Someone hasn't been paying attention
and that someone is Nobel Laureate Paul Krugman:
Spend now, while the economy remains depressed; save later, once it has recovered. How hard is that to understand?
Very hard, if the current state of political debate is any indication. All around the world, politicians seem determined to do the reverse. They’re eager to shortchange the economy when it needs help, even as they balk at dealing with long-run budget problems......So America has a long-run budget problem. Dealing with this problem will require, first and foremost, a real effort to bring health costs under control — without that, nothing will work.
Look, I clearly don't have a Nobel Prize or a gig at the Times, but I do remember the last year of history! The government put together a near 1 trillion dollar "stimulus" package and passed a comprehensive health reform bill.
That did happen, didn't it? Or am I just somehow plugged into the Matrix and missing the truth?
The government has enacted a big stimulus package, bailed out GM, extended unemployment benefits and the Fed has undertaken extraordinary expansionary measures. To me, this hardly qualifies as "eager to shortchange the economy".
A disinterested spectator could look at the evidence and easily conclude that old school macro policy didn't work rather than arrive at PK's conclusion which is apparently that it hasn't been tried!
It just seems to be an article of faith with Krugman, DeLong and others, some kind of twisted syllogism:
"Fiscal policy can always bring the economy to full employment. The economy is not at full employment, therefore fiscal policy has not been sufficiently applied."
On the long-run part of the equation, Krugman points, with apparently no sense of irony, to out of control health costs as the killer problem.
Wow. Just wow.
Krugman should be an anarchist at this point, shouldn't he?
He says we need currently need stimulus and health care cost control. Hey Paul, the government has spent most of the last year working on those two issues with apparently no results.
Paul, either your model is wrong or the government is totally incompetent (or both?)