Economy

Paul Krugman Exposes Conservative Lies About Why the Economy Is Finally Recovering

Let's compare Obama's and Bush's recoveries. Whose do you think is better?

Photo Credit: via YouTube

Paul Krugman is guardedly optimistic that the economy is finally recovering after seven long years, although a great deal of damage has been done, some of it avoidable. In Monday's New York Times column, the economist celebrates last week's positive employment report which said the U.S. economy added well over 300,000 jobs, and that wages have increased a bit.  Yay. Granted, we still have a long ways to go, and the devastation to American workers and their families cannot easily be undone. "Millions of families lost their homes, their savings, or both," Krugman writes. "Many young Americans graduated into a labor market that didn’t want their skills, and will never get back onto the career tracks they should have had." 

The Great Recession was different and more far-reaching than other downturns in recent history, Krugman explains.

Some recessions are deliberately engineered to cool off an overheated, inflating economy. For example, the Fed caused the 1981-82 recession with tight-money policies that temporarily sent interest rates to almost 20 percent. And ending that recession was easy: Once the Fed decided that we had suffered enough, it relented, interest rates tumbled, and it was morning in America.

But “postmodern” recessions, like the downturns of 2001 and 2007-9, reflect bursting bubbles rather than tight money, and they’re hard to end; even if the Fed cuts interest rates all the way to zero, it may find itself pushing on a string, unable to have much of a positive effect. As a result, you don’t expect to see V-shaped recoveries like 1982-84 — and sure enough, we didn’t.

But here's the rub. Some of the pain of the last seven years could have been avoided.  "We could have had a much faster recovery if the U.S. government had ramped up public investment and put more money in the hands of families likely to spend it," Krugman reminds. "But the Obama stimulus was much too small and short-lived — as many of us warned, in advance, it would be — and since 2010 what we have actually seen, thanks to scorched-earth Republican opposition on all fronts, are unprecedented cutbacks in government spending, especially investment, and in government employment."

The Republicans and conservative economists insist on the fiction that Obama's so-called anti-business attitude was the problem. He called rich people "fat cats," and that hurt their feelings. Wrong wrong wrong. Krugman points out that the Obama recovery has been stronger and faster than that of George W Bush, and W never insulted, ummm, "fat cats."

You know what else has helped the recovery? Obamacare. That's not a story you'll be hearing on Fox News.

Government paralysis caused by the Party of No is the true culprit in this sluggish recovery, Krugman writes,  "paralysis that has, alas, richly rewarded the very politicians who caused it."

Sigh.

 

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