Saturday, November 6, 2010

Economic Recovery Debate

The economic debate.

James K. Galbraith:
"The original sin of Obama's presidency was to assign economic policy to a closed circle of bank-friendly economists and Bush carryovers. Larry Summers. Timothy Geithner. Ben Bernanke. These men had no personal commitment to the goal of an early recovery, no stake in the Democratic Party, no interest in the larger success of Barack Obama. Their primary goal, instead, was and remains to protect their own past decisions and their own professional futures."

James K. Galbraith, "Obama's Problem Simply Defined: It Was the Banks," Huffington Post, 5 November 2010.

Paul Krugman:

"Mr. Obama’s problem wasn’t lack of focus; it was lack of audacity. At the start of his administration he settled for an economic plan that was far too weak. He compounded this original sin both by pretending that everything was on track and by adopting the rhetoric of his enemies."

Paul Krugman, "The Focus Hocus-Pocus," New York Times, 4 November 2010.

They could both be right. And if they are, and if the new majority in the House of Representatives manages to end spending that could stimulate the economy, while at the same time increasing the debt by extending tax cuts for the richest Americans, where does that leave us, economically and politically? If the economists are right that more, not less, stimulus was and is needed, why has it been so hard for the argument to win over the American electorate? Is it simply "if there's less for the other guy, there will be more for me" thinking?

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