Flashback -- Krugman: Franklin Delano Obama?

[ProSense]

Franklin Delano Obama?

By Paul Krugman
Published: November 10, 2008

<...>

About the New Deal’s long-run achievements: the institutions F.D.R. built have proved both durable and essential. Indeed, those institutions remain the bedrock of our nation’s economic stability. Imagine how much worse the financial crisis would be if the New Deal hadn’t insured most bank deposits. Imagine how insecure older Americans would feel right now if Republicans had managed to dismantle Social Security.

<...>

That said, F.D.R. did not, in fact, manage to engineer a full economic recovery during his first two terms. This failure is often cited as evidence against Keynesian economics, which says that increased public spending can get a stalled economy moving. But the definitive study of fiscal policy in the ’30s, by the M.I.T. economist E. Cary Brown, reached a very different conclusion: fiscal stimulus was unsuccessful “not because it does not work, but because it was not tried.”

This may seem hard to believe. The New Deal famously placed millions of Americans on the public payroll via the Works Progress Administration and the Civilian Conservation Corps. To this day we drive on W.P.A.-built roads and send our children to W.P.A.-built schools. Didn’t all these public works amount to a major fiscal stimulus?

Well, it wasn’t as major as you might think. The effects of federal public works spending were largely offset by other factors, notably a large tax increase, enacted by Herbert Hoover, whose full effects weren’t felt until his successor took office. Also, expansionary policy at the federal level was undercut by spending cuts and tax increases at the state and local level.

And F.D.R. wasn’t just reluctant to pursue an all-out fiscal expansion — he was eager to return to conservative budget principles. That eagerness almost destroyed his legacy. After winning a smashing election victory in 1936, the Roosevelt administration cut spending and raised taxes, precipitating an economic relapse that drove the unemployment rate back into double digits and led to a major defeat in the 1938 midterm elections.

What saved the economy, and the New Deal, was the enormous public works project known as World War II, which finally provided a fiscal stimulus adequate to the economy’s needs.

<...>

The economic lesson is the importance of doing enough. F.D.R. thought he was being prudent by reining in his spending plans; in reality, he was taking big risks with the economy and with his legacy. My advice to the Obama people is to figure out how much help they think the economy needs, then add 50 percent. It’s much better, in a depressed economy, to err on the side of too much stimulus than on the side of too little.

In short, Mr. Obama’s chances of leading a new New Deal depend largely on whether his short-run economic plans are sufficiently bold. Progressives can only hope that he has the necessary audacity.

[izquierdista]

1. Let's hope it's not Lyndon Baines Hoover

He already owns Afghanistan. And if Geithner does a heck of a job, well, there's your third name.

[ProSense]

4. Remember when all the critics wanted Obama to be more like LBJ

Doesn't look so attractive now does it?

[AllentownJake]

7. We got the equivalent of Medicare and the Civil Rights Act?

Vietnam was Johnson's folly and he went to the grave regretting it, he did pass a civil rights legislation and Medicare.

[DebbieCDC]

2. Written when we still had hope for change

Those days are long gone

[mcablue]

3. "Progressives can only hope that he has the necessary audacity"

Krugman has said Obama has not had the necessary audacity regarding the stimulus package. PK argued for a bigger one.

[Oregone]

5. Im not sure why you are citing this. Are you trying to make us cry?

Yes, things could have been so different. What a hopeful time. A fleeting window in time that was so much more positive than much of the rest of the decade.

[AllentownJake]

6. Are you a doom and gloomer now nt

[ProSense]

9. Actually, it's obvious the irony is lost on the "doom and gloomers"

That said, F.D.R. did not, in fact, manage to engineer a full economic recovery during his first two terms. This failure is often cited as evidence against Keynesian economics, which says that increased public spending can get a stalled economy moving. But the definitive study of fiscal policy in the ’30s, by the M.I.T. economist E. Cary Brown, reached a very different conclusion: fiscal stimulus was unsuccessful “not because it does not work, but because it was not tried.”

This may seem hard to believe. The New Deal famously placed millions of Americans on the public payroll via the Works Progress Administration and the Civilian Conservation Corps. To this day we drive on W.P.A.-built roads and send our children to W.P.A.-built schools. Didn’t all these public works amount to a major fiscal stimulus?

Well, it wasn’t as major as you might think. The effects of federal public works spending were largely offset by other factors, notably a large tax increase, enacted by Herbert Hoover, whose full effects weren’t felt until his successor took office. Also, expansionary policy at the federal level was undercut by spending cuts and tax increases at the state and local level.

And F.D.R. wasn’t just reluctant to pursue an all-out fiscal expansion — he was eager to return to conservative budget principles. That eagerness almost destroyed his legacy. After winning a smashing election victory in 1936, the Roosevelt administration cut spending and raised taxes, precipitating an economic relapse that drove the unemployment rate back into double digits and led to a major defeat in the 1938 midterm elections.

What saved the economy, and the New Deal, was the enormous public works project known as World War II, which finally provided a fiscal stimulus adequate to the economy’s needs.

That's a bag load of Irony. Wonder if Krugman would support a large increase?



edited typo

[AllentownJake]

10. Volker said today that the recovery is entirely government spendiing

I'm not laughing right now.

[ProSense]

11. And it shouldn't be?

So Krugman is wrong about needing something similar to the W.P.A.?

[AllentownJake]

12. Nope he isn't wrong

but when the administration starts paying lip service to debt reduction it means it will not be tolerated much longer.

[ProSense]

13. "but when the administration starts paying lip service to debt reduction" Wonder why?

Statement of U.S. Senator Russ Feingold on President Obama's Jobs Proposal

Tuesday, December 8, 2009

“I am particularly pleased that President Obama is including a tax credit for businesses to create jobs in his proposal, since it’s something I have urged both the President and Congress to do. While there’s no single way to address the challenges facing businesses, a jobs tax credit would help some firms hire workers they otherwise couldn’t. It would be an effective tool in putting more people back to work. I applaud the president for focusing on putting people back to work, which is a top priority for so many American families.

“I did not support the Wall Street bailout and strongly prefer that we use funds from that program to pay down the deficit. And while I would have preferred the president to have proposed other ways to pay for his jobs package, using bailout money is much better than not paying for that package at all.”

Here you have progressive Senator "paying lip service to debt reduction." President Obama is dealing with 535 people with stances ranging from very progressive to very strange. He has to do everything in his power to address these concerns while trying to move the nation forward.

[Kurt_and_Hunter]

14. Will he be denying evolution soon?

After all, evolution doesn't poll any better than deficit spending.

The man was and is supposed to L-E-A-D, not regurgitate and reinforce the existing destructive delusions of others.

That is very hard to do.

And if someone had forced him to become president then I'd have all sorts of sympathy for his inability to do difficult things that are vital to our national well-being.

But nobody forced him to be president. He put himself forward as the best possible president in the whole wide world.

So perhaps he ought to do something extraordinary.

[ProSense]

15. "After all, evolution doesn't poll any better than deficit spending."

Did my comment include a reference to polling?

Senator Feingold is a progressive Democrat. Are you suggesting that the President ignore him?

The man was and is supposed to L-E-A-D, not regurgitate and reinforce the existing destructive delusions of others.

By "L-E-A-D," do you mean as in dictator?

But nobody forced him to be president. He put himself forward as the best possible president in the whole wide world.

So perhaps he ought to do something extraordinary.

Like what: winning a Nobel Peace Prize or saving the country from financial ruin?

[Kurt_and_Hunter]

16. Of course he should ignore him.

If Feingold proposed imprisoning everyone whose last name starts with G I hope Obama would ignore him, and that's not so much more senseless than deficit angst.

Perhaps if President Obama had diminished, rather than fed, that kind of idiocy then Feingold wouldn't feel obliged to say such destructive things.

Regarding your polling comment, this craven deficit-hawking is poll driven... by Feingold, by Obama, by all the 535 folks you cite.

I don't care what Feingold has to say when he is pandering any more than I care what Obama has to say wen he is pandering.

[ProSense]

17. Dumb

You can easily make the claim that other people's concerns are invalid because they do not agree with you.

The President should not govern by ignoring people with valid concerns.

If you have to throw out ridiculous hypotheticals to justify your arguments, maybe you should consider that you're not dealing with reality.

[Kurt_and_Hunter]

18. You are arguing with someone else.

"The President should not govern by ignoring people with valid concerns."

No shit. Nobody could disagree with that, myself included. Go find somebody who says "The President should govern by ignoring people with valid concerns" and argue with that person.

I equated the current deficit-angst with denying evolution. If you want to argue FOR deficit-angst as a "valid concern" then do that.

[ProSense]

19. "Of course he should ignore him." I appear to be arguing with a schizophrenic. n/t

[Kurt_and_Hunter]

20. You are arguing with yourself, but I am not offering a diagnosis

I do not think a president should govern by ignoring valid concerns.

I do not think Feingold's deceit angst is a valid concern.

If you meditate on those two statements for a while you might have a "eureka" moment.

[ProSense]

21. "I do not think Feingold's deceit angst is a valid concern." Let me reiterate:

You can easily make the claim that other people's concerns are invalid because they do not agree with you.

Who decides what is invalid? You baselessly suggested that Feingold is pandering on this issue.

[ProSense]

8. The responses to this are hilarious. n/t