Green Room

Krugman Keeps Pretending Spending Has Gone Down

posted at 2:34 pm on June 11, 2012 by

In his June 08 column, New York Times columnist Paul Krugman says a major part of the reason the recession under Reagan recovered more quickly than the current recession is because of government spending. From the column:

Why was government spending much stronger under Reagan than in the current slump? “Weaponized Keynesianism” — Reagan’s big military buildup — played some role. But the big difference was real per capita spending at the state and local level, which continued to rise under Reagan but has fallen significantly this time around.

There are a myriad of things with which to respond to Krugman over this – his most egregiously inaccurate claim – and other points and inferences in his column. Below are several:

First and foremost, local and state government spending hasn’t gone down since the recession started. The linked chart does show that government spending went down in from 2009 to 2011 as a percentage of Gross Domestic Product, but in pure numbers (also seen at the link) only 2009 saw a drop, and the spending in 2010 more than matched the 2009 drop.

(Data for this claim comes from the Bureau of Economic Analysis, and the linked chart and data come from Just Facts.)

Second, the spending prior to and during both recessions was both different and similar. From 1975 through 1979, state and local spending as a percentage of GDP fell by .9%, and then fluctuated for the following several years. Meanwhile, local and state spending went up by 1% of GDP from 1999 to 2002 and 2003. This reversed course for several years, and has since fluctuated. However, at no point did the spending as a percentage of GDP in the current recession drop even to the high point prior to the 1980s recession, an important context Krugman seems to ignore.

The above shows how the periods are different. They are similar insofar as the actual dollars spent consistently grew, meaning that Krugman’s overall contrast is still wrong.

Third, Dan Mitchell of Cato wrote a piece in February stating the obvious: The same bad policies Bush was responsible for that both contributed to the recession and exacerbated its problems have been continued by Obama. From Mitchell’s analysis:

    • Bush increased government spending. Obama has been increasing government spending.
    • Bush adopted Keynesian “stimulus” policies. Obama adopted Keynesian “stimulus” policies.
    • Bush bailed out politically connected companies. Obama has been bailing out politically connected companies.
    • Bush supported the Fed’s easy-money policy. Obama has been supporting the Fed’s easy-money policy.
    • Bush created a new healthcare entitlement. Obama created a new healthcare entitlement.
    • Bush imposed costly new regulations on the financial sector. Obama imposed costly new regulations on the financial sector.

To see some of these points in a more humorous way, check out this cartoon comparing the similarities in policies between Bush and Obama. All in all, for Krugman to blame (as he insinuated in this column and has outright stated in others) Republicans for allegedly holding Obama back and preventing Keynesian economic policies is insincere. Keynesian policies, as well as incestuous Big Business and Big Government back-scratching, have been the norm under the last two Presidents.

Fourth, as my good friend Bill Beach pointed out last week, our economy is incredibly sluggish compared to the 1980s recession, even though we are nearly five years out from its start and three years into the “recovery.” This is despite massive government spending in TARP, two stimuli, unemployment benefit extensions, the auto bailout, and trillions in Federal Reserve spending. Again, if it’s more outgoing federal money Krugman wants, he should simply look at the last several years.

Fifth and finally, Krugman’s argument about local and state governments and their alleged woes was coincidentally (or not?) discussed by President Obama on Friday, when the President said the nation’s economy is struggling mostly at the level of local and state governments. However, as the Wall Street Journal pointed out, Census data shows revenues for local and state governments have increased by six percent over the last two years.

In short, Paul Krugman is doing what Paul Krugman does best: cherry-picking a fact and making a completely unrelated conclusion that lacks proper context and fails to hold up even to the most cursory of examinations.

[Originally published at RightWingNews.com]

Recently in the Green Room:

Blowback

Trackbacks/Pings

Trackback URL

Comments

Krugman keeps pretending he knows anything about economics.

gravityman on June 11, 2012 at 3:12 PM

our economy is incredibly sluggish … despite [because of] massive government spending in TARP, two stimuli, unemployment benefit extensions, the auto bailout, and trillions in Federal Reserve spending.

FTFY

Fenris on June 11, 2012 at 3:19 PM

Fenris, I agree with your point, but I was trying to stick within the liberal mindset in order to refute it most effectively. :O)

Dustin Siggins on June 11, 2012 at 3:29 PM

Dustin Siggins on June 11, 2012 at 3:29 PM

I guess I knew that. But then, at one point I thought Bush was (somewhat) fiscally conservative too, so I don’t take anything for granted anymore.

Fenris on June 11, 2012 at 3:42 PM

Fair point, Fenris. I, too, was fooled regarding Bush and fiscal conservatism at one point. :o)

Dustin Siggins on June 11, 2012 at 4:04 PM

Bush increased government spending. Obama has been increasing government spending.
Bush adopted Keynesian “stimulus” policies. Obama adopted Keynesian “stimulus” policies.
Bush bailed out politically connected companies. Obama has been bailing out politically connected companies.
Bush supported the Fed’s easy-money policy. Obama has been supporting the Fed’s easy-money policy.
Bush created a new healthcare entitlement. Obama created a new healthcare entitlement.
Bush imposed costly new regulations on the financial sector. Obama imposed costly new regulations on the financial sector.

Change.

visions on June 11, 2012 at 4:38 PM

This post has been promoted to HotAir.com.

Comments have been closed on this post but the discussion continues here.

Allahpundit on June 12, 2012 at 1:19 AM

This post has been promoted to HotAir.com.

Comments have been closed on this post but the discussion continues here.

Allahpundit on June 12, 2012 at 1:20 AM

How does a columnist know anything about economy sitting at a desk reading what others are writing about the economy? Krugman is in a state of delusion and is quite comfortable there.

mixplix on June 12, 2012 at 7:35 AM


HotAir — Politics, Culture, Media, 2017, Breaking News from a conservative viewpoint

McConnell may not get his wish on health care vote

Taylor Millard Jun 25, 2017 7:31 PM
Top Pick

Senate leadership wants a vote this week, others say, “Negative, Ghost Rider.”

Top Pick

Helping others without the government.

“…the reality is the reality.”

These kiosks don’t make $15 per hour or need benefits

Going for the record

“We will answer them on the field”

Taking it to the limit

Sunday morning talking heads

Jazz Shaw Jun 25, 2017 8:01 AM

Health care and tweeting and Russia, oh my!

Will they stay or will they go?

I can’t imagine what I was thinking when I said that

Rocking the boat majorly

Big government never contracts. It only grows more powerful

It’s only a “ban” until it becomes inconvenient

The decline and fall of Obamacare and the AHCA

Jazz Shaw Jun 24, 2017 8:31 AM

This was all over before it began

Fixing crime in America is a complicated issue

Taylor Millard Jun 23, 2017 8:31 PM

Cops alone won’t solve it.

Victim’s father was President Maduro’s supervisor back when he was a bus driver.

Democrats forgot all about the “era of good feelings”

“Bernie and Jane Sanders have lawyered up.”

“the Judiciary Committee is examining the circumstances surrounding the removal of James Comey.”

Winning isn’t everything. It is the only thing

Trump signs VA reform bill into law

John Sexton Jun 23, 2017 2:41 PM

“What happened was a national disgrace, and yet some of the employees involved in these scandals remained on the payrolls.”

A new era of something.

“…died suddenly in less than a week just after his return to the U.S.”

The shortsightedness of “Denounce and Preserve”

Taylor Millard Jun 23, 2017 12:11 PM

Pragmatism for the sake of pragmatism doesn’t always work.

Perhaps if you threw in a new car?

Gay marriages still growing, but not as fast

Andrew Malcolm Jun 23, 2017 10:31 AM

More, but not as quickly.

Should’ve stuck with the pirate gig. It was working for him

The battle for the rubble of Raqqa is underway

Andrew Malcolm Jun 23, 2017 8:51 AM

Won’t be much left.

Your list of demands is a publicity stunt

“what happened that day was emblematic of a deeply troubling trend among progressives…”

“The jobs are still leaving. Nothing has stopped.”

Bad vendor. Bad! No cookie!

“The Corps is just starting to grapple with the issues the court has identified.”

“So you want me to sing my praises, is that what you’re saying?”

Why would we possibly want that?

“I mean he sold our country to The Russians.”

I could think of someone else you might want to ask about…