With “Experts” Like Krugman Progressives are Clueless

Paul Krugman, the Progressive’s favorite “economist” pontificated again from his New York Times tower, far from the realities of Main Street.  Astoundingly, Krugman says the problem is the government has not yet borrowed and spent enough to haul the economy out of recession.  Here’s an excerpt:

I don’t mean to dismiss concerns about the long-run U.S. budget picture. If you look at fiscal prospects over, say, the next 20 years, they are indeed deeply worrying, largely because of rising health-care costs.

Krugman doesn’t say when he thinks we should shift gears and stop running gargantuan deficits.

But presumably 2012 would be the first of “the next 20 years” Krugman finds “worrying.” With the government borrowing 41¢ of every dollar it spends it’s hard to imagine how spending could be cut and/or revenue could increased enough to run a surplus and begin paying down the debt in 2012 or 2013 or whenever Mr. Krugman would finally be agreeable.  We should note that Paul Krugman has never complained about government spending too much, even in boom times when unemployment was at historic lows.  Perhaps he just doesn’t concern himself with paying off the debt.

Krugman continued…

But the experience of the past two years has overwhelmingly confirmed what some of us tried to argue from the beginning: The deficits we’re running right now — deficits we should be running, because deficit spending helps support a depressed economy — are no threat at all.

How can current deficits be “no threat at all” if they’re adding to the future debt that he finds “worrying?”   Has Krugman seen the data in the chart above?  The only time debt as a percentage of GDP has been higher was during World War II.  But that huge increase in debt was to pay for tens of millions of soldiers and all their guns, tanks, aircraft and supplies.  As soon as the war ended Congress cut spending by more than two thirds.

But only 7% of today’s deficits pay for the wars in Afghanistan and Iraq.  The Obama Administration and the Democrats in Congress have done their best to bake more than a trillion in additional annual spending into the permanent budgets of non-military departments and agencies.  One wonders, at what point would Krugman acknowledge a debt problem?

More from Krugman:

…the past year has actually been a pretty good test of the theory that slashing government spending actually creates jobs. The deficit obsession has blocked a much-needed second round of federal stimulus, and with stimulus spending, such as it was, fading out, we’re experiencing de facto fiscal austerity.

Slashing?  Austerity?  Has Krugman looked at the data in the chart below?  in 2011 the government will spend MORE, not less than was spent in 2010 – more than any previous year in US history, even after adjusting for inflation.

What has actually happened this past year is a test of the theory that spending MORE creates jobs.  And based on actual results, the answer would seem to be an emphatic no.

One more baseless assertion from Krugman:

State and local governments, in particular, faced with the loss of federal aid, have been sharply cutting many programs and have been laying off a lot of workers, mostly schoolteachers.

Again, Krugman seems to be completely ignorant of the actual data which is easily accessible at the Bureau of Labor Statistics website.  In the past 12 months state and local governments have cut 345,000 employees or 5% of the 7.5 million who were on their payrolls a year ago.  About 14,000 of those layoffs were from “local government education.”  Presumably, some of those were and some were not classroom teachers.  So fewer than 4% of all the state and local layoffs were teachers.

If Krugman had bothered to look at the data he would also have discovered that at the same time those teachers were laid off, an additional 10,000 education bureaucrats were added to state government payrolls.  Perhaps the real problem he should look into is misallocation of resources away from classroom teachers, rather than making the manifestly false assertion that someone has “slashed” federal spending.

6 Comments so far

  1. Larry Walker, Jr. on September 7th, 2011

    I guess from Krugman’s windowless tower, government spending should equal 100% of GDP, or close! However, when the USA’s debt rating is cut to C-, and interest charged on the debt reaches 10% , and a loaf of bread costs $1,000, and government spending is then cut by force, and the aliens haven’t attacked and ended it all yet; someone else will attack — at a time when we are morally, spiritually, and physically bankrupt, and we will all be enslaved. I bet even Gideon Gono (Zimbabwe) is saying ‘no thanks’ to Krugmanomics.

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