PAUL KRUGMAN - The Obama Gap

[biopowertoday]

I think Obama should go BOLD and get us out of the hole-especially given todays unemployment bad news.


http://www.nytimes.com/2009/01/09/opinion/09krugman.html?em


January 9, 2009
Op-Ed Columnist

The Obama Gap
By PAUL KRUGMAN

“I don’t believe it’s too late to change course, but it will be if we don’t take dramatic action as soon as possible. If nothing is done, this recession could linger for years.”

So declared President-elect Barack Obama on Thursday, explaining why the nation needs an extremely aggressive government response to the economic downturn. He’s right. This is the most dangerous economic crisis since the Great Depression, and it could all too easily turn into a prolonged slump.

But Mr. Obama’s prescription doesn’t live up to his diagnosis. The economic plan he’s offering isn’t as strong as his language about the economic threat. In fact, it falls well short of what’s needed.

Bear in mind just how big the U.S. economy is. Given sufficient demand for its output, America would produce more than $30 trillion worth of goods and services over the next two years. But with both consumer spending and business investment plunging, a huge gap is opening up between what the American economy can produce and what it’s able to sell.

And the Obama plan is nowhere near big enough to fill this “output gap.”

[Beetwasher]

1. Krugman Is Doing His Part: Obama Is Practically BEGGING To Be Persuaded

to be "educated" about why his initial plan should be modified as Krugman suggests; ie, less focus on tax cuts and more on infrastructure and job creation.

I truly believe this is a tactic Obama is using. Adopting a position resembling the Repub position, have a healthy, educational debate about it, and ultimately be convinced it's wrong. We MUST do our part and PERSUADE him. He completely cuts the idiot Repubs out of the picture by adopting their position (essentially) and controls the debate and in the process educates the public about how stupid the "tax cuts solve everything" philosophy is. It also immunizes the public from "tax cut" politics for quite some time.

Simply brilliant. This is the Harvard professor we're watching, teaching the class a lesson.

[Thrill]

3. If people listen to Obama. Especially the CNBC interview

He said they were starting at 775 Billion because they knew it would grow in Congress. Now its up to Congress to expand the price tag.

[grantcart]

10. I think that if you listen to the interview you will

see that Obama carefully avoided a partiuclar number.

I didn't see the CNBC interview but he made it clear in others that they weren't going to be tied to a number yet, and that more negotiations were going on Sunday.

[Phx_Dem]

7. Clever. I think he's outsmarting everyone too. O-style.

Just like he did all throughout the primaries.

Outsmart. Outsmart. Outsmart.

:smoke:

[AtomicKitten]

2. Obama said he was low-balling it. n/t

[patrice]

4. Is it true that Middle-Class tax cuts drive wages down, because, even though the

"new" wage/salary (larger now because of the tax cut) is still the "price" for the job, employers ALSO know now how low workers will go, because they know what you were doing the job for BEFORE the tax cut?

[grantcart]

5. what Krugman is really saying is that he is smarter than all of the other

economists who are advising Obama.

How do we know that?

Because the Obama team has not yet established a number for the amount of his plan and Krugman is already saying its too small even though the size is unknown.

[Runcible Spoon]

6. I don't know about smarter...

but the stable Chicago School neolibs and other sundry whores for "free trade" certainly have established their records and it's NOT GOOD for the American worker, our environment, or the long-term stability of our economy. Krugman is not even very radical; he deserves an ear.

[Captain Hilts]

8. Don't forget that UChicago lawyers gave us the endless Whitewater investigation. nt

[grantcart]

9. Krugman deserves an ear but it appears as if he is getting more and more

involved on an ego basis.

1) The size of Obama's plan has not been decided. They have been particularly careful not to indicate the size of the package and yet Krugman says its not big or bold enough.

2) Discussions with the Congressional leadership are continuing with more scheduled for Sunday.

3) Whatever President Obama does propose will almost certainly expand in the congressional deliberative process.

4) There is no law that says that it all has to be done at one time. There is only so much that the system can absorb at one time. Some estimates are that it will be 1.2 trillion is that enough Krugman or are you criticizing the lower estimates of 800 billion?
In 6, 9 months Obama can always go back for more, and they won't have spent even a fraction of the initial plan at that time.

5) It isn't about what Obama wants its about what Obama can get passed through Congress. Krugman has the luxury of writing on a paper and Obama has the reality of getting a bill passed through the legislature.


There are two possible reactions to this; either Krugman is going out of his way to prematurely criticizing Obama when he doesn't have all of the facts yet or he thinks (and maybe in concert with the Obama team) that if there isn't some pressure to go big that the forces to go small will force a compromise and they are trying to balance out the public voices to maintain the size they want.

In any case the proof of how well Obama is doing will not be in getting passing grades from Krugman or narcissistic DUers. When it comes to the economy there will be only one guideline, how many jobs did he create preferably with as little debt as possible, and fortunately for Obama - he knows that.

[Thrill]

15. All I've heard Krugman do is criticize. He hasn't offered any solutions. Only a price tag

Thats advice me and you could give Obama.

Obama pretty much told him today. Offer something besides criticism.

[paulk]

17. a price tag is a solution

and I'm sure Obama will listen to a Nobel prize winning economist long before he listens to you or me.

[Thrill]

21. No its not. Anyone can throw out a price tag

Obama wants ideas on what to do with the money. How to create jobs. Anyone can throw out a dollar figure. The solution to the problem is what to do with it. We all know it will take money. The debate is how do you use the money to create jobs

[paulk]

22. and any idiot can post on DU

Anyone who has read Krugman's columns and blog knows that he has offered plenty of advice and solutions concerning our current economic crisis.

And anyone who was paying the slightest attention to the news would understand that Obama was refering to the Republicans (and a few Democrats) who oppose his plan, not to Krugman...

[Thrill]

26. Obama mentioned Krugman

in response to a question about Krugman's criticism. Maybe you were the one not paying attention. And please show me where Krugman has offered a solution or a program that would help create jobs

[paulk]

29. link?

[Kurt_and_Hunter]

23. The column is mostly interesting in terms of how the price-tag is derived

Identifying the useful economic datums to determine such a thing and deducing a figure from it isn't just throwing out a number.

If an engineer said, "to keep this car teetering on a cliff from tipping over the cliff I calculate we need to but 225 lbs of weight in the trunk right now" that wouldn't be useless or flippant just because he didn't specify 225 pounds of what.

[biopowertoday]

27. Yes, he deserves to be listened to seriously.

[lumberjack_jeff]

12. He is. Obama's main economic adviser is Austan Goolsbee of the U of Chicago.

His other advisers? Who knows, but nary a nobel prize in the bunch.

[Uzybone]

13. Because those Nobel Prize laurates are never wrong right?

[grantcart]

14. Goolsbee isn't even one of the top 6 advisers Obama has picked

http://en.wikipedia.org/wiki/Presidential_transition_of_Barack_Obama#Economic

but we are in agreement that Krugman's criticism is more about ego than about making an intelligent criticism about the size of an economic package that is still under negotiation, the final size not decided, and not yet announced.

On the other hand it could be an orchestrated move with the Obama team in order to try and balance out some of the conservative politicians that are gagging on a package that could be as large as 1.2 Trillion.

[lumberjack_jeff]

16. I don't remember typing the word "agree". n/t

[grantcart]

18. You also didn't offer an explanation on how Krugman could possibly

criticize the size of a package that is not yet finalized and whose size is reported to start at between 800 million and 1.2 Trillion.


but then you were wrong about Goolsbee as well.

[paulk]

24. Obama has floated a proposal with a number attached

that number is quoted by Krugman.

your argument is disengeuous at best, dishonest at worst.

And the new meme is apparently that Krugman is an egoist? Sounds a lot like the one the Republicans used when Krugman went after Bush.

[grantcart]

30. The Obama campaign has specifically said that it has not offered a

number.

The number you quote is from congressional sources.


Sunday more discussions will be had. On Countdown it was specifically reported that no one from the Obama campaign would commit to a number that the range was somewhere between 800 Billion and 1.2 Trillion and that the psychological barrier of 1 trillion may be put aside.

Olbermann also reported that the size of the package would be discussed tomorrow at a meeting with Obama and congressional Democrats.


Now it is possible that you have better credible sources than Olbermann and I await your citation of them.

[paulk]

34. from the CNBC interview 1/07/09

HARWOOD: Tomorrow you're going to give a speech and talk about your economic stimulus package.

President-elect OBAMA: Right.

HARWOOD: It looks like it's going to be at the high end of your range, around $775 billion.

President-elect OBAMA: That's correct.

[Kurt_and_Hunter]

25. Op-eds are supposed to influence opinion

Some read Krugman's column as encouraging the view that Obama is a bum.

Others read that column as encouraging the view that the stimulus needs to be BIG.

If this was an SAT reading comprehension question I think the right answer would be the second one.

What is the harm in Krugman throwing whatever opinion-making weight behind encouraging people to think the package should be BIG?

If Obama's proposal ends up BIG then Krugman will have laid part of the public-opinion predicate for making the package more palatable.

If Obama's proposal ends up SMALL then it's a disaster for us all and what Paul Krugman said once is kind of irrelevant.

Does Krugman's column make the eventual package likely to be bigger or smaller? Probably not a giant effect either way, but it seems likelier to make it bigger if it has an effect.

So what on Earth is the problem?

Preventing a depression is roughly 1,000,000 times more important than who gets credit or whether people are properly deferential to Barack Obama, so I don't get the whole "How can Krugman criticize Barack when the package isn't finalized?"

That's when you speak up. When something isn't finalized. And tea-leaves have been put out for the purpose of being read.

Not much point in a trial balloon if nobody is supposed to comment on it.

(I am quite exercised about this issue because I do not agree with Krugman because he's an authority. I agree with him because I've been saying this for at least as long as Krugman has, and for reasons I find persuasive. If Krugman said anything different I would disagree with him in strong terms.)

[grantcart]

31. The only problem with your thoughtful response is that Krugman seems to

be under the impression that you can have only one economic stimulus package.


IF they pass an 800 Billion package and IF that did not create enough jobs and then IF Obama refused to do anything more then Krugman would be right to criticize.


At this point none of those IFs exist.


The size of the package has not be finalized, it is not the only time that Obama can ask for a stimulus package and we don't have any idea exactly how many jobs are needed yet.


Obama shouldn't be judged on the size of the package or the number of packages he asks for. The only bottom line assesment should be how many jobs did he create (preferably with as little additional debt as possible but that is a secondary matter).


Krugman's advice is either premature or part of an attempt to balance premature criticism from the timid. In either case it is not a serious criticism of Obama for reasons cited.

[Kurt_and_Hunter]

32. I don't see it as being about judging Obama. That's the heart of my problem here

I have never seen Democrats get into this cult of personality thing where statements are judged primarily in terms of how flattering or unflattering they are to Barack Obama.

The best way for Paul Krugman to influence what happens in the US economy going forward is to say what he's saying from his influential perch.

The fact that an op-ed isn't laden with caveats and softeners is the nature of an op-ed. You want to push a point, not, as Nichols Cage said in MOONSTRUCK, be "a monument to justice."

When people said 'troop strength in the Iraq invasion plan is way too low' that was analyzed primarily in terms of whether is questioned Bush's position as maximum leader and whether it was fair to Bush, since the invasion plan might still be changed.

But it wasn't about Bush. It was about an invasion plan.

And this isn't about Obama. It's about an economic package.

(And the title "The Obama Gap" was almost certainly written by the NYT, not Krugman. Columnists don't usually get to headline their pieces.)

[grantcart]

33. I appreciate your thoughtful reply

But Krugman is not making it about economics. He is making his column for a complete criticism of Obama on all matters. For example his criticism of Gupta has nothing to do with economics.


Again is he trying to push Obama or trying to promote Krugman?


Would it have been too great a 'softner' to point out that Obama hasn't in fact decided on the size or that it would be very easy to come back for more if it was necessary?


While you are right about the cult of Obama there is another cult that is also rising the "cult of anybody who is more liberal and critical of Obama" and Krugman is going to the head of that class at DU.


The irony is that I hold it entirely possible that the Krugman article was done in concert with the Obama team as a coordinated effort to balance the push by more conservative pundits.

[Kurt_and_Hunter]

20. Actually, he is saying what he is saying.

What alternative does he have as an expert but to say what he believes to be true? Other experts can disagree. (Not that they do all disagree, of course. I guarantee you there are some advisers telling Obama it's too small but they are not likely to write an op-ed to that effect. The Krugman view is a lot closer to economic consensus than 750 billion that's more than a third tax cuts.)

The idea that minority views are intrinsically arrogant since they suggest the majority may be mistaken isn't a good path to go down.

I said there were no WMD before Iraq based on information, not just a hunch. I was not saying I am smarter than any given person or group... that was sideways to the question. I was saying, I think X based on Y.

The "smarter" construction short circuits discussion as if stupidity was the chief source of disagreement on subtle matters.

If Krugman thinks XYZ should he not proclaim it because other economists don't agree? Because disagreeing might imply he thinks he's smarter than they are?

Don't they, by implication, think they're smarter than Krugman? Should they apologize for that?

Sorry for going off but the whole "smart" thing bothers me because it seems to have currency on DU lately as an authoritarian cudgel (Not citing you)

There is no economist presumptively smarter than Krugman, nor is he presumptively smarter than someone else.

And smart isn't the same as right.

Someone threw Lawrence Tribe in my face the other day, as if that was dispositive of a constitutional question, like Tribe is God or something. (I was right and Tribe was dead wrong and making a real ass of himself, BTW) That invocation of authority overlooks the fact that 1) equally esteemed people hold a contrary view, and 2) that Antonin Scalia is a more expert constitutional scholar than anyone arguing on DU but I certainly don't feel obliged to take Scalia's view of things.

[Jennicut]

11. Obama is the decider but somehow actually asks for other opinions, someone check my pulse

Krugman may be right, Obama may be right. But the fact that Obama said he would listen to a good idea is so hard for me to get used to. Shrub never listened to anyone.

[Kurt_and_Hunter]

19. BTW: Most op-eds are not titled by the author

They are usually titled by the editorial page staff.

(And newspaper headlines articles are not written by the reporters)

Just a note, since "The Obama Gap" seems rather snarky.

[jumptheshadow]

28. Good point on that one

And, since David Brooks was on the same page opining that the package was too big, it was all the more likely that Krugman's piece was titled to show the contrast with the other columnist.