Republicans are far worse than hypocrites. They are cynics to their core.
Throughout the Obama presidency, Republicans in Congress were deliberately sabotaging the economy with government shut downs, debt ceiling crises and austerity in fiscal policy. Their goal was stated by Senate Majority Leader Mitch McConnell: make Obama a one-term president. Conservatives hated the Fed back then because it thwarted their sabotage with its Quantitative Easing (QE) programs.
Everyone knows that deficits are fuel for the economy and given the low employment to population ratio, there is still plenty of slack in the economy. We are still well below the level before the Great Recession and far below the peak 19 years ago. https://fred.stlouisfed.org/series/EMRATIO
With very low inflation, more deficit spending is necessary.
28
It's worse than you led on Mr. Krugman. Trump and the GOP increased overall spending from 3.5 trillion to 4.2 trillion in two years, and Trump's latest budget calls for a whopping 4.7 trillion dollars in spending. Given that government evenues are only around 3-3.2 trillion, this will surely result in well over a trillion dollar deficit.
20
Government spending and debt transforms from socialism into patriotism when Republicans do it.
41
Surprise, surprise Donald J Trump does not understand trade. But, according to Trump earlier trade wars are easily won. Tax cuts for the wealthy and corporations remain unpopular for a reason, few benefit from the policy. The fickle nature of the GOP Senate means policy debates await a sound policy recommendation from the White House, a commitment to something. Painting in broad strokes Trump refuses to unveil his fantastic insurance plan to replace Obamacare. His "idea" on infrastructure slammed dunked before consideration of the issues. Immigration once within grasp lost for another day. McConnell refused to be torched by Trump by leading on policy. Nothing gets done.
7
its not just that current deficits are being driven largely by tax cuts and not spending on infrastructure or education. the money spent when incurring deficits is not spread evenly throughout the economy. as a consequence the current deficits are adding to the already severe income and wealth inequality. if and when inflation finally catches up to us this already bad situation will only get worse.
13
Republicans don't see themselves as hypocrites for restraining Obama but enabling Trump. Deficits are fine so long as it is government money going back into their pockets that was stolen from them through taxation to pay for freeloaders.
The gov't owes them. They are simple folks, including all those country club elites, who can't do the math to see that their safe, comfortable life is supported by gov't spending on programs and research and regulations.
Krugman didn't finish his column. The final chapter of huge deficits created from tax giveaways instead of spending on future societal benefits, benefits that the next generation builds upon for their own prosperity, means under investing in what will make America strong in 20, 30 years. For everyone, stiff headwinds ahead and craters for potholes.
Like everything Trump has ever done, he sells his story right up to the moment he scrams out of town with the money leaving behind chaos.
29
“Keynes’s genius—a very English one—was to insist we should approach an economic system not as a morality play but as a technical challenge” (https://www.ft.com/content/be2dbf2c-d113-11dd-8cc3-000077b07658).
https://krugman.blogs.nytimes.com/2008/12/24/keyness-difficult-idea/
4
I have been saying this for quite some time...validation is nice from Krugman.
Still, I think Keynesian spending has to be backed up by an economic base that has a vertical structure to a certain extent. That is something the US has ceded to other countries. During US industrial expansion of the 20th century, ores were mined, materials were forged, components were manufactured and shipped to retail stores or used to build infrastructure. Now the US moved the mining, forging and manufacturing to other countries in order to boost profits. This has not been 100%, but has been significant in the loss of manufacturing capabilities. A baseline of industry and manufacturing are needed long term for Keynesian spending to work…in my opine.
4
Rather than the federal budget deficit, I prefer real government consumption expenditures and gross investment, which includes federal, state and local government spending. Recall the GOP not only captured the House in 2010 but also many state governments. State and local budgets were cut and many GOP states refused federal Medicaid expansion funds.
Real government spending fell by a total of 9.2% from Q2 of 2010 until Q2 of 2014, which is a post-war record decline. Then from Q2 2014 until Q1 of 2016 real government spending increased by 3.7%. It was not a coincidence that during this period GDP growth picked up and peaked at 3.8% year-over-year in Q1 2015. But even that mild fiscal stimulus did not last. Starting in Q1 2016 until Q3 of 2017, which coincided with the 2016 election campaigns, real government spending was basically flat, which helped Trump win. From Q3 2017 until Q1 of 2019 real government spending began growing again by a total of 2.8% over that period, which explains the recent uptick in GDP growth.
8
The flim-flam that Paul Ryan and gang put forth, under auspices of Very Serious People, were nothing more than window dressing to conceal the invidiousness of the 'Capital Strike' crowd that John Boehner so proudly bragged about in his Sep. 15, 2011 NYC speech:
https://www.nytimes.com/2011/09/16/us/politics/jobs-speech-by-house-speaker-john-boehner.html
This was the same crowd which had waged a 'Capital Strike' against FDR, precipitating his famous words:
“We had to struggle with the old enemies of peace—business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.
They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob.
Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me—and I welcome their hatred.”
Americans in the austerity years were plainly held hostage by the tax cut interests, in (yet) another sorry chapter of their epic perversity.
It is a measure of how severely they starved the economy, that even with $2Trillion$ in deficit spending, no inflation is apparent.
17
I just said after reading through cepr.net's GDP (cepr.net) analysis that the US economy is doing as well as it is because of a good old fashioned Keynesian stimulus.
http://cepr.net/data-bytes/gdp-bytes/gdp-byte-2019-04
It's tragic that Lowlife Donnie Trump can make people forget who they are, what they stand for and the difference between right and wrong.
12
Well, as Nixon said back in the day, we are all Keynesians now.
I'd just like to point out that the Trump/GOP's tax cuts are providing an economic stimulus to the rest of the world as well. After all, one third of U.S. stocks are owned by foreigners, right? So one third of the tax cut's dollar value is going to the foreign corporations who Trump claims are working us over when they sell us the goods we want at prices we agree to pay.
This stuff couldn't be more bizarre if it was being written by the guys who write the Onion - truth truly is stranger than fiction.
16
Whoever the Democrat candidate for president is, and whoever are the senate and house candidates are. They need to pound this home. You know the GOP will already be pivoting to "wasteful gov't spending", "tax and spend" democrats, etc.
Instead of the usual cowering, they need to defend sane economic principles. This was a huge tactical and strategic error Obama made. Don't play nice with them, don't assume they just have different ideas on the economy. Of course, it would be easier if 90% of the press wasn't economically illiterate.
Nothing new in this column, but the message bears repeating. Thanks.
18
I'd like to see Dr Krugman compare the spending of the US government with that of the Chinese. While the US has squandered trillions on foolish wars of choice the Chinese have spent trillions on improving their country's infrastructure. How does this difference impact the long term prospects of the respective economies?
14
What Trump and his cronies want, based on their behavior and recorded or proposed policies is what might be called "the worst of Venezuela". They want corruption and they want to put unqualified and incapable loyalists in important positions. They don't want to bother spending on infrastructure or other practical matters of governing. They don't think that the laws apply to them. But while Chavismo, Hugo Chavez' movement, at least rewarded his poor and working class supporters with some support programs aimed at them, Trompismo (the spelling is deliberate) directs its benefits at the well-off and influential, like what we could expect from the Venezuelan opposition, which has strong roots in the traditional parties whose lack of concern for ordinary citizens made Chavismo possible.
6
When the Tea Party changed its name to The Freedom Caucasians (did I get that right?), they did exactly what Professor Krugman said with extreme hypocrisy: forgot all about deficits and went on a spending spree to save our poor, suffering corporations and their CEOs.
Voodoo economics should be dead but it isn't. Why?
11
@Gustav: A policy goal of "starve the Beast" is at the core of the Republican policy agenda. Even Rand Paul, the so-called "libertarian," and John McCain, who saved the A.C.A. with his one measly vote, voted for the tax cut for the 1% and corporations. And I, with an income of $30K per year, got a federal tax refund of $23.
9
A Crisis Wasted by Reed Hundt is an excellent analysis of the early macro choices made by the Obama administration.
"You let me write $300,000,000,000.00 worth of hot checks a year and I to could give you an illusion of prosperity", Lloyd Benson, 1988 on the Reagan recovery.
That is Republicans using deficits to argue against education, healthcare and even food stamps (the one Government program that actually reduces the deficit by bringing in more tax revenue than money spent on the program) well at the same time looting the treasury to create better economic numbers is the policy of every Republican president since 1980.
The same is true in regard Republicans in congress trying to sabotage any Democrat president by not allowing any measure to address the nations problems. That the U.S. senate in 1993 - 4, the first two years of the Clinton presidency when Dems held the majority, had more filibusters than in the entire history of the Republic before 1993.
The problem is the Republican strategy of using opposition to deficits to sabotage Democrats well being all for deficits to help Republicans has worked. In 1994 and 2010 stopping Democrats in the White House from passing laws was responsible for big Republican midterm gains and deficit spending was also responsible for George W Bush's victory in 2004.
But Because Republican deficit hypocrisy has been good politics, it will continue until pay a political price for their hypocrisy.
11
There was a time when we believed in investing in our children, our roads, our nation. We believed Rights came with responsibilities. “Ask not what your country can do for you. Ask what you can do for your country.” Now it’s “What profits can you wring from your fellow Americans, even if you have to commit fraud to do it.”
50
The flim-flam that Paul Ryan and gang put forth, under auspices of Very Serious People, were nothing more than window dressing to conceal the invidiousness of the 'Capital Strike' crowd that John Boehner so proudly bragged about in his Sep. 15, 2011 NYC speech:
https://www.nytimes.com/2011/09/16/us/politics/jobs-speech-by-house-speaker-john-boehner.html
This was the same crowd which had waged a 'Capital Strike' against FDR, precipitating his famous words:
“We had to struggle with the old enemies of peace—business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.
They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob.
Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me—and I welcome their hatred.”
Americans in the austerity years were plainly held hostage by the tax cut interests, in (yet) another sorry chapter of their epic perversity.
It is a measure of how severely they starved the economy, that even with $2Trillion$ in deficit spending, no inflation is apparent.
20
@R. Law - What a timely use of this great Republican takedown by FDR. Unlike in wrestling though, when Republicans are taken down, they keep lumbering back and abusing power in the same ways over and over. I wish I could paraphrase your opening statement in slightly simpler words that might resonate more with those working class voters who keep supporting Republicans, but if they can't understand you or FDR, perhaps they are beyond any hope of persuasion by anyone.
6
@Gary - Hey there; we're holding down the fort here for you, and the day you can come back because Texas will be more purple - it's a tough slog.
Yes, too bad actual facts have nuances that preclude easy soundbites/paraphrasing, even though they seem to always be so liberally biased.
The best distillation is most likely "Friends don't let friends vote GOP".
6
Would someone please explain to me why the national debt is anything other than an accounting fiction? Since the federal government can create as much money as ti needs out of thin air, it has an infinite supply of money so ANY finite sum is insignificant.
So if we wanted to, we could eliminate federal borrowing, and simply create as much money as we needed for federal government operations WITH NO DEBT.
What about inflation? Well, while prices ARE proportional to the amount of money in the private sector (which only has a FINITE amount of it), they are INVERSELY proportional to the amount of stuff we produce. Ya make more widgets, their price goes down. So if we spend the federal money in a way that increases production, prices probably not go too high.
And if we see that prices are going too high, why THEN we can raise taxes and take some of the money out of the private sector. The federal government does not need that money to pay for things. That is not the purpose of taxes. The purpose of taxes is to control the amount of money in the private sector. Since the federal government has an infinite supply, it may as well just shred the money it takes in as taxes.
But most people think that like their family finances, the federal government only has a finite amount of money which is just wrong.
The federal government will run out of money the day after the NFL runs out of points.
14
This should be a Times pick. We could solve a lot of important problems in this country if we could just stop asking “how do we pay for it?”
4
@Len Charlap
There may be a few holders of U.S. Treasuries that would like these investments to retain some value. Perhaps you should start there in your macroeconomic quest.
@Gregg54 - As a economist once remarked, "The only reason to sell Treasury bonds is to provide a risk free method of savings to the public."
If you buy Treasuries, you always have to worry about inflation eating up your money.
Deficit spending for defense or infrastructure are investments in American economic and political security. Borrowing money to invest in our military keeps the United States the only super power on earth. Our national military might keeps us safe, free and therefore prosperous.
Deficit spending on social programs that do not advance our values nor incentivize good behavior is absurd. Our economy is growing because jobs are available and people must work to pay for their needs. Provide welfare and the incentive to work diminishes and robs men and women of the pride of being self sustaining. No money should be spent to deny our brothers and sisters of this unique pride we Americans enjoy. We pay our own way. Proudly.
The author will never give Trump credit for the economy. Wait; he will someday, when recession returns, claim that then we have the Trump economy.
Tax cuts helped supercharge business investment and that creates jobs. We all win when our economy is booming and our military is strong. We owe our warriors the best physical and mental healthcare money can buy. Borrow for that, we all agree, and spend wisely the dollars borrowed to keep America strong.
@EWG
The data indicate that tax cuts do stimulate!!
Stock buybacks.
Continuous investments in the military-industrial complex we have now is creating billion dollar targets for thousands of cheap drones.
But it does make the military-industrial complex richer!
5
Why is it the MI Complex now calls our soldiers warriors? And why are you parroting it? Why is spending on educating and lifting people out of poverty wasted spending? The guns vs butter debate has been going on for centuries. W and friends got us in to these never ending illegal wars and we are going to take many decades to pay them off, if the planet survives.
2
@EWG
Where is the evidence that the Trump tax cut "helped supercharge business investment"? I haven't seen much, but you must have some basis for your assertion. Please educate us.
4
Professor Krugman is spot on as usual. In layman’s language the Republicans are mortgaging our grandchildren’s futures to enrich the fat cats. At some point we may see the equivalent of the French Revolution. But first the bubble is sure to burst, and let’s hope it happens in 2020 before the election.
6
Unemployment looks low because of how the government defines work and who is not counted. In reality it's not as low as claimed. We continue to hear companies complaints that they cannot find qualified people. Except for a few instances that is not true. There are plenty of people who are in need of jobs, who have the skills and are not being hired or considered. Why? Companies don't want to pay for experience. There is rampant age discrimination. Companies are advertising for too many skills in one person. And companies prefer to outsource to other countries where the pay is less even if the end result is not as good.
As for deficit spending, all we have to do is look at each other to see that. This "recovery" is not real. Never mind what the GOP controlled government refused to do when Obama was in office. Look at the figures on how many Americans cannot deal with a monetary emergency of $1000 dollars without going into debt or having to choose between paying the mortgage or the utilities.
In my opinion, and I'm not an economist at all, the biggest danger to our country's well being is our reliance on credit. It wouldn't be a problem if most things were not beyond our reach to cover, didn't require payment plans over 5 years to pay in full. How many Americans own their cars, are not in debt for their educations, can cover an emergency medical bill? Leave out the richest and my bet is this: almost no one.
5/7/2019 11:05am
9
Is there a meaningful estimate of the multiplier effect of the Trump tax cuts to-date? The Bush Tax cuts were measured at around 0.3 and the stimulus spending after 2008 was measured between 1.2 and 1.5 (or there about) by the IMF. It would be interesting to get a sense of where this stimulus fits in. I'm guessing it's closer to the Bush tax cuts.
And what about the cost of deregulation? To what extent is the current "boom" at the expense of the environment and consumer protections?
32
Republicans have one principle and that is that they have no principles. They'll adjust their beliefs, sometimes reversing them 180 degrees as long as in the end they get their way. It's really that simple and blatantly hypocritical.
17
The problem:
https://twitter.com/BrankoMilan/status/1125321020448104450
Branko Milanovic @BrankoMilan
Relative price changes between houses and equities after 2007 have produced the largest spike in wealth inequality in postwar American history. Surging post-crisis wealth inequality might have contributed to the perception of sharply rising inequality in recent years.
ProMarket @ProMarket_org
Booming stock markets & the collapse of house prices in the aftermath of the 2008 financial crisis have increased US wealth inequality to a new historical high. Meanwhile, the racial wealth gap has stayed put for over 70 years....
1:46 AM - 6 May 2019
1
“After a Republicans took control of the House in 2010....”
Republicans have been super lucky:
In 2010, with 300 safe House seats Republicans won an unprecedented 128 of the remaining 135 seats with a small national vote share even though close races should break about even.
And in 2014, the approval rating of the Republican Congress was in the single digits, yet the ‘Party of No’ swept up more seats despite the fact that progressive ballot measures passed by wide margins, even in non-blue states.
These are huge red flags. We don't conduct banking without a transparent and verifiable process, why are we putting blind faith in secret vote counts?
Election Theft in the 21st Century with Jonathan Simon https://tinyurl.com/ydz3jcvj
NYT Magazine: The Crisis of Election Security https://tinyurl.com/yczwsupq
“[Steny] Hoyer insists that the subject of security and paper trails didn’t come up when lawmakers were developing HAVA. But Rebecca Mercuri disputes this. A computer scientist at Bryn Mawr at the time, she told the House science committee — in a hearing that was meant to inform the lawmakers writing HAVA — that ‘any programmer can write code that displays one thing on the screen, records something else and prints out something else as an entirely different result. I have freshmen, by the way, who can do this. There is no known way to ensure that this is not happening inside of a voting system.’”
#DemocracyDemandsTransparentVoteCounting
#HandCountedBallotsNow!
10
"Politically, we’ve learned that the G.O.P. is deeply hypocritical."
So it has always been.
So it shall likely always be.
6
no mystery about what trump is doing..... trump, surprised by his win in 2016, is running the country the only way he knows how..... by the seat of the pants and no "interference" from knowledgable people. I believe we will be another one of his bankruptcies..... the biggest ever!!
9
Welfare for the rich, belt-thightening for the poor. And of course, Bait-and-switch and racial whistle calls to distract from the obvious.
55
@SJP yes, and what's most frightening of all about this is how few people realize exactly what's going on. This is pre-WWII Germany, when the prejudices were being inflamed and constantly stirred up. Every problem was blamed on Jews and foreigners. History may not repeat itself but it can be circular and return to old themes. This reader wishes the themes were of a more positive nature or helpful.
9
The economy looks good due to consumer spending. In general consumers know little about economics, most of what the think they know is opinion,not fact. The GOP tax cut is creating a deficit exceeding any seen previously. It was not too long ago that conservative thinkers considered almost any deficit spending as leading to economic disaster, their solution was a return to the gold standard to prevent that. But history showed a rigid gold standard led to deflation.
Now we also low unemployment, we do not know who that incorporates, a great many people dropped out of the work force and are no longer part of the calculations. Thanks to what is perceived as a booming economy, personal debt is again at the same level as it was in 2008 just before the recession. Surveys show 40% of the population can not produce $400 on demand, they live day to day, savings are low. Those that have savings put them into the market, which has risks, so any disruption can cause them financial problems.
The market is oversold, the average P/E is far above historical numbers. Yield on investment is lagging inflation, even Treasury bonds are behind inflation. That puts pension plans in the red. Economics is "Human Action." We may soon see how much the government can spend to keep up appearances.
Dishonest Donald's economic advisors have a record of being wrong at a high rate. We are on a sugar high at the moment.
81
@David Underwood Great comment, David, so perhaps I'm nitpicking, but with average P/E ratios far above historical averages, it seems better to say the market is overbought than to call it oversold. For every buyer there is a seller though, so I suppose you could look at it another way. Anyway, I'm glad to see you're still here telling it like it is - I enjoyed your comment, as usual.
8
@David Underwood
You mean that the market is "overbought," i.e., too high, not "oversold" as you wrote. I tend to agree.
4
@David Underwood Thank you for mentioning the unemployment figures. At best they are only a story half told. I wonder what the real story is.
2
This article is a good rebuttal to Neal Irwin’s article yesterday about our unexplained miracle economy of growth without inflation.
There’s no miracle, just an incomplete story. Deficit-funded stimulus in good times is a sugar high that sells out the future. Rising inequality and globalization limit wages and prices.
We’re binging on credit and keeping profits away from people who might spend them.
10
I second your point. Irwin was saying, in effect, that really low employment and huge deficits should be inflationary, but they aren’t. The correct answer is, they are inflationary, but the inflation shows up later. That stuff causes inflation. You get one and then the other, later, when it’s too late to stop it except through painful monetary action. Or we become Weimar Germany.
2
How does a country create the crisis that requires the dismantling of social safety nets of all types? First, bigly cut tax revenues. Second, bigly balloon deficit spending. Third, sit back, watch the train wreck, and then deliver a moving speech that we are all in this together and now is the time for meaningful sacrifice from the beneficiaries of social programs. Meanwhile, the rich get richer, the poor get poorer and sicker, and our democracy fades.
13
@Mr. Anderson It is called "starve the beast" with the beast being the Federal Government. It has been the operative Republican policy since 1980.
1
Since Mr. K like using abbreviations for economic terms, I will use one of mine O.M.I. which stands for the Obama Misery Index.
Meaning because of huge job losses and Obama's inability to create only jobs in the bloated Government and service minimum wage jobs, families lost their homes, saving, retirements, divorces happened, family dysfunction, spouse abuse child abuse, homelessness, murder, murder suicides, food stamps, welfare rolls and applications for Disability insurance soared.
Trump with deregulation, tax credits for 82% of middle class taxpayers and small businesses has stimulated an economy that was waiting for stimulus. Drive down streets new business pops up in long vacant storefronts. People have a more positive outlook. Kruger can have his Pulitzer but he lost his credibility a long time ago with his political driven opinions.
1
Off topic here, but in response to your tweet on Tiger Woods getting the Presidential Medal of Freedom (since I don't use twitter). Your assertion that people used to get this award mainly for sacrifice and contribution is just not true if you look at the record. Woods is the 4th golfer to get it. The list is full of celebrities and politicians. Remarkably short list of scientists, I noticed, which is a poor reflection on our Presidents. Even winning the Nobel Prize is rarely enough for American Presidents to take note.
2
The one thing that Keynesian economics is indisputably good for is Monday morning quarterbacking.
2
If you believe that candidates run so that they can govern equitably, I have a bridge that might intrigue you.
Winning doesn't require fair behavior; in fact, politicians often avoid doing the honorable thing because their judge is not some noble standard but chronically ignorant voters.
Paul, you can cite chapter and verse on the scorched Earth prescriptions of those who were willing to give George W. Bush the two wars he desired and now have deeded the government printing press to Trump.
So what? Even if you know and I know, that's two votes. How does a public raised on red lining and contempt for Cesar Chavez and his brown fruit pickers come full circle and realize that their indoctrinated impulse to punish poor people for not accepting their lot with quiet good humor is harming not only those Others but also the country as a whole?
How many GOP voters grok how little a border wall would curb immigration but want it anyway, whatever the cost? Like graffiti staining the landscape, their wall would deliver a profanity-laced message to less fortunate peoples, that the American dream might currently wallow in an Oxy stupor but it must have value because it can be withheld from those who want it.
No money for Medicare for All but an open treasure chest for the war Trump will provoke to make himself a war President and therefore re-electable. No money for Flint or Puerto Rico but carte blanche for Houston.
The austerity talk only erupts when inconvenient people need help.
10
I can imagine the next Republican electoral message: "Vote Republican, or we'll do every thing to hurt the economy!"
4
Now that Trump and his party of hypocritical sycophants have opportunistically gone full Keynesian (for now), perhaps they would be so kind as to re-read the last 4 words of a quote often attributed to Keynes:
"Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone"
Trump and the GOP have nailed "wickedest". But the rest?
They are already hard at work to make sure the stimulas effect of the tax cut for the one percent comes nowhere near providing the "greatest good of everyone".
But you can be sure the bill will be paid by demanding years of program cuts for everyone else.
5
The Republicans use cynically adjusted budget deficits. Like anything else, they are OK if you are a Republican.
3
The question now is how do you respond if you are the Democrats? If you complain about the deficits the Republicans will call you hypocrites, regardless of it being situationally different it will hurt because that detail wont be in the headline. If you allow them to continue the deficit spending they win the pocketbook voters.
There's still 18 months before the election. A new budget will come into play in October with the Democrats in position to lead on that budget since they control the house where budgets starts.
Two key points for the Democrats to focus on are rebalancing the tax burden and closing the holes that allow large corporations to not only avoid paying taxes but to actually get money back despite all those untaxed profits. These are popular positions that would not be sabotaging the economy for political gain. Drive for those and be certain the public sees the reverse Robinhood policies of Republicans.
5
Yes, deficit spending, but also unrestrained destruction of the government and the environment. Things that really need to be managed, fossil fuel reduction and environmental issues, taxes and inequality, are ignored so the corrupt and wealthy can strip the last of the flesh of a dying carcass they help kill.
7
'Austerity for Democrats, stimulus for Republicans'
nice one - aka Stealing from the Poor to Give to the Rich ...
Government of the Poor, by the Rich, for the Rich ?
4
Don't you remember Paul Ryan, the (wink wink) policy wonk who was adamantly against deficit spending......as long as Obama was president? What a joke of an elected official! History will not be kind to him or most of the elected GOP who valiantly stand for against something.....until they don't anymore, and instead they do the exact opposite of what they said.
9
Paul,
You are dead right. If the Dems win in 2020, the Reps will do another 180.
3
I'm surprised the a Keynesian like Krugman doesn't address the problem that perhaps, just perhaps, the modern capitalistic economy suffers from a CHRONIC shortage of demand. While many moan and complain about "deficit spending," it seems that we only do well when the government is fully spending and then some. Similarly with the trade deficit (which we've had since I was a child in a galaxy far away and a time long, long ago). No one seems to even entertain the idea that our modern economy MUST have massive government deficits in order to grow. (Hush: go read a little Karl Marx and some of this might just make more sense)
1
The politicians are playing the same game with the federal government that made takeover artists rich bankrupting corporations. The recent New York Times piece on the Remington gun company is an example of this strategy in action. Step 1: gain control of an company. Step 2: have the organization borrow as much money as possible. Step 3: pocket the borrowed funds. Step 4: step away and watch the victims go broke trying to repay excessive debts. We must make this predatory business practice illegal, like Ponzi schemes, before we all go broke.
15
George W. and his merry men wanted to force the Social Security Fund to "invest" in the stock market. The public screamed "No way!" Now, rumors persist, that the Feds are directly buying stock, effectively socializing the stock market ala Bank of Japan. Now, it seems, all Americans are "invested" in the Market and assisting large corporations in buying back their own stock with freshly printed public money. Seems "they" are redefining Capitalism and the old rules no longer apply. But, I'm fearful, as Mr
Krugmam suggests, a huge mess will be left when the robbers gallop out of town.
5
The intellectual dishonesty and bad faith of the Republican party has been on such blatant display, since at least 2009, that it's a bit perplexing that they even bother to disguise it anymore.
Shortly after the 2008 election, with an epic GOP-enabled financial crisis staring the country in the face, Mitch McConnell marshaled his fellow Republican "conservatives" and declared that the most vital task at hand was to oppose anything and everything that the incoming Democratic president might propose--regardless of any merit or benefit to the country of such proposals. Their mission was to obstruct president Obama. Period.
From that point forward, Republican arguments recycling debunked conservative economic tropes really don't even merit serious discussion. The hypocrisy and bad faith is completely transparent---and insidious.
19
Any citizen who takes on debt knows to borrow when interest rates are low. That is what the U.S. government should have done during the recession. But the GOP intentionally refused to help the majority of citizens so they could undermine President Obama.
In 2017, the GOP decided to borrow, when interest rates had increased. And they borrowed for the sole purpose of cutting taxes on the wealthiest corporations and human citizens in the U.S. while gutting government services for the majority of citizens.
We citizens get what we vote for.
11
@June and don't forget that from Trump on down, they're screaming for the Fed to lower interest rates to lower the costs of their unpaid for deficit spending.
5
@June Except we dud not vote for Trump and Republicans. Russians did.
3
There has not been as dishonest a bunch of politicians assembled in one place since the days of Tammany Hall. This time, they're in the Senate and not New York but the dishonesty is just as deep seeded.
It shows in many ways.
Republicans are in favor of welfare for wealthy corporations but not for hungry children.
Republicans are in favor of taxing the middle class but not wealthy individuals or businesses.
Republicans are in favor of helping dying industries such as coal where jobs are disappearing but not assisting new and growing industries such as solar where companies cannot find enough skilled employees to meet the demand.
Republicans are in favor of helping wealthy white executives but not poor people who did not have the common sense to be born to white parents.
Republicans are in favor of helping wealthy pharmaceutical companies but not people who need medication to stay healthy or even survive.
How any honest and thinking American can vote for anyone with (R) after their name escapes me and belies rational thinking.
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@Charley James - Yep, the flim-flam that Paul Ryan and gang put forth, under auspices of Very Serious People, was nothing more than window dressing to conceal the invidiousness of the 'Capital Strike' crowd that John Boehner so proudly bragged about in his Sep. 15, 2011 NYC speech:
https://www.nytimes.com/2011/09/16/us/politics/jobs-speech-by-house-speaker-john-boehner.html
It is the same crowd which waged a 'Capital Strike' against FDR, precipitating his famous words:
“We had to struggle with the old enemies of peace—business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.
They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob.
Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me—and I welcome their hatred.”
Americans in the austerity years were plainly held hostage by tax cut interests, in (yet) another sorry chapter of those interests' epic perversity.
It is a measure of how severely deficit scolds starved the economy, that now - even with $2Trillion$ in deficit spending - no inflation is apparent.
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"Explosion of the budget deficit"
Maybe, maybe not.
In 2018, the budget deficit fell by $200 billion as a percentage of GDP.
In 2016, the budget deficit increased by $125 billion as a percentage of GDP.
Debt service is just 1.6% of GDP, less than half of the peak set in the 1990s.
@John Huppenthal
Here are previous Federal budget deficits and the projection for 2019.
2017-$666 billion
2018-$779 billion
2019-$896 billion (projected)
I’m not sure what you are talking about. The deficit grew by 17% 2017-2018 and 15% 2018-2019. GDP did not grow as much.
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@Mark
In 2018, GDP increased by $985 billion (nominal) while the deficit was $780 billion. That means that debt fell as a percentage of GDP by $205 billion.
In 2016, GDP increased by $480 billion with a deficit $584. That means debt as a percentage of GDP increased by over $100 billion.
And, this number will only keep getting better. 5.7 million people have escaped welfare dependency in the last 32 months. That trend will keep moving indefinitely. More startling, a million people have escaped Social Security disability.
Having 1.2 million more open jobs than we have unemployed is a first in history. Never seen before.
And, revenues are going to start growing at a 5% plus pace.
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@John Huppenthal
I'm sure there is a point I'm missing, but it seems that what you are saying is we borrowed 79% of the growth in GDP in 2018. Most of that went to the tax cut which was geared to the wealthiest 1%.
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So grudgingly, Dr. Krugman kind of admits he was wrong about...well just about everything when it comes to Trumponomics. The stock market, which he said would never recover, recovered within hours of his prediction. Then a couple of days later he piously claimed that he was noble for for admitting obvious that he had been wrong. GDP growth is strong. Unemployment is historically low and continuing to drop. The stock market is booming benefiting retirement plans. Poor Americans are actually benefiting from the boom. Real wages and real wealth are rising for all Americans, not just the rich.
Now Dr. Krugman claims that Republicans are running huge deficits to stimulate the economy as long it does not help poor people. There are two profound problems with this argument. First, deficits as a percentage of GDP are not even close to what they were under Obama. Second, apparently Dr. Krugman fails to understand (because like most progressives he is blinded by ideology) that nothing helps poor people more than jobs, especially when there is upward pressure on wages, as there is now, but which never occurred under Obama.
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@Charles - The reason wages are finally nudging slightly upward is largely the result of the high tech and healthcare sectors where demand for highly skilled workers outstrips the supply. At the bottom end of the ladder, wage growth for food service workers is happening only in states that have raised the minimum wage, as one example.
GDP growth is not strong. It is barely limping along. Worse, the fact that bond yields have inverted means a recession is looming. But Trumpsters have stripped the government of the ability to respond to the coming slowdown.
The only entities benefiting from the current economy are corporations and wealthy individuals. I am counting the days until January 20, 2021 - and hoping, as I do, that democracy and the economy survive that long.
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@Charles
Not really addressing the point of the column: The economy under Obama was not as strong as it should have been because of the efforts of congressional Republicans. Efforts that were described as concerns over inflation and budget deficits. We now know that those "concerns" were all about politics and doing anything possible to wreck the Obama Presidency.
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@anthony, nice try. Obama had a full Democratic Congress from 2008 till 2010. He got every stimulus he wanted. Try again.
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This is yet another thorough and articulate account of Republican policy, and the ways they've used it to further enrich the richest Americans who've never experienced the least bit of hardship at the expense of the many who live it daily. I used to participate here regularly, usually because doing so helped inform my views, and sometimes because I had something I thought was worth adding to the forum. What I got in return was more attention than I deserved, but also "friends" who dug in their heels all the deeper anytime I tried sharing anything I learned here with them.
I get demoralized at the senseless direction the country has been driven down due to government by a lot of corrupt politicians, but I didn't bow out out of pressure from anyone else, I only stepped aside because I had already said everything I had worth saying on these matters. A lot of newcomers are adding new insights to the mix, and I needed to publish in my own field, which is teaching EFL in three Japanese universities. I'm glad and grateful to the many others putting up the good fight here. It's hard to know whether we're making any progress, but without their fight for a fairer and brighter future for all Americans, things would be even worse than they are, and hope for anything better for our children would already be lost.
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The observations are true. However what difference does it make to observe and not act?
One party will compromise and the other will not. We’ve thrown out the rule of law. So called conservative media is predicated on lying and MSM is so focused on access and whataboutism that they allow them to do it. They flipped the Supreme Court and now the lower courts. They took away minority rights in the Senate. They suppress voting.
Power is all they care about.
The times, they are depressing.
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Mr. Krugman, do you have a suggestion on how to break out this cycle in which Republicans drive deficits and reap economy growth while Democrats clean up the mess the GOP made and reap the downside of a shrinking economy?
Because that's been going on for decades as far as I can tell. You may not like what the GOP has been doing all along, but it sure looks like they have gotten themselves into a position where they can position themselves as economy experts, leaving the Democrats with the damage done. And at the same time, they are able to grow the economy over the backs of their voters. Leaving them with scraps while the actual benefits go to their billionaire donors.
How's this even possible? I'm at a loss.
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I’m spending time in Europe on vacation, where the middle class is huge, and people live a generally good life. What is happening in the United States is making me sick. We must tax the rich and give to the poor. There are various ways of doing that, and we need to start now.
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Your history is accurate but I would like to footnote the recovery. It was not an Obama recovery. It was a very slow recovery from a drag on fiscal policy (your advice was sound) created by a Republican majority Congress from 2010. From the T-Party takeover, no thought of increasing the stimulus as you suggested. Mr. Bernanke testified that his efforts at the Fed to stimulate the economy were hampered by fiscal "headwinds".
The full employment claim drives me a little crazy because the economy has had a huge loss of labor participation.
And the super loss was the real loss from the potential economic that could have and should have been avoided. The financial blowout came from a wild financial industry that took the brakes off of personal responsibility. Our weak monitoring institutions that allowed the creation of new investment products that appeared to only make a few people very rich at the expense of millions globally.
Now we have very high personal debt, aging and deteriorating transport that is not competing well in terms of efficiency and a wacko new interest in tariffs, toll roads, and congestion pricing that come out of the hides of the average worker. And a ridiculous minimum wage, many workers with 2 or 3 jobs to make ends meet, and years of flooding, droughts, wildfires and crop failures to show for our negligence. And the cherry on top of this greedy policy is a 4 decades long income gap.
It was a sad period, nothing to be proud of.
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Yeah, congrats to Trump for reducing the unemployment rate from 5% all the way down to 3.6% (as Archie Bunker might have put it, "Whoop-Di-Doo"). Now here are some questions that need to be asked (as they were of President Obama's much larger reductions in the unemployment rate): How many of those jobs are full-time, pay well and carry decent benefits? How many Americans are still working two or three jobs in order to pay their bills? How many are no longer carrying a load of debt proportional to the nation's? How many have been able to increase their savings, even given the tax cut that came at the expense of the next generation? And how are they faring in those small towns in Middle America that have seen their one factory close down and their small businesses on Main Street boarded up and who saw fit to vote for The Donald in 2016? Has there been evidence of a dramatic turn-around- or do we still need to chase away those job-stealing "illegals" whose employment at Mar-a-Lago was terminated only recently?
comment submitted on 5/7 at 12:54 AM
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It’s wonderful that Krugman has finally admitted that his political hackery clouds his judgment on economics. The question is why would he even continue writing the rest of the article given this admission.
It cannot be disputed that Trump took Obama’s “you didn’t build that” stagnant economy, where middle-class and working-class purchasing power had not moved, the work force was shrinking, and GDP per capita growth was down to 1 percent and not accruing to the lower two-thirds of the population at all, and produced over 3 percent income growth for all socioeconomic echelons.
Trump’s tax cuts and repeal of redundant regulations have unleashed American economic ingenuity. What is perhaps just as satisfying, he has forced bitter partisans like
Krugman to eat a healthy slice of humble pie.
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@Registered Repub: Yeah, by his own admission Krugman was mistaken for all of three days. But for how long will you be mistaken in your praise for Donald Trump's economy? His tax cuts and repeal of "redundant" (i.e., consumer-effective, anti-pollutant, anti-monopoly) regulations have been good for the captains of industry, most of whom have inherited the bulk of their wealth and continue to exploit their own workers. There's only recently been some degree of upward movement in salaries, mostly because the lower unemployment rates have given those workers a degree of opportunity to quit and latch on elsewhere. That is, however, chicken feed compared to what their bosses are (pardon the expression) "earning."
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@Registered Repub Unemployment was just over four percent when Trump took office, and it's just slightly under 4% now. As Professor Krugman correctly notes, the economy has expanded due to Trump's use of massive fiscal stimulas, but then every Republican has used tax cuts to further enrich multi-millionaires at everyone else's expense since Ronald Reagan first began setting new records in deficit spending. I noticed that you failed to note the more than 2 trillion dollars that Trump has added to the deficit, or that such debt amounts to deferred taxes. You also never mentioned the trillions in largesse he shared with wealthy European and Asian investors, in the form of tax cuts on investment income earned in the American stock and bond markets. Trump has given more aid to Europeans and Asians than at any time since the Marshall Plan, but unlike post-war rebuilding, his aid went entirely to wealthy investors in those countries.
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It’s wonderful that Krugman has finally admitted that his political hackery clouds his judgment on economics. The question is why would he even continue writing the rest of the article given this admission.
It cannot be disputed that Trump took Obama’s “you didn’t build that” stagnant economy, where middle-class and working-class purchasing power had not moved, the work force was shrinking, and GDP per capita growth was down to 1 percent and not accruing to the lower two-thirds of the population at all, and produced over 3 percent income growth for all socioeconomic echelons.
Trump’s tax cuts and repeal of redundant regulations have unleashed American economic ingenuity. What is perhaps just as satisfying, he has forced bitter partisans like
Krugman to eat a healthy slice of humble pie.
@Registered Repub except for none of that is remotely true, if you ignore the facts then yes you have an argument. https://ycharts.com/indicators/us_gdp_per_capita_growth shows you are absolutely incorrect.
2
I think it is wrong to call it spending - it is more a redistribution. In essence the corporate tax cuts were a transfer of funds from the public purse (actually the country's mortgage) to the share-owners: from each irrespective of his ability, to each opposite to his needs.
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Let us not forget that the Very Serious People whom you refer to were bye and large liberal economists, who presumably were more concerned about public welfare and the common good than their conservative counterparts, yes? And so it behooves us to understand how they could possibly have been so misguided in their analyses and predictions.
Most of them, like Larry Summers, convinced themselves that what is good for Wall Street is good for America, and so suggested policies accordingly. While the bribes and perks offered by the banks, brokerages, and other financial institutions were surely influential, the shallowness of the economics discipline itself must also be considered. Where there are no reliable rules, laws, or principles, not only can anyone call themselves an expert, but even the most self-serving and irresponsible policy proposals can be foisted upon a credulous public. And when that public has finally had enough, well, Hello Donald!
3
@kbaa: You've got it wrong, I'm afraid. Most of those economists were quite conservative in their thinking, as was certainly the case for Reagan, the Bushes and presently The Donald.
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@kbaa You are incorrect about the VSP's. There may be some liberals in their ranks but all conservatives can be found there.
Pay more attention.
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@kbaa actually the VSP were almost exclusively conservative economist. Larry Summner isn’t really an economist he’s a wall streeter. No he’s talking Gina about the likes of kudlow et al, and moore. And of course the speaker Paul clueless Ryan
2
This is not the Party of Lincoln. Intellectually it is the party of Calhoun and like the ante bellum Democratic Party, will not spend any money on improvements or as we say today, infrastructure.
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Guess I’m confused. Agree, all the money appears to be going to buybacks, and more generally the rich. Still, how are we seeing a Keynesian bump if none of the money is making it to the people who spend their money? It almost seems like it’s “trickling down”? I mean, I hope not, but your argument seems to have a hole in it.
1
@R. Jeremy Dr. Krugman answers your question in his column: the money's coming from federal spending, NOT the tax cut.
"the federal government is now pumping as much money into the economy as it was seven years ago, when the unemployment rate was more than 8 percent. ...
In particular, real discretionary spending — expenditures other than those on Social Security, Medicare and other safety net programs — has surged after years of decline."
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@DonMcV and tax cuts. Some did make it to people below, until the rate reductions expire in 2022
3
@Kyle Samuels
I spend my 50 cents per paycheck on a quarter of a cup of coffee.
1
Since America will never pay off the National Debt completely, every current annual budget deficit of a trillion dollars will mean anywhere from $20 Billion to $60 Billion in additional interest payments alone every single year forever. Rock on folks.
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@rocky vermont
Yes, but in 2544 a person in my position will be making $60 billion by himself. So, really this is a deal!
1
My problem with Paul Krugman’s articles is how clear his bias against Republicans is. Do I agree with the tax cut? Not necessarily. But Krugman decided in November 2016 that the economy was going to falter, and has been looking ever since for evidence of his claims.
Of course, when you predict something and also predict it’s opposite, as he did, it becomes much easier to say you were correct in retrospect. Something tells me, however, that if the current administration was of a different party, but was responsible for similar fiscal policy, Krugman would be among those cheering the government on. Oh well.
1
@Christopher Loonam: Did you read the part where Dr Krugman said his post-election prediction was wrong?
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@Christopher Loonam
Krugman made a mistaken call, but retracted it soon. I suppose you never made any mistakes. Of course, he has a political opinion, but when he does economics he tries to be objective.
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@Christopher Loonam
He wrote clear as day that he was in error. He even faulted his dismay at Trump's election. But here you are acting as though Krugman didn't write that. I think the bias you are struggling with is your own.
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Exactly. Everyone's celebrating the strong economy but we could have had this starting in 2014 or even 2012. The Republicans owe Americans 6 years of reparation for their negligence, not to mention creating the fiscal crisis in the first place through deregulation.
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I seem to recall that B.Clinton signed off on the repeal of Glass-Steagall — much to my and many others’ chagrin! Even our guys make big mistakes sometimes.
8
In reality, the big change in 2016 is that Republicans stopped lying about how awful the economy was doing and started lying about how great the economy is doing.
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“ The modern conservative is engaged in one of man’s oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness “ - John Kenneth Galbraith.
Utter perfection, period.
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A major goal of "austerity programs", based on false claims of excess government debts, seems like it was a strategy to keep the brakes on the economy and keep Obama from gaining success. Critics kept saying the economy was not growing as fast as it should have; implying Obama was failing.
As Paul notes, the opposite tack is now to spend every dollar they can find to heat up the current economy even more. Now Trump and his backers take credit and plan to take the 2020 election with this success.
The crime here is deliberately sabotaging a recovery from the great recession and thus causing pain to millions of people struggling to regain their lives. All for the political and economic gains of their masters.
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"Employment is high, unemployment low". . . "because Republicans have embraced . . . deficit spending". "But none of that spending is being used to help those in need". Really? Doesn't, "those in need" include people looking for and finding jobs? Is it better to spend to increase employment or welfare payments? Should we, as Democrats are doing, encourage a stampede of essentially unemployable immigrants who seek not work but welfare benefits? Or should we try to build a strong economy with high employment by encouraging increased business activity as Mr. Trump is doing? Democrats seem fixated on building a sprawling welfare state full of languishing government- dependents. Which should voters choose?
@Ronald B. Duke Actually reading the article might help. Infrastructure investment is hardly welfare. Spending for childcare which means education and development of those children is an investment that has been shown to pay off in the future. Providing decent healthcare for all pays dividends as well as being the humane, decent thing to do. Trump encouraging business opportunities? That would be true if there had been a surge in investment due to his tax bill (basically not his but a Republican bill). The same exact statements were probably made about your ancestors when they immigrated. But don't those immigrants have to spend money and by doing so boost aggregate demand which creates jobs. Plus there is no evidence that the bulk of immigrants suffer hardships to come to the US simply to garner less than generous welfare benefits. (These of course are only available if they are classified as legal immigrants.) The employment trend did not start with Trump nor did economic growth. Will you lay all the blame on Trump when the US economy goes into recession?
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@Ronald B. Duke Infrastructure jobs would pay a lot better than most of the jobs being created now. The kind of jobs whose workers still qualify for food stamps.
Out here in California I see immigrants who work quite hard indeed. Illegal immigrants can't get any government benefits. But you prefer not to know that.
12
@Craig Freedman: In actuality very few legally-admitted aliens are eligible for public assistance. Most have to be U.S. residents for at least five years in order to qualify. The "illegals" aren't eligible at all, regardless of what Mr. Duke thinks.
7
Republicans lie to gain power and then take for themselves. It is what they do.
Trump knows how to make things look good the easy way. He runs the economy hot, keeping the stock market high and unemployment low. We can argue about the value of these economic indicators, but people put stock in them. And they are in good shape for the upcoming election.
Democratic candidates should ask voters:
Are you happy with your job? With your pay? With your benefits? Do you have any bargaining power through a union?
Is the stock market helping you? If so, how much longer do you think we can run the economy this hot before it crashes?
Trump knows that at election time, the economy needs to be good and people need to feel safe. In addition to a healthy stock market and robust employment figures, inflation is low. And we have no new wars.
Democrats should certainly talk about their ideas for infrastructure, public education, the minimum wage, immigration, and (of course) climate change.
They should also focus on health care, in particular tying health insurance to the individual, not the employer. That will give all workers the best opportunities to seek the best jobs for themselves. That's a good way to spur the economy and to get votes.
Trump and his GOP play to win. Democrats must do the same. There is no other option.
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R'n economics is not rooted in economic theory as much as it is in greed, selfishness, and callousness. Conservatism for them is spending as much as I can on my priorities (which is basically anything that benefits them and theirs) and as little as possible on the priorities of others. That's why they can gleefully pass a deficit exploding tax cut and then rail against deficit spending on infrastructure.
25
It comes down to deciding on the point of a nation's economy: unlock value in individual people? or unlock value in its best businesses? True Keynesian stimulus unlocks value in the still-capable people that companies are unwilling to take a risk on during a recession, while the Republican brand of stimulus leaves that up to corporations. Unfortunately, corporations aren't willing to stick their necks out in a high-risk situation, nor should we ask them to. So the economic potential of individuals across the nation atrophies through unemployment, learning gaps, foreclosures, industry shifts, and other high-risk, high-civic-reward projects. That's what will bring the debt chickens home to roost—when our reduced economic capacity shakes other nations' faith in our viability.
9