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Who’s lying

October 11, 2010

It’s either Paul Krugman or the administration.

In his op-ed piece today Krugman attempts to make the case that President Obama’s economic policies really haven’t failed because they actually haven’t been implemented –

Ask yourself: What major new federal programs have started up since Mr. Obama took office? Health care reform, for the most part, hasn’t kicked in yet, so that can’t be it. So are there giant infrastructure projects under way? No. Are there huge new benefits for low-income workers or the poor? No. Where’s all that spending we keep hearing about? It never happened.

That isn’t what the administration claims. They are out every day talking about how their stimulus spending funded this project or saved that job. Both propositions can’t be true so who is lying?

I don’t want to keep you in suspense so I will just tell you – Krugman claims it’s the administration.

it has insisted throughout that its original plan was just right, a position that has become increasingly awkward as the recovery stalls.

And a side consequence of this awkward positioning is that officials can’t easily offer the obvious rebuttal to claims that big spending failed to fix the economy — namely, that thanks to the inadequate scale of the Recovery Act, big spending never happened in the first place.

I guess that means that 1.2 trillion dollars is still in the bank somewhere.

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2 Comments leave one →
  1. xbradtc permalink
    October 11, 2010 11:43 am

    One of the problems is that as soon as the ink was on the paper, the money was gone. Out of circulation, unavailable to any other borrowers.

    That was part of the whole reason there was a “shovel ready” meme. In order for the stimulus to do any good (or more accurately, do less harm) it had to be injected back into the economy quickly. But the government cannot do that sort of thing quickly.

    That was one very valid reason why the Republicans tried to get a payroll tax moratorium in place instead. It would have immediately injected money back into the economy, and likely caused either increased consumption or increased personal savings (with the concommittent rise in liquidity in banks, which would have been a nice side effect).

  2. October 13, 2010 4:45 pm

    They are both lying. I’ve been in finance for as long as I can remember. Krugman has never, ever been right. If he had skin in the game, he’d be as upside down as our government. He’s not an economist. He’s a propagandist.

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