealthy elite now are Dems - Wall Street, Hollywood, Silicon Valley, pro sports, you name it. They, too, prefer to live above the sweltering masses, sending crumbs to the poor by government programs, promising ever more without delivering. They may vote for higher taxes because their wealth is not at risk. And they know more taxes will always “trickle-down” to the working “middle-class” who carry the burden as always. The government elite mingle easily with the ever-more concentrated power of the financial elite; talk about crony capitalism, we have it in spades.
    The solution: break up the oligarchies, the institutions, the duopolies, and drain the swamp in DC. It will take a curmudgeon. Look! Perhaps we have one!

  225. As an economist myself I totally agree with Krugman's opinion that the fiscal stimulus was too small and cut off too soon or the economy would have recovered in far fewer than ten years.

    However, I also blame Obama and the Congressional Democrats in 2009-11 for failing to change housing laws that would have allowed most of the 10 million families who lost their homes to refinance and remain in them, thus shortening the housing bust. No bank/mortgage official went to prison, but millions lost their homes when they should have been allowed to refinance and stay there.

    Also not all of the trillion dollar stimulus the Democrats did approve was spent. In my own state of Virginia, perhaps a hundred million dollars for temporary jobs went unspent. Why?

  226. @john isn't taking any responsibility for the Republicans making bad decisions. Why not?

  227. Obama had no support from the do nothing congress- both from re-election concerned Democrats & of course the GOP who vowed to sink his legacy. With this dynamic Please explain how any safety valves were to be placed into affect to save the homeowner? The power is and remains with the moneyed class.