By his account, he claims that the stimulus package Obama signed into law was too small and thus ineffective. To fix this problem, he proposes the government pass yet another stimulus package. Do not forget that he is calling for a third stimulus package; we already have the monolithic waste Obama signed this year and the relatively smaller junk Bush executed in 2008. His liberal conscience seems to tell him that $787 billion does not cut it as a government rescue. Maybe he thinks that the third time is a charm.
He has forgotten that not only are individuals budget constrained, but the government is as well. And with "health-care reform" also on the table, who will finance this new stimulus sequel? Oh yeah...the taxpayers....maybe China too...
Contrary to Krugman's proposal, we do not need another stimulus package to add to the government deficit. Just look at where the national accounts are now. For example, the average deficit amount from 2005-2007 before the passage of the American Recovery and Reinvestment Act of 2009 (aka the stimulus package) was roughly $800 billion already. As of today, BBC News reports that the US deficit has moved above $1 Trillion. Robert Barro is right in saying that the government's current macro policy is a version of Keynes's 1936 "General Theory of Employment, Interest and Money." He emphasizes strongly that this current financial crisis does not " invalidate everything we have learned about macroeconomics since 1936." And from the things we have learned in economics, he proposes that the optimal fiscal policy is to provide incentives for people to save, invest, and produce more instead of throwing money around superfluously.
I mean how does the government solve a financial crisis that was caused by too much leverage by issuing more and more debt? I don't mean to say debt is always bad. A college education is good debt, so is investing in a house within your means with a down payment and a fixed APR, but more spending on highway construction and bridges to no where like splurging on a new wardrobe from the GAP is not. The government needs to see the difference between good and bad debt. And surely more stimulus is just bad, as well as Krugman's conscience.
He has forgotten that not only are individuals budget constrained, but the government is as well. And with "health-care reform" also on the table, who will finance this new stimulus sequel? Oh yeah...the taxpayers....maybe China too...
Contrary to Krugman's proposal, we do not need another stimulus package to add to the government deficit. Just look at where the national accounts are now. For example, the average deficit amount from 2005-2007 before the passage of the American Recovery and Reinvestment Act of 2009 (aka the stimulus package) was roughly $800 billion already. As of today, BBC News reports that the US deficit has moved above $1 Trillion. Robert Barro is right in saying that the government's current macro policy is a version of Keynes's 1936 "General Theory of Employment, Interest and Money." He emphasizes strongly that this current financial crisis does not " invalidate everything we have learned about macroeconomics since 1936." And from the things we have learned in economics, he proposes that the optimal fiscal policy is to provide incentives for people to save, invest, and produce more instead of throwing money around superfluously.
I mean how does the government solve a financial crisis that was caused by too much leverage by issuing more and more debt? I don't mean to say debt is always bad. A college education is good debt, so is investing in a house within your means with a down payment and a fixed APR, but more spending on highway construction and bridges to no where like splurging on a new wardrobe from the GAP is not. The government needs to see the difference between good and bad debt. And surely more stimulus is just bad, as well as Krugman's conscience.
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