WASHINGTON, Dec. 28, 2008
Economist: Obama Stimulus Not Enough
Nobel Winner Paul Krugman Tells Face The Nation President-Elect's Stimulus Plan Not Big Enough
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Face The Nation, 12.28.08
Chip Reid speaks with President-elect Barack Obama's White House Senior Advisor David, Ill. Lieutenant Gov. Pat Quinn and Nobel Laureate in Economics Paul Krugman.
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Paul Krugman appears on Face The Nation, Dec. 28, 2008. (CBS)
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However, Nobel-winning economist Paul Krugman said he is concerned that the stimulus package is not big enough.
"I'd like to see it bigger." Krugman said. "I understand that there's difficulty in actually spending that much money, and I--they're also afraid of the--of the T word. They're afraid of a trillion dollar for the two-year number. But you know, the back of my envelope says it takes roughly 200 billion a year to cut the unemployment rate by 1 percent from what it would otherwise be. In the absence of this program, we could very easily be looking at a 10 percent unemployment rate. So you do the math and you say, you know, even these enormous numbers we're hearing about are probably enough to mitigate but by no means to reverse the slump we're heading into. So this is--you know, I--they're thinking about it straight."
"I liked what Larry Summers wrote in The Washington Post," Krugman added. "I think he was getting it right that the risks of being too small are much bigger than the risks of being too big. Nonetheless, I am actually concerned that this thing is not going to be really big enough."
Krugman chimed in on comparisons between the present economic situation and the Great Depression and said, "the only reason that we're not headed for Great Depression II -- at least I don't think we are -- is that we think we learned a few things since then." He then added, "but this is big stuff. This is the worst thing, you know, in two life times."
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See all 98 CommentsWe''''re not going to print our way out of this, it''''s going take work as well and a complete change of economic policy. The results of reaganomics are in. It''''s time we started taking care of the United States.
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Posted by rightbehind at 03:53 PM : Dec 28, 2008
Hey moron....Reagan got us out of the last hole we were put in by Carter. So reaganomics are the cure.
Cut spending and get people off of the government payroll. Too many people sitting around grabbing a check from all the stupid failed social programs. GET TO WORK!!!
try not to call peoplle names while showing you dont know history
Reagan was a huge huge deficit spender.
Carter didnt cause anything he was only in office 4 years. Carter inherited huge inflation problems from johnson nixon and ford (although ford was not really a contributor to the problem
Reagan didnt solve the inflation problem...the fed chair, paul volker did with his monetary policy
volker was a carter appointment, re appointed, wisely, by reagan
the problems we face today are exactly the opposite of what carter and reagan faced
do your homework
gov should balance the budget and pay down debts during fat years and deficit spend during recessions and depressions
if we cut fed spending now the country will be plunged into the deepest darkest depression since the inception of the country
when we get past this huge collapse of credit (money destruction) then the fiscal hawks who want to put the gov on a diet will have my support...but not now
unless of course you want to see starvation and rioting in the streets...a breakdown of society
It''s time for change alright.
It''s time for change alright.
The image that Roosevelt got the nation out of the depression by spending money is pretty much a fallacy.
What actually got the nation out of debt was actually the by-products the World War, which brought production back into full swing, and created millions of new jobs, as well as sent thousands of men off to war, which took them out of the squalor that the depression had created.
I have read where there are some that believe that another large scale war is the way to bring us out of the economic crisis we are now in. What we now see evolving in India/Pakistan, and Israel/Palestine could very easy lead to such a large scale confrontation. Israel is just itching to attack I ran as well.
Unfortunately, war is a very expensive proposition in both lives and monies. One would hope that other ways can be found to alleviate the situation without another war. Because another war could leave large portions of the world a wasteland, especially if nuclear weapons were used.
How, exactly, does government spending help the economy? If government can magically create wealth where there was none before, why not spend $2-3 Trillion and REALLY ''stimulate'' the economy?
Well, because it doesn''t work that way. ALL government spending (so-called ''stimulus'') comes at the expense of private sector spending (de-stimulus). Thus, with government ''investment'' in the economy, you give up private sector risk assessment and capital allocation to productive endeavors in exchange for bureaucrats deciding who gets the largesse based upon political patronage, favoritism, and quid pro quo.
Stimulus do not work. Like an alchoholic binge, it only makes you feel better for a little while and then you wake up to a big headache.
Our only way back out of this is to go back to work and work hard. Stop spending until the debts are paid.
Giving a tx reabet to everyone as Obama has said will make it worse. Roosevelt proved that.
Our country got rich after WWII because we were the only nation that still had factories. War doesnt end depression, it ends competition.
Handing out money means everyone has more money but there is no more products unless everyone goes back to work. Factories will stay closed until it profitable to open again. So, prices on what is left over will go up to match the more money everyone got from the government.
Everytime I hear about this stimulus package I think of that book and wonder whether the lesson applies to governments and their crafting of economic policy - you think maybe focusing too much on the indicators of achievement ($ for corporations, GDP and unemployment for government) rather than on the value of our workforce and how to best apply our resources might be more ''Good'' than ''Great'' policy?
Because the indicators of economic achievement during Bush''s tenure have been pretty good - to only focus on that maybe doesn''t portray the whole picture of how they were achieved on collectively overextending ourselves, fraud, etc rather than value added to the world (?)
I don''t know . . .
A stimulus works if it''s governed in a responsible and productive way. Rebuilding our nations infrastructure and targeting research funds to new energy sources fits that bill. Which is precisely what most major economists without political agendas are calling for.
As to JFK, the only things that made him unpopular were the Bay of Pigs fiasco - hatched by the CIA under Ike - and his support for racial equality; very unpopular in the South. The Cuban Missile Crisis turned the former on its head.
Posted by bigmtwmike
So you foresee this stimulus bill to be a one-time measure that will result in what type of jobs in the long-term after the money''s been spent? I''m not getting a clear read on what specifically the outcome is projected to be after the money''s been spent.
Or as a ''stimulus'' bills is the goal to get consumers and businesses to spend?
What''s your take?
-- George Burns (1896 - 1996)
-- George Burns (1896 - 1996)---
Posted by Hookoa
That''s the sure sign that the plan''s a dog, when the only way to defend it is to insult people because it''s indefensible on the merits.
Posted by DebinOK1
I''m a little worried that if the people crafting the solution to the problem were the very people who worked to alter the regulatory framework and trade relationships then there''s going to be an assumption on their part that they''re perfect even if everybody else lacking that self-interest might be inclined to arrive at another conclusion :(
"I''d like to see it bigger." Krugman said.
Posted by keystonebull
I thought he meant to say the opposite - everybody thinks they know best but who are any of us with our common sense to be questioning the Harvard ''experts'' . . . who knows . . .
Where is the man with a plan?
Where?
Obama is committed to what?
Where is he?
He needs to sprinkle that Obama dust!
Why do other people always speak for him?
Is he a puppet on a string?
Is he a dog that barks when commanded?
Is he a boy that others must help?
Come on now Obama now is the time to come out and strut your stuff!
You can do it if you have the guts!
This is a real crises!
Do not shirk your responsibilities!
Posted by Obamagasm at 05:35 PM : Dec 28, 2008
Only One President at a time...
I pretty much agree with a lot of your observations - when I was in college there were kids who had to drop out because their dad got injured and there was nobody else to tend to the crops, or their mom got laid off and they had to drop out to go get a job to feed their little brothers and sisters. I meet people all the time who are smart as can be but just never grew up seeing the ivy league as part of their future.
On the other hand my brother''s wife''s brother''s an investment banker who made an unbelievable amount of money in 2006 and he''s the most unremarkable person you''ll ever meet - not very bright, not very interesting, not very creative, not even very good looking LOL.
I think in a democracy if people give too much deference to a person''s title or credentials, and if people in positions of power actually expect us to give people deference because of their title or credentials rather than their meritorious ideas, then the next thing you know the marines are being shipped off to Iraq even though it doesn''t make sense.
Having a PhD from Harvard doesn''t mean one''s automatically good at weeding out their personal interest in guarding their legacy or in listening to the concerns of people with very different life stories and experiences.
Posted by keystonebull
LOL Night
How about thinking for a moment about how America got as far as it did after WW2? It was three things- EDUCATION, EDUCATION, EDUCATION. Starting with the GI Bill we established a culture that HONORED advanced education and those people who showed they were our brightest. We used to be a country that elevated science, math, analytical thinking, and general knowledge. THAT is how we became the greatest country on Earth. However, now the morons claim insight and brilliance. When the uneducated and uninformed are elevated, you have Uganda, or Somalia, NOT the U.S.A. If we do not turn it around, we will become a 3rd world country. How sad.
Posted by dburfears
That''s not what I said, and I don''t think that''s what keystonebull intended to say - I''ve got education from very good schools up the wazoo . . . more than enough to recognize mediocrity for ''experts'' when I see it.
Intelligence is basically just like having a fast computer - the type of information you put into it and the type of software you choose to run matters as much if not more.
Henry Paulson and Ben Bernanke are both very smart and have great deals of expertise in the areas of investments and the Great Depression respectively - if expertise is your guiding force, doesn''t your believe compel you to give deference to all of their ideas or are their additional elements which factor into your assessment of which of the experts to which you''re actually willing to defer?
I would just LOVE to hear how much you hang off the every word of Paulson and Bernanke - yeah, I thought as much . . .
Now they are ready to block half a trillion from being spent to create middle class jobs to help pay the tab for their drunken orgy of spending.
Now that the Neo Cons have fed you with lies you continue to believe there is hope and change.
Government cant change it cant create jobs either with out hurting the system even more making your dollar worthless every day. Spend money print money spend money print money spend money AND Repeat
devaluing your counterfeit currency all the more
"common sense" without knowledge and education only gets you so far- and that is NOT far enough to deal with the complicated issues facing a country like ours. Now if YOU WANT TO MOVE TO KENYA, I''m sure your "common sense" will get you a good government position.
I stand by my previous argument, still not refuted, that this country was successful because we valued education and tried top place our best and brightest in our highest positions of industry and government--- not because we elevated populist fantasy as a replacement.
This is the malarkey I was responding to:
"Too many Harvard and other high educated people trying to run the country"
First- learn ENGLISH. Second. There is NEVER too much education. This comment smacks of populist idiocy. What "highly educated" people are acceptable to you? How would you EVEN KNOW?
"Don''t know what is going on".
A comment based on WHAT? Please, explain how someone without the requisite education and experience can run things "better" (George Bush). How is is it that someone with education automatically does not know "what is going on"?
"never worked a day in their life"
Don''t make me laugh. MOST of the people I knew in college had to hold down multiple jobs AND STUDY. They worked 3 times harder that most of the morons who issue complaints like this. This applies to the MS and PhD''s I later came to know in industry. I sure as h*ll would hire them for their expertise than the "common sense" experts who complain about "privilege" when they don''t know what it means to accomplish something.
Posted by dmjakers
I actually haven''t heard a lot of resistance from Republicans for the stimulus plan - yet - although they probably will resist, but who cares because they''re ideology''s in tatters.
People seem to worry an awful lot about resistance that''s just completely irrelevant - Summers apparently perceives people as advocating stimulus aimed directly at consumer spending, although I haven''t heard anybody say anything about that. Besides, isn''t his plan an indirect aim at consumer spending? Is there really THAT much difference.
In contrast to the idea that we focus on the regulatory framework to put a firewall back in place between Wall St. and Main St. banks and heavily regulate derivatives, and also work out a new trade relationship with China that focuses our efforts on expanding exports to meet the needs of that population to better balance out their savings and our deficits, possibly revive manufacturing domestically in the area of say like FDA-regulated products, etc. I mean like that seems to be the most common competing idea that doesn''t SEEM to be getting any attention from Barack''s economic team because we never hear them mention it (?)
Team Barack''s idea - get the numbers up via borrowing, and then people will start buying again.
Competing idea - manufacturing, fair trade, fair regulation are the cornerstone of reviving the economy, the trillion dollars is the stop-gap for until the changes kick in.
* * * * *
So like everybody''s on board with plan #1 because that''s what the experts that have the higher visibility in the media are advocating (even though there are equally qualified experts in lesser-known media outlets who advocate plan #2)?
I think people are maybe a little to quick to make assumptions rather than asking question to clarify . . .
Well, because it doesn''t work that way. ALL government spending (so-called ''stimulus'') comes at the expense of private sector spending (de-stimulus).
Thus, with government ''investment'' in the economy, you give up private sector capital allocation to productive endeavors in exchange for bureaucrats deciding who gets the largesse based upon political patronage, special interests, and favoritism.
Thus, government spending is ALWAYS less efficient than if the money remained in the hands of those who actually earned the money in the first place.
The money is to be ''off-the-books'' or a ''budget-supplemental'' like for the Iraq War.
I''m glad to see the idea of a ''New Marshall Plan'' for America but the entire monetary-system will have to be put through bankruptcy first.
That way we can rebuild the United States like we rebuilt Europe.
Posted by whitemale08
So team Obama is taking inspiration from the George Bush and Enron schools of creative finance?
And you all think this is the way to go over re-implementing a regulatory framework and balancing out trade because one guy with a PhD (not that other guy with the PhD) said so?!?
Government does not have its own money, folks. Every dollar it spends is expropriated from someone who actually worked for it.
ALL government ''stimulus'' results is DE-STIMULUS of the private sector.
If government spending magically created wealth, just about every country around the world would be infinitely rich.
Posted by JT_Lancer
Irrationality seems to be epidemic on this board tonight - if you don''t support a specific guy with a PhD but you do support another specific guy with a PhD then apparently some people think that means you don''t support education. The person made about 5 posts to elaborate on that principle . . .
Good ideas speak for themselves . . .
So many of you think that you have the right answer yet I want to place a bet because I know that there is no right answer. The government can create jobs they can raise taxes to pay for those jobs.
If the government collects taxes from jobs they have created and those people spend money then more jobs will be created. The problem has been the conservatives who say less taxes and smaller governmet yet do the opposite.
I was sold on the that idea but now I see the flaw. People can''t be trusted with that much responsiblility. Look at Madoff and Lay and the rest of the boys club of corruption.
What we need America is a transparent government with no secerts.
The question remains: HOW can government ''create'' a SINGLE job without first DESTROYING a private sector job?
Yet, the federal government recently entrusted a SINGLE man with $2 Trillion of taxpayer funds:
http://www.informationliberation.com/?id=26342
So much for ''transparent government''.
Pathetic journalism. Truly pathetic.
So, by his rationale, if the govt spent $1 Trillion, it would magically reduce the unemployment by 5 percentage points?
If this government ''magic'' worked (creation of jobs via deficit spending), why is there ANY unemployment?
Wouldn''t it be in the best interest of EVERY politician to have ZERO unemployment? After all, that would greatly improve his or her chances of re-election.
I find it stunning that this guy won a Nobel prize in economics. His arguments are simplistic and have been disproved through history.
FDR spent huge amounts of money in an attempt to ''spend his way out of the Depression'', yet unemployment was HIGHER SEVEN YEARS after he took office.
http://www.informationliberation.com/?
id=26342"---
Posted by JT_Lancer
I guess the thinking was that because he had a PhD the rest of us who had concerns about giving Paulson so much power needed to **** and defer.
I don''t know if it''s fear, or wishful thinking, or greed or what, but I think people don''t question authority nearly enough - why ISN''T the stimulus $2 or $3 trillion? There must be drawbacks that aren''t getting a lot of analysis, otherwise yeah why wouldn''t we want to lower unemployment down to the lowest possible amount?
Well, primarily because government cannot spend its way to prosperity, no matter what the political snake oil salesman say.
Posted by JT_Lancer
I think Barack''s deliberately not going to impose new regulations because let''s face it fraud grows the economy - it worked in the 90''s with Enron and it worked in the middle of the decade with the mortgage backed securities bubble.
Absent a commitment to reworking a regulatory framework, willful ignorance is just one tranche of morality away from condoning criminal behavior. It''s not on the up and up true growth . . . so yeah, I guess I agree that there''s an element of not being on the up and up, the straight and narrow.
But it might actually work . . . who knows. Another point of contention I have is that by not changing anything of substance like the regulatory framework or our trade relationships he''s essentially playing to our lesser natures by taking the gamble that although we''ve collectively recoiled from spending on consumption, we''ll be unable to resist if he furnishes sufficient temptation by way of a stimulus. I just don''t like that approach when there''s also the option of focusing on our better natures like what we all have to offer the workplace via our unique talents and abilities which have worth both here at home and abroad.
I just think the plan is kind of icky and so-so . . . jmo though . . .
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During both Clinton and Bush terms, the trade imbalance with the PRC grew alarmingly. But not nearly so fast with Clinton-- who demanded trade reciprocity-- as with Bush. Beijing began to regard Bush and his plaintive calls for balance with yawning contempt.
The PRC knows Bush is political vassal to American multinationals, who give heavily to the GOP and its campaigns. The PRC knows Bush will do nothing to endanger PRC export volume-- even to help native manufacturing. Bush claims of support for American industry are largely empty.
To counter criticism, Bush and Department of Commerce set up an instant dog-and-pony show for the press, to prove American exports were alive and well. Minutes before Bush was to speak, someone noticed all the boxes in the background said "Made in China". Bush flaks raced madly for the copy machine, and pasted a stack of "Made in the USA" labels over all the boxes-- just in time for the press conference.
Did you hear about the FEMA "press conference" staged after the CA fires last October? The Bush people gave the press 30 minutes emailed notice, and started without them. The questions asked during the taped "press conference" were prepared in advance, read by FEMA staffers posing as reporters, and answered by FEMA staffers.
Posted by alphaa10000
Oh Mission Accomplished! GRRRRR!!!!!! :P
The only impediment to bringing back manufacturing seems to be some sort of psychological belief on the part of the people who put the free trade policies in place that to revive manufacturing would be some sort of a ''step back'' - I don''t think that''s a good enough reason to stand in the way of prosperity if all that''s holding us back from moving forward is some sort of psychological impediment. Having good paying jobs and a sustainable economy ought to matter more than hurting somebody who''s somebody important''s feelings :(
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