February 10, 2009

Krugman: Obama caves in to the destructive center

Posted: 07:48 AM ET

By NY Times columnist Paul Krugman

What do you call someone who eliminates hundreds of thousands of American jobs, deprives millions of adequate health care and nutrition, undermines schools, but offers a $15,000 bonus to affluent people who flip their houses?

A proud centrist. For that is what the senators who ended up calling the tune on the stimulus bill just accomplished.

Even if the original Obama plan — around $800 billion in stimulus, with a substantial fraction of that total given over to ineffective tax cuts — had been enacted, it wouldn’t have been enough to fill the looming hole in the U.S. economy, which the Congressional Budget Office estimates will amount to $2.9 trillion over the next three years.

Yet the centrists did their best to make the plan weaker and worse.

(Read more of Krugman's commentary HERE)

Filed under: Paul Krugman • President Obama

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Michael C. Mchugh   February 10th, 2009 8:41 am ET

Of course, I am not happy at having to deal with "moderate" Republicans, who seem only marginally nicer people than the raw meat type. There's a certain lack of humanity in that party that truly makes it a different animal from the Party of Lincoln. I think the Republicans need to reconsider 19th Century laissez faire, and go back and make Teddy Roosevelt and the New Nationalism their starting point. I would be happy to see the education spending restored in some future bill, if it's not possible to put it in this one.

Anyway, waiting for that to happen...I am not sure that the stimulus will be enough to revive this very sick economy, although it will certainly offer us some temporary stability. Now, I believe in a mixed economy, somewhere between free market capitalism and total state control. I's argue that it's the only way to go now. For example, I really thing we need a government investment and development bank to start funding all kinds on projects, such as schools, green technology, state and local government, public works and infrastructure, low cost housing, etc.

Yes, I think we really have come to that. As a historian, I know that we're in danger of a general collapse, and not just in this country. When the history of our times is finally written, it will note that there were many warning signs of collapses even in the 1980s and 1990s, but few economists ever seemed to imagine that such a collapse would ever happen in the West again. Historians, on the other hand, never say never, even though we can make no real claim to be scientific. Well, right now, the worst has happened, and time is running out.

If there is a general global collapse, then we can expect to see a revival of fascism and communism, along with a much greater danger of world war. That is what we mean when we say catastrophe is knocking at the front door.

I doubt that private capital will be able to pull us out of this depression, which is not really a U-shaped or L-shaped thing at all now, but a slide straight to the bottom. I'd bet at least half of the private capital built up in recent decades is already lost, perhaps more. Who really knows with all the funny money and fake assets floating around? All that's left is an expanded state sector, both nationally and internationally, one that can absorb, sink and write off all these trillions in bad debts and provide credits for expansionary, Keynesian policies.

I don't think the Republican have caught on yet to what's really going to be needed to save us from collapse. They understand that we have to sink the debts, but none of them has yet mentioned just how we're going to have to reform the IMF and other international institutions to get the world out from under trillions in bad debts. I wonder when they will notice what's going on in that area?

Michael C. Mchugh   February 10th, 2009 8:49 am ET

PS I think Obama is a political Einstein. I think he's very smart to keep reaching out to Republicans, knowing full well that they will reject everything he wants to do. I can guarantee that they will all vote against him on every issue, and thus speed their party to extinction as the depression deepens.

By the way, it seems to me a fair question to keep asking whether states like Kentucky, Tennessee, Arizona, Alabama, etc, etc, intend to take their share of all this federal money, even as their Republican Congresspeople keep voting against it. So far, only the honorable governors of Texas and South Carolina have refused to take it, on general principles. I can respect that, even if those principles are not mine. What about the rest of the Republicans, though? Are they going to have it both ways? Are they going to vote against Obama and the horrible liberals all the time, while quietly sending as much federal money as they can get their hands on back home?

Gene   February 10th, 2009 10:07 am ET

there is the fact admitted that no one is sure if some parts of this bill will actually work as intended, $256 million break to hollywood film producers, how does that help the unemployed average american
worker not sure if that is lumped in with another part of this bill now.

I know the bill was admitted as not being the perfect bill but one thing everyone is agreement on its this bill will actually be bad for the economy in the long run slower growth less job created, higher prices due to inflation.

How does making the healthcare records system become more centralized on a national database which can be accessed from any hospital in the united states i would be concerned about my information getting in to the wrong hands what is going to be done to protect everyone's information once that is completed?
are the citzens going to have to be concerned about its contents being auctioned off to the highest bidder. I have held many jobs some had health insurance other did not, one thing i have observed is the fact that when you have insurance it seems the doctor always want to run test after test on some of the simplest things just to get in the insurance company and my wallet..

i would rather have that money spent on seeing the food is safe to be consumed in the united states instead of my privacy invaded even more.

Ron   February 10th, 2009 10:29 am ET

President Obama is in the White House for eight years then its Joe Bidden's turn with Hilary Clinton as the vice president then its Hilary Clinton's turn at the White House again. Get used to it The Golden Age has arrived.

Dave of Detroit   February 10th, 2009 11:47 am ET

What do you call someone that causes huge deficits, deregulation of banking and insurance companies, Free Market economists and Fascist POW killer? Answer-the Bush Administration! Let's give credit where credit is due............................

sean brizendine   February 10th, 2009 1:02 pm ET

larry i am a big obama fan but unfortunately he has to move to the center because as i once heard that there is nothing that a first term president wants more than a second term and he will only get that by moving to the center just like bill clinton did way back when.
"sean in santa rosa"

georgie girl from MI   February 10th, 2009 2:47 pm ET

it seems ti us that the Republicans do not want Pres Obama to succeed..sad,,,,,,but he will & maybe in 8 yrs Hil Clinton will be the candidate ? & who will oppose her? not Palin, I hope...

mike jacobs from arizona in mesa   February 10th, 2009 5:50 pm ET

i see you all still think that the issues are rep sad to be you so fare obama has broken 2 things he said he would do and have any of you seen what was on the stimulus they just put through i mean if it was not for the rep obama would have waisted more money that he did not need to i hope 4 years goes by fast

Perry Daneshgari   February 10th, 2009 8:03 pm ET

Why are we applying Wrong Science to the Financial Rescue?
The Earth is flat, items heavier than air cannot fly, the sun rotates around the earth, Newtonian Physics sets the limits, capitalism will not survive more than a few decades, we can’t exceed the sound barrier, Toyota will never surpass GM, and Japanese products are toys and many more. These are all wrong sciences that for a long time hampered human social progress. It looks like we are about to make the same kind of mistakes in dealing with the current economic crisis. Wrong science, while it is in power, will gather evidence to support itself. It will even have institutional power such as church and federal government’s Federal Reserve to support its wrong theories and projections. The current financial crisis did not start with the housing subprime market; it started with the budget surplus at the end of the Clinton era. Contrary to Mr. Greenspan’s beliefs, the surplus was not due to the application of computers and well made financial decisions. It was primarily driven by reduction of inventories in manufacturing and the end of the cold war. The surplus was not a perpetual income it was mainly a onetime deal and could not continue unless other industries such as government, healthcare, construction, distribution and many more would continue to apply waste reduction principles used in other Industries. So what happened with the surplus? We made the same mistake Germans made in the seventies and Japanese made in the eighties. We made access to money easier for people who could not afford it. Remember the slogan “A house for every American”? So we gave money to the banks to give away to people that could not afford repayments if they lost their jobs. We are making the same mistake again we are taking moneys from tax payers and giving it to the banks who in the first place could not manage their risk. In other words we are asking the fox to watch the henhouse.

Dodie from Irvine, CA   February 10th, 2009 8:49 pm ET

RESOULTON To Our Economic Meltdown:
1. STOP giving money to the banks!!!! FEDERALIZE THEM Instead!!
STOP giving money to the banks!!!! FEDERALIZE THEM Instead!!
STOP giving money to the banks!!!! FEDERALIZE THEM Instead!!
2. Create a FEDERAL Bank to decrease interest rates for all mortgages, small business loans, etc.
3. Create federal jobs for repairing our infrastructure.
4. Look at what other countries are doing. (China for example just lowered all interest rates for everyone)
5. If we continue to give banks more money, I guarantee you, we will go down in flames!

Dodie from Irvine, CA   February 10th, 2009 9:08 pm ET

WE MUST CHANGE our strategy! We need to STOP giving banks and Wall Street monies that they frivolously waste! All banks that need large sums of handouts need to be federalized!

Yes, we need change…. Even more change than anyone is even aware of. We need to change our design. The Capitalist way is to spend trillions of dollars. We can NO longer do this. It will NOT work any more. We need to contrive a new design. We can create a ((((FEDERAL BANK))) designed by and for “we the people’s” best interest.

Giving money to Wall Street or the banks in the hopes of bringing a halt to our economic meltdown will no longer work.

We need to look at what other countries are doing. I believe Obama is doing the very best that he and his team knows what to do; however, they MUST think out of the box!

The OLD way: giving banks and Wall Street billions of dollars

The NEW way: Federalize all banks that require a bailout! Then we can designate where the monies will be best used.

Pat   February 10th, 2009 9:20 pm ET

Dear Sully,

What ever you and your crews salaries are, they aren't enough.
God bless all of your for your professionalism and kindness towards all those passengers. See, THERE ARE ANGELS ON EARTH.

eunice   February 10th, 2009 11:23 pm ET

The money belongs to the people and not the Banks. Give the money back to the people. The banks are not doing anything for the people.They are hurdding the money and they are not giving anything to the people. So stop giving the money to the banks. Give it to the people.

David Redden shepherdville ky   February 11th, 2009 3:01 am ET

What do you call someone who out-sources millions of american jobs..

Then turns around and begs for and spends trillions of dollars trying to replace them?

ed ,vancouver canada   February 11th, 2009 4:47 am ET

the interest on a trillion dollars at 5% is 136 million dollars a day.
each american saves about 45 cents a day for each day they wait to pass the bailout.
so in a couple weeks your job is worth about 6 bucks.

Terry, TX   February 11th, 2009 9:24 am ET

Have we been Blagovich-ed with an "F".

1) $2.9 billion for weatherization programs -No Home Responsibility Here…. Go Buy a Tube of Caulk at Wal-Mart & weatherstripping..are we serious?

2) Doubled Education Budget...Did we have 100% Unemployment in Education... construction ok…but increasing the 2009 Education Budget… illegal aliens should be jumping for joy.

3) Health Data Processing to merge records....yeah right...Read Daschle's Book Page 196....then read the Health Part of the Pork Package...pages 442, 445, 457 and 459...this bad...and after you read it...Blagovich-ed.

4) These mayor's with their Christmas List.

5) Have you mentioned that California is going to end with most of the state freebie money…that should make Pelosi & Boxer happy and all the illegal aliens down there….the majority of these freebie state money is going to New York, Illinois, Michigan and Florida…a bunch of sanctuary states... the balanced states are screwed. Also there is an argument not to use E-Verify to be insure American Citizens get the funds.

I could go on and on but it would bore you. Say No to This Pork…and this editorial is just ludicrous.

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