Congress wants to raise the debt limit.
By a lot.
This cannot go on much longer.
UPDATE: The world According to Krugman.
Quite aside from everything else going on, the economic recovery isn’t looking very good. Unemployment claims are stalled at a level that bodes ill for for the overall employment picture (don’t count on falling unemployment until that number falls well below 400,000). And the 10-year bond rate, which is my personal index of the market’s expectations about recovery, has been falling off again after rising for several weeks.
No reason to panic — but it does look as if this recovery is going to be jobless for quite a while.
He previously said this:
In the table above, spending peaks in the second quarter of 2010, but the peak impact on growth is in the third quarter of 2009, i.e., it’s behind us. That’s true even though by the end of 2009 less than a third of the money has been spent.
And when the spending begins to tail off, the effect on growth turns negative.
So growth will soon turn negative. I like the first comment on his blog post.
As Alesina and Ardagna showed in a recent study of 91 episodes in OECD countries since 1970 when governments attempted to stimulate the economy, cuts in business and income taxes are successful, while increases in government spending fail. There is no reason at all to ever propose a Keynesian “stimulus”.
Unfortunately, ideology often trumps fact and analysis. Accordingly, Prof. Krugman continues to propose Keynesian stimulus, even as he struggles to square his ideology with the failure of (now three) stimuli since 2008 to do anything other than destroy jobs.
Those who actually create jobs in small businesses struggle to manage the obstacles that governments create upon the advice of people like Prof. Krugman. We see nothing but future obstacles, as the promise of new taxes on investment, inheritances, and growth destroy seed capital, added regulations based on junk science (for example “climate change”) and health care “reform” raise the cost of business, and Obama’s corporate socialism transfers wealth to cronies in unions and Wall Street.
Pork-laden stimulus bills and the frantic vote-buying that preceded this week’s Senate health vote confirms our worst fears about liberal governance, with or without a “conscience”: it’s a racket rigged to benefit privileged insiders floated by our tax dollars.
Now, that fellow should be considered for a Nobel Prize.
Now comes this.
The fact is that the Senate [health care] bill is a centrist document, which moderate Republicans should find entirely acceptable. In fact, it’s very similar to the plan Mitt Romney introduced in Massachusetts just a few years ago. Yet it has faced lock-step opposition from the G.O.P., which is determined to prevent Democrats from achieving any successes. Why would this change now that Republicans think they’re on a roll?
This man is delusional. He doesn’t seem to understand economics or health reform. God help us.
Tags: economics
That is one depressing chart, Dr. K. Very depressing.
Hey VL,
Long time no see! I miss the old community we had at the Festering Swamp. You’re the pistol-packin lady who likes Virginia gardening, right?
I agree about the debt chart. Like Dr. K says, the problem with liberals is that they don’t understand economics.
I’m starting to worry that Obama might throw a tantrum and wreck the economy out of spite. I don’t think he has any idea about how things work. His idea of economics is cashing his faculty paycheck.
His idea of economics is cashing his faculty paycheck.
Very true.
I recall that Michelle Obama complained about stretching the family finances…until Barrack got into Chicago politics. I suspect it taught them that wealth is just penciled in.
Congress wants to raise the debt limit.
…like a junkie wants to take another hit.
All this spending is done under the guise of wanting to “help” the economy, of wanting to “help” Americans. It is fake compassion that makes things worse in the long run.
Michelle had a good job with U of Chicago Hospitals helping them get poor people out of their ER. They paid her $300k/ year.
Yeah, I saw that “job” she had. I notice they eliminated the position when she left for greener pastures.
Well, we have placed a lot of hope in Scott Brown. All eyes will be upon him for some time…A lot hangs on him. He, right now, is an extremely important member of our congress. Or will be, rather, when he gets sworn in.