Paul Krugman: On the Inadequacy of the 2009 Stimulus

[Better Believe It]

On the Inadequacy of the Stimulus
By Paul Krugman
September 5, 2011

So here’s the thing: the financial crisis, and in particular the popping of the housing bubble, had two big effects on spending. One was that housing investment plunged from well-above-normal to well-below-normal levels. The other was that consumers suddenly increased their savings. Here’s a picture, with the red line showing residential construction as a percentage of GDP and the blue line showing the personal savings rate:



Put these together and you have a negative shock on the order of 6 percent of GDP.

Against this you had a stimulus bill of $800 billion — except $100 billion of that was AMT extension that was going to happen anyway, another $200 billion was other tax cuts of dubious effectiveness, so you were left with $500 billion of spending, spread over more than 2 years — maybe 1.5 percent of GDP or less.

It just wasn’t big enough to do the job.

http://krugman.blogs.nytimes.com/2011/09/05/on-the-inadequacy-of-the-stimulus/

[FSogol]

1. Dupe

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=439&topic_id=1858317&mesg_id=1858317

Oh wait, you posted it before?

Agenda?

:shrug:

[RaleighNCDUer]

3. A very clear agenda

of making sure people are aware of what REALLY happened to the 'stimulus'.

[FSogol]

6. Did everyone forget how the Republicans forced a big portion of the stimulus into tax cuts rather

than actual stimulus?

[RaleighNCDUer]

7. They didn't 'force' shit. WE had the majority. The entire stimulus bill

passed without a SINGLE Republican vote.

We could have any any bill we wanted. But some people thought it better to play nice, than to save the economy.

[RaleighNCDUer]

2. It just wasn’t big enough to do the job.

Which is exactly what he predicted at the time.

[WI_DEM]

4. I think he has made this abundantly clear about 1000 times. Can't he find any other topic to write

about?

[FSogol]

5. Paul "I told you so" Krugman.

:shrug:

[Tesha]

9. Yet another person clearly on our side who now gets thrown "under the bus", ehh?

I guess the truth hurts.

Tesha

[QC]

10. Paul Krugman never really loved him!

:cry:

[sam11111]

8. Massive stimulus, tarrif protection, strong proUnion regs, permanent LARGE WPA for zero unemployment

Would be a good beginning.

WPA, especially.

Michael Moore and Rbt. Reich (ex sec Labor clinton) have called for a new WPA. See sig belo.