Obama asks for Paul Krugman's advice: Show me the Money!
Paul Krugman wrote yesterday that Obama might not be spending enough in his new stimulus package to really change much.
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.
NBC's Chip Reid siezed on this during Obama's presser and asked Obama about the fact that some Democrats like Paul don' think he's going to spend enough jack to really save the economy...
CHIP REID: Thank you, Mr. President-Elect. I’d like to follow up on that. Larry Summers, as he said, is up on the Hill now, and we’re told he’s getting an earful from some Democrats who say this plan just isn’t big enough. And I know you resisted putting a number on it, but your staff has talked about a high end of $800 billion or something like that. They say if that’s true, and 40 percent of it is tax cuts that don’t have the bang for the buck, that spending has, it’s not big enough. Paul Krugman today said it falls far short for what you’re going to need to put America back to work. How do you respond to those critics?
OBAMA: Look, there’s some people who have said that it’s not big enough, there are others who say it’s too big. Well, the — as I said before, Democrats or Republicans, we welcome good ideas. And so the challenge for all of us, I think, is to identify good ideas, good spending plans, that deliver on my commitment to create or save 3 million jobs. I want this to work. This is not an intellectual exercise, and there is no pride of authorship. If members of Congress have good ideas, if they can identify a project for me that will create jobs in an efficient way, that does not hamper our ability to — over the long term — get control of our deficit, that is good for the economy, then I’m going to accept it.
If Paul Krugman has a good idea, in terms of how to spend money efficiently and effectively to jump-start the economy, then we’re going to do it. If somebody has an idea for a tax cut that is better than a tax cut we’ve proposed, we will embrace it. So, you know, one of the things that I think I’m trying to communicate in this process is for everybody to get past the habit that sometimes occurs in Washington of whose idea is it, what ideological corner does it come from. Just show me. If you can show me that something is going to work, I will welcome it.
Obama said he's willing to hear from everybody and is open to more suggestions and new ideas. He basically asked Paul to "Show me the Money!"
I know Obama's team is reading Krugman's blog and columns so I think he's putting his ideas out there for all to see, but heck, give him an adviser role too and let him go to work for you. That is, if he'd accept...
As I've written many time before, when it comes right down to it, Republicans do not want Obama to succeed in DC so forget the bipartisan stuff and implement the plan Obama really wants without worrying about the vote count. There will be enough Republicans to get it passed so let old McConnell cry in the wind if that's what it takes.
To have an intellectual at the helm.
I just wish he could see a way to straighten out his thinking vis-a-vis Israel.
"The US has an army of 90,000 soldiers in Afghanistan and is spending $100bn a year, but has still been unable to defeat 20,000-25,000 Taliban who receive no pay at all." - Patrick Cockburn
Jesus H. Christ on a pogo stick!
It would be awesome if in a topic about the economy we could focus about the economy and not Israel, and viceversa.
I am plenty critical when it comes to Obama and his cabinet choices thus far. But if he is doing the right thing at the topic at hand, there is no need to find any tangential shortcoming to bitch about.
but I don't think Obama is going to morph into Mahmoud Ahmadinejad. Thank you for playing.
Dear Mr. Krugman, your spending is debt expansion. Debt expansion is what got us in this mess, therefore more debt is not going to get us out of it. It is going to dig a deeper hole.
Every inflation ends in a deflation. There is no spending enough.
Running the federal debt parabolic will result in a parabolic collapse. 100% guaranteed.
Someone honest really needs to start doing the math. 1+1=2, no matter who tries to make it be 3.
Congratulations.
not all debts are created equal.
Debt that creates infrastructure and allows for stability during uncertain economic times, is not really debt as it is more of an investment. Which is what the new deal was.
That Debt is different as the Debt as employed by the GOP that simply transfers public assets to provide cheap, almost free, liquidity to the financial sector, and wastes money in things with little return like arms (bombs can only be used one and have no return on investment really).
Really, that is not so darn hard to understand. Please don't buy into the many intellectually dishonest tricks some libertarians are trying pull nowadays out of desperation...
It's going to take a lot of investment (spending) to get out of this mess Bush administration caused.
I'm all in favor of it.
Government spends.
Money flows, but individuals are left saddled with debt.
Where is the recovery?
and increase the taxation on the upper earning brackets, so that the middle class don't have to bear the blunt of this.
If the rich want to have a bigger piece of the pie, they should pay for having to have a pie to begin with.
But in all honesty. I see a clear difference between borrowing money from your parents to get your business going (which is what I equate the new deal) vs. borrowing money from your parents to blow it on hookers and blow (which is what Reagan et al did with their "spend it like you got it" approach to government spending).
But I think we already threw the money for it at the banks.
How much infrastructure would 700 Billion dollars buy?
If you guessed 700 Billion, you're correct.
Its kind of like calling your wife to tell her you got mugged. Then she says to you can you please pick up a full load of groceries.
saw a lot of new banking laws designed so that "this would never happen again." Those laws were slowly repealed, one by one, during the past two decades ... with the help of a few democrats, but mostly by republicans, and especially by Phil Gramm and a few other members of the Texas Taliban.
We need those banking laws re-instated, and the SEC given some new backbone. Our recent woes are the 1920s & 30s all over again, with a few modern embellishments.
And the "cure," in Obama's view (and mine), is the same prescription of WPA/CCC investments. Keynesian pump-priming to get the economy faltering forward. And meanwhile, patch up the damn laws so they quit leaking so badly.
This is a very good thumbnail sketch of where we are right now, and where we need to go from here. The only thing I would add is this: The Democratic party won in November. Decisively and across the board. Accordingly, it is not necessary to appease the Republican party with stupid shit (like tax cuts) that will not work. The votes are there to get a good bill passed. Use them! Failing that, get ready to lose seats in 2010 and the presidency in 2012. The right-wingers are waiting with baited breath to say, "See? We told you it wouldn't work". And using their approach, it won't. Period. They want this package to fail.
not all debts are created equal.
Debt that creates infrastructure and allows for stability during uncertain economic times, is not really debt as it is more of an investment. Which is what the new deal was.
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Sorry, but debt is debt, regardless what you want to rationalize it into. All parabolics collapse, regardless whether it is the stock market running one or the government. There is no stability in the government running parabolic deficits, regardless what the money is spent on.
Then there should be no such thing as a sub-prime category! Lend a million to the bum on the street rather than to a prosperous family to buy a McMansion.
If your in a stall in an airplane, you put the nose down to get speed. You can reclaim the altitude later. Same with deficit spending.
The truly tragic thing is that if Bush had not racked up 3 trillion in debt during economically OK times and getting nothing for it, we wouldn't be squirming about spending 3 trillion in an emergency.
You sound like the blinkered Michelle Singletary from The Washington Post, who goes so far as to say, "All debt is bondage."
If she would restrict her claim to consumer debt, she would have a very good point. But to equate non-value added debt such as credit cards with the debt incurred by Google and Microsoft to implement new, value-added ideas is fucking idiotic.
Similarly, national debt incurred to build the Interstate Highway system is not the same as debt incurred to pay KBR to poison our troops.
Then there should be no such thing as a sub-prime category! Lend a million to the bum on the street rather than to a prosperous family to buy a McMansion.
If your in a stall in an airplane, you put the nose down to get speed. You can reclaim the altitude later. Same with deficit spending.
The truly tragic thing is that if Bush had not racked up 3 trillion in debt during economically OK times and getting nothing for it, we wouldn't be squirming about spending 3 trillion in an emergency.
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They were not economicly okay times. Every boom ends in a bust. Remember the Clinton era boom? ALL booms end in a bust. The deficits Bush ran were part of trying to avoid the bust. It didn't work, did it? So Obama running trillion dollar deficits for years to come, isn't going to work either. Every boom ends in a bust. It is mathmatics.
There is no getting around the math.
If you are in a stall, you put the nose down to regain altitude. In a credit bubble, you let the debt default, to put the debt level down, so the economy can regain "altitude".
Republished here at Common Dreams:
The Obama Gap
Krugman addresses precisely your concern.
When will government of the people, by the politicians, for the corporations perish from this Earth?
Not soon enough!
Really? Is this why the price of a hot dog has over the last century fluctuated around the price my gramps paid in 1920 for one (2 cents)?
One the one hand, spend according to the 1930s formula.
On the other. Think first. Then spend.
I find it refreshing that a President would take the time to listen to anyone suggestion. He shows an open mind to any one wheter they are republican or democratic. Right now is what this country needs many suggestions, review them and then make the decision.
Southern Yankee
george was getting his advice from God and even though he created the heavens and the earth, he doesn't know squat about economics.
About Obama's approach to the economy. The Republicrat and Republican Congress has no right to block him after it willingly screwed us over during the Clinton and Bush years. If it does, it'll pay in 2010. The people want action, not in-fighting. Congress still has to even come close to Obama's approval rating before it can pull any shenanigans on his proposals.
The American sheeple will not rise up against a treasonous Republican party. They will continue to elect John Boner and the other fascists.
Krugman suggested that if not enough infrastructure projects could be found to spend the amount of money he believes must be spent to jump start the economy, that Obama could spend that additional money on Health Care.
There's a great need for Clinics throughout the US, for low income persons urban and rural.
If I can find the Krugman article where he proposed this I'll post it, but it was more an aside than the main point. However, now the question has been raised, "What more would you spend stimulus monies on. Mr. Krugman?" .. and I recall Health Care was his answer.
When will government of the people, by the politicians, for the corporations perish from this Earth?
Not soon enough!
So if your money estimation for debt and spending is off
You're a jack-off?
Diabolus est Deus Inversus
if your name is Jack.
Guarateed to stimulate.
I say legalize marijuana and tax the bejeezus out of it.
Even with that it probably will be cheaper than the illegal stuff we have now.
(And to make up for lost costs, after cheapening the cost of marijuana, raise the prices on Twinkies.)
Diabolus est Deus Inversus
Obama said he's willing to hear from everybody and is open to more suggestions and new ideas. He basically asked Paul to "Show me the Money!"
well, it may not be Krugman but here is Ron Paul "showing the money" (the door)
http://www.govtrack.us/congress/bill.xpd?bill...
Step #1 ...repeal the federal reserve act.
Step #2 ...cut Military budget.
Step #3 ...eliminate wasteful govt spending.
audit-prosecute-incarcerate
Our country is fucked.
We need radical change.
Keep the federal reserve act and tighten regulations on business loans,
Cutting the military budget is problematic since so much said budget is classified in the "black budget" of CIA, NSA, DHD, DID, FBI counter-intelligence, and each branch of the military as well as the Joint Chief's of Staff having their own Intelligence departments
And government spending is wasteful if it's not YOUR project.
Diabolus est Deus Inversus
we just fire the Federal Reserve, and default on the trillions we owe them, and leave their fat (non american) asses hangin' in the wind...and let them bail themselves out!
audit-prosecute-incarcerate
You'd be assassinated by your V.P.
Then our banking accounts are subject to the whims and vagrancies of Bank runs, depressions, recessions etc like the Depressions of 1819, 1836, 1873, 1893, the Scare of 1910, and the Depression of 1929.
This solutions has the same risk value of privatizing social security and getting us all to invest in Wall Street.
Diabolus est Deus Inversus
In 29, when the banks went bust,
our coins still read "in god we trust"
Yip Harberg
If churches aren't going to provide charitable services, since they're more interested in Crystal Cathedrals, cable TV networks and political postulations, I say tax them as non-charitables.
Diabolus est Deus Inversus
you cant include 1929!!!!
...the federal reserve act was passed in 1913 and the great depression happened under Federal reserve watch!!!
as a matter of fact there have been alot of ups and downs, that could have been avoided if they werent a private for profit group of banks in it for themselves...
audit-prosecute-incarcerate
That's true, but the regulations like the FDIC insurance on banking accounts, and the Glass-Steagall act was passed after the crash.
The Federal Reserve Act of 1913 was a reaction to the Bank Panic of 1910.
Diabolus est Deus Inversus
...did not fix "bank panics" or depressions. ...as a matter of fact they suck at it!
...they have also (over the years) gradually removed all the silver from our coinage.
audit-prosecute-incarcerate
um...... so?
And look at the 19th century to see what true turmoil is.
I'm not a fan of the fed by any stretch, but can we talk about what to do with it only if we talk honestly about what it has done well and what it does not do well. It has calmed the roller coaster, but did so at the consequence of creating a debt based monetizing solution. I think that puts us on the wrong end of a J curve and we are seeing many of the effects of that now.
The trouble is wasteful spending is anything that helps the other person. Or in Ron Paul's world, anything that helps anybody.
One place where money could be spent that would be a great investment would be public education. More schools plus smaller classes would mean you'd have construction (which means more jobs) and you'd need more teachers (I'm thinking maximum of 12 students per class). That would solve 2 problems - jobs and our education problem. Oh, and ditch the no-child left behind mess while you're at it.
Education, health care, infrastructure, and industrial re-conversion.
Each dollar spent on any of those sectors has orders of magnitude more return on the investment, than starting wars so that our boy king can deal with his Oedipus complex.
If we can waste $2 billion on a piece of shit stealth bomber, we sure as f*ck should be able to make sure no one has to worry about their health care.
i like my idea
have a prescription for solving the problems of individual indebtedness and bank balance sheet crap?
Krugman's more of a Macroeconomist than a Microeconomist.
And as for individual indebtedness a great deal is due to wages being stagnant.
And as for bank balance...you lost me, your reference seems inchoate.
Diabolus est Deus Inversus
wages increased more slowly than individual debt.
Individuals believed they could incur debt and pay it off because of rising real estate values.
Bank balance sheets were based on the assumption of rising real estate values...whoops.
I understand now what you said about bank balance sheets, but individual debt is often not due to nice vacations and luxury items but paying for necessities like medical, pharmaceutical even grocery bills.
I saw an article that said in the last twenty years wages have gone up about 150% (unadjusted for COL increases), but college tuition by about 320%.
Diabolus est Deus Inversus
as for wages being stagnant I think that's a small part of it. The big problem was the easy availability of credit (hey, a circuit city credit card!) and all of the new technology available today. There is simply so much more stuff to buy these days, it's ridiculous.
People wouldn't need so much credit if they're wages weren't stagnant.
And the increase of online shopping has a lot to do with the use of credit cards, since that's often the only way to pay.
Diabolus est Deus Inversus
ah true about online shopping. That's a very good point.
Additionally, the credit card companies offer their deals to new college students who one: don't understand budgets, two: facing the increasing costs of tuition and textbooks and charge them. And then when the banks start levying punitive penalties on the users, that increases their debt exponentially.
Diabolus est Deus Inversus
In most cases a Debit card works just as well, if you have thefunds in your account.
If you're referring to my online shopping comment not all sites are set up to allow debit cards. And even then they're guaranteed by credit companies like Visa.
Diabolus est Deus Inversus
I did say most but I still haven't gotten your payment for my generous comments.
as for individual debt... they need to start teaching basic life skills classes in school to (which ties back into education). Smaller classes, smarter students, smarter workers, less debt.
I agree. When I left the Air Force, I found myself wishing they had a basic training program to turn us back into civilians. I had no idea of how to maintain a checking account, since I enlisted right out of high school.
Maybe banks could offer loans at slightly lower interests if we agree to to take such classes even as adults.
Diabolus est Deus Inversus
If consumers had saved the money instead of borrowed it, the country would be in a Japanese style recession. We would all be bitching that consumers weren't spending enough. If they borrow to spend then they are living beyond their means. It's a no win scenario and a false one.
In a purely macroeconomic sense, consumers could not possibly have wanted too much stuff because the stuff got made. Plus, people had jobs, so they must have been doing something useful. In a supply demand curve, you don't account for the amount of available money in the system. It should be irrelevant. However, when we look at where the scarcity was, it was not in demand, nor in the ability to supply, but rather consumers not having enough money in circulation.
The problem is that businesses decided to profit by gaming the system rather than actually contributing value. This ballooning of profit created a bubble that drew more money away from proper investments and into gapping chasms. Couple this with the same trickle down philosophy of the 1920s and you have a circulation problem. The circulation problem pops the investment bubble and all that wealth that was sucked up simply disappears in a puff further constricting circulation.
A simple solution is to follow Paul's advice for Japan in the 90s. Print lots of money. Create inflation.
Now who's going to be the first to prove how little they know about economics by mentioning Argentina?
Give me 100 Million dollars. I will go buy a new house, new car, fill the house with furniture, open a restaurant, hire employees, pay local and state taxes, buy another car, sell the first one for a loss, sell the restaurant, order construction on a new house, sell the old one, give the furniture to Salvation Army, pay my taxes, paint and furtnish my new house, start another business, etc, etc.
trust me, I can fix the problem. Just give me the money.
... until you came to 'furtnish'.
That is prohibited.
If you need funds to pay for essentials, you have a revenue problem
If you need funds to pay for frivolity, you have a spending problem
I just could not watch all the vidio!!! I was getting tooooo much of a intellectual talking to the American people. less than 10 days left of stupid.
First PE Obams needs to get control of the money. How, DUMP the federal reserve. Have the US Goverment take back our country from the bankers. fuck them. think about it. these assholes have been fucking the American worker for 50 years. You buy a home, your dream. the bank tells you, you have avery good intrest rate at 6% over the next 30 years. most people don't look at what they will be paying for this great loan. great for the BANKS, because you will pay more in intrest than your home cost and you pay the bank FIRST. 80% of you house payment goes to the BANK. this is nothing but the bank butfucking you. then 8 to 10 years every thing goes to shit and they take millions of homes back. rember the Saving and Loan bullshit. look how many people lost there homes then. look how many banks came out on top, again................
"but heck, give him an adviser role too and let him go to work for you."
That comment bugs me. It implies that Obama should only accept and idea if the person is on the governments dime. I think the Obama camp understands that there are many think tanks out there, despite partisan agendas, that have really great ideas. The fact remains that bitching and moaning get you nowhere. I believe Obama is pointing to the old axiom: Either you're part of the solution or you're part of the problem. Help or get out of the way.
... you don't first squabble about your next water bill.
No one in this century will pay any of it anyway, considering the debts was $10T before the collapse of the economy.
If you need funds to pay for essentials, you have a revenue problem
If you need funds to pay for frivolity, you have a spending problem
... when the great economy-wizard-genius Hannity on Fox says the opposite?
)-:
If you need funds to pay for essentials, you have a revenue problem
If you need funds to pay for frivolity, you have a spending problem
It's like people at C&L just don't get this. DEBT IS THE PROBLEM, Foreign debt!
I voted for Obama because he would improve our nations good standing, NOT because of his economic plan.
Think!
We have no money and are in huge debt SO we are going to borrow MORE to stimulate the economy thus increasing our debt to fix our debt problem?!?!
Hello?
Anyone here want to explain how or why that is a good solution? Because Paul Krugman hasn't! His prize wasn't for his work on economic downturns
For God's sake even the FED's own charts dating back to it's inception in 1913 say we have jumped off a cliff to a whole new level of stupidity see for yourself.
http://research.stlouisfed.org/fred2/fredgraph?s[1][id]=AMBNS
Goodnight, Frau Blücher
Cut the defense budget in half
Education, health care, infrastructure, and industrial re-conversion.
Each dollar spent on any of those sectors has orders of magnitude more return on the investment, than starting wars so that our boy king can deal with his Oedipus complex.
If we can waste $2 billion on a piece of shit stealth bomber, we sure as f*ck should be able to make sure no one has to worry about their health care.
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All money is debt. In a fractional reserve banking system all debts cannot be repaid due to the interest factor. The money you earned last week is someones debt. Eventually, a major debt default occurs, resulting in a depression.
Due to that fact, there is no ensuring anything in perpetuity. All cycles come back to where they began.
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