Austerity is killing us
In Europe, troubled nations like Greece and Ireland have imposed savage cuts, even as stronger nations have imposed milder austerity programs of their own. In the United States, the modest federal stimulus of 2009 has faded out, while state and local governments have slashed their budgets, so that over all we’ve had a de facto move toward austerity not so different from Europe’s.
Strange to say, however, confidence hasn’t surged. Somehow, businesses and consumers seem much more concerned about the lack of customers and jobs, respectively, than they are reassured by the fiscal righteousness of their governments. And growth seems to be stalling, while unemployment remains disastrously high on both sides of the Atlantic…
In fact, when you combine the growing evidence that fiscal austerity is reducing our future prospects with the very low interest rates on U.S. government debt, it’s hard to avoid a startling conclusion: budget austerity may well be counterproductive even from a purely fiscal point of view, because lower future growth means lower tax receipts.
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SSDD
agmartin on September 19, 2011 at 2:20 PM
$800 billion can only be called “modest” when it’s not your money, you bitter, fat, evil garden gnome.
Chuck Schick on September 19, 2011 at 2:21 PM
Krugman, aka Mephistopheles, is desperate. My schadenfreude against him overfloweth.
Sadly, our times.
Schadenfreude on September 19, 2011 at 2:21 PM
Ignore this jackass. Render him irrelevant.
(I wonder if comments are allowed on this one, but I won’t give it a click to find out.)
novaculus on September 19, 2011 at 2:22 PM
“Those aren’t 800 pound gorillas in the room, those are features.” – Paul Krugman.
NotCoach on September 19, 2011 at 2:22 PM
Right, Krugman. So, where does the money come to spend those trillions of gubmint dollars/Euros?
Either through taxes, loans, or just printing it.
Tell me, which of those are designed to produce jobs? Taxes? Only government jobs. And we all know how well the Soviets lasted when the economy was stressed.
Loans? All that capital being hoovered up by governments. Interest payments the nations can’t afford. Or are you arguing to just stiff the moneylenders?
Printing it? Weimar Germany and Argentina want to say hello.
Vanceone on September 19, 2011 at 2:22 PM
Yes, because when you’re in a hole, you should keep digging.
And if you ever turned your comments on, I would once again destroy every one of your arguments. And of course, my comments would be almost immediately deleted as usual.
Mental illness must be terrible.
stvnscott on September 19, 2011 at 2:23 PM
What we really need is more profilgate, irresponsible, endless spending.
Spend, spend, spend! Debt, debt, debt!
Utopia is about $50 trillion more away! Within our grasp!
Good Lt on September 19, 2011 at 2:23 PM
Shut down the comments again. Only allowed 300.
I’ll get to one of your ‘articles’ one of these days….
catmman on September 19, 2011 at 2:24 PM
Fortunately for the “stimulus” addicts, we’re we’re injecting 1.5 trillion/year that we borrow from ourselves.
elfman on September 19, 2011 at 2:24 PM
There’s been austerity?
lorien1973 on September 19, 2011 at 2:25 PM
Krugman’s solution to “too much bleeding” is to open another wound!!!
More proof that Liberalism is a mental illness!!
landlines on September 19, 2011 at 2:25 PM
I have to ask, what austerity?
Fallon on September 19, 2011 at 2:26 PM
There is an austerity of brains and common sense at Princeton, apparently. This is a remarkable shame.
Jaibones on September 19, 2011 at 2:27 PM
“Taxes should be 100% and government spending should be infinite. We can just borrow the difference,” -Paul Krugman.
Akzed on September 19, 2011 at 2:27 PM
No Paul… profligacy is what is killing us.
But there we have teh difference between the Right and left… one considers austerity a virtue, and one considers profligacy a virtue.
I leave it to you to determine the difference.
JohnGalt23 on September 19, 2011 at 2:28 PM
Sunshine Daydream?
JohnGalt23 on September 19, 2011 at 2:30 PM
“Austerity” is how the federal government should function. “Profligacy” is how it is functioning. Krugman wouldn’t know austerity if a giant austerity bit his pasty white ass.
gryphon202 on September 19, 2011 at 2:31 PM
Funny, we don’t have a federal budget, but Austerity is killing us.
Oil Can on September 19, 2011 at 2:32 PM
Dude, when the feds are still spending twice what they take in, the last thing I would call it is ‘austerity’.
Vashta.Nerada on September 19, 2011 at 2:32 PM
Tossing half billion dollar loans to failing companies doesn’t sound like austerity to me. Proping up State govt. union contracts for workers being paid far above their market value doesn’t sound like austerity to me either.
tommyboy on September 19, 2011 at 2:34 PM
Federal spending has gone up 30% and nobody is even talking about making any real cuts. Stop huffing paint before your write your columns, Ferret-face.
forest on September 19, 2011 at 2:37 PM
Certainly not. If it reminds me of anything in today’s pop culture vernacular, it would be the phenomenon known as “making it rain”…
JohnGalt23 on September 19, 2011 at 2:38 PM
Wait just a minute, this cost more than all 7 years of the Iraq and Afghanistan wars during Bush in one shot. That level of “unpaid for” spending over 7 years is supposedly what bankrupted us yet, that amount in one year under a Democrat ruler is “modest?”
Youngs98 on September 19, 2011 at 2:38 PM
I’ve written it before and I shall write it again: you just know that when he was a boy, Paul Krugman was the kid the other boys held down and took turns farting in his face.
radjah shelduck on September 19, 2011 at 2:39 PM
Only in liberal land is it a “savage cut” when the government decides to increase spending by 7.5% instead of the previously planned 8%.
JamesB on September 19, 2011 at 2:41 PM
To Krugman, austerity means not spending more than you did last year.
RadClown on September 19, 2011 at 2:43 PM
This is from the guy the won the Nobel Prize for Economic. A child have a better understand of basic economy than Krugman. He is a fool and anyone that can add 1+1 will know that the federal stimulus was a failure before it even started.
The best thing for any countries is to stop spending. Cut back. Paid all the debt before moving forward.
Keep in mind that the USA is now 100% debt to GDP. There is no country that have not defaulted with 100+% debt to GDP. There is no country that prevented chaos with 100+% debt to GDP.
The question is how much chaos will be in the USA. If we cut down the debt right now the destruction will be limited. If we continue on this path than God help us all.
jdun on September 19, 2011 at 2:44 PM
Paul Krugman, perfecting the art of pulling crap from thin air and turning it into words.
Bishop on September 19, 2011 at 2:45 PM
It must really be enjoyable to live in the alternative universe that Krugman inhabits – I wonder if he rents or is on a long term lease?
Anyway, since when have these measures been taken?
Every other day El Presidente Downgrade rolls out more calls for ever higher taxes on the rich and corporate jet owners, how are businesses reassured that they won’t get shafted once again?
Chip on September 19, 2011 at 2:47 PM
Austerity?? In America????? BWAAAAAHAHAHAHAHAHAHAHA!! Not even close, Champ. At least, not yet.
I refuse to click on Krugman’s internet privy-hole after his despicable 9/11 comments, but seriously… the dude has become a caricature of himself.
CantCureStupid on September 19, 2011 at 2:47 PM
The author of this blog:
http://krugman-in-wonderland.blogspot.com/
may not have everything right, but he specializes in skewering Krugman.
Count to 10 on September 19, 2011 at 2:51 PM
fify
Count to 10 on September 19, 2011 at 2:54 PM
Consumer demand did not surge after 1941 either. Public spending on munitions did keep the factories open and humming for war production, but the availability of ordinary goods was severely limited by that conversion plus high taxes plus rationing. Draftees and civilians alike were forced to save or buy war bonds while living in cramped quarters (!) so pent up demand was not released until the end of the war. Austerity by any other name.
Seth Halpern on September 19, 2011 at 2:59 PM
FIFY
connertown on September 19, 2011 at 3:04 PM
Well, the cutback in spending after the war would have qualified as austerity, but government spending during the war was profuse as all get out, and crushed the economy, enforcing private austerity.
Count to 10 on September 19, 2011 at 3:07 PM
Wow – he really doesn’t look at numbers, or have any sense of scale. The “modest federal stimulus” was the largest such program ever inacted anywhere in the world. Our de facto austerity measures aren’t actually cuts at all. It’s not even clear that we’re actually going to reduce the growth of federal government programs.
I’m actually not looking forward to the day Krugman witnesses America truly adopting European-style austerity cuts. Those days aren’t far off, and they will be really painful. But at least I can enjoy Krugman’s lunacy while that’s happening.
hawksruleva on September 19, 2011 at 3:07 PM
More Solyndra’s…
right2bright on September 19, 2011 at 3:20 PM
Paul Krugman would have us think that a “federal” deficit of c. $1,400,000,000,000 counts as austerity, but that seems doubtful. He would also have us think that all “GDP” is real product, but it seems that as long as what the “federal” government does counts as product, it is not possible to decrease the size of the “federal” government without subtracting from “GDP.”
Krugman seems similar to a physician who does not distinguish between adipose and lean tissues, nor between tumors and organs, nor between parasites and host. As long as the whole mass is growing, he seems happy. Actually, my darkest thought about Krugman is that he resembles a physician who takes the side of fat, cancer, and worms.
Marsili.us on September 19, 2011 at 3:25 PM
“For the time being we need more, not less, government spending, supported by aggressively expansionary policies from the Federal Reserve and its counterparts abroad. And it’s not just pointy-headed economists saying this; business leaders like Google’s Eric Schmidt are saying the same thing”
Wow. Just wow.
One, been there done that. Doesn’t work, will never work.
Two, who is Eric Schmidt to say “spend more”? Spend what?
Hey Eric, how’s about this: why don’t you pay your “fair share” of the 35% corporate tax your company should pay on it’s 3.1 BILLION dollar proti in the last three years instead of the 2.4% you actually paid?
That would FULLY FUND the “jobs bill” that Obama says we “have to pass”
Opposite Day on September 19, 2011 at 3:29 PM
Wormtongue Krugman
Terp Mole on September 19, 2011 at 3:40 PM
The largetst spending bill in history = “modest”
This guy really is in his own universe.
Scrappy on September 19, 2011 at 4:01 PM
Now i know why Krugman is insane!
He has been eating mass quantities of THIS!
Opposite Day on September 19, 2011 at 4:03 PM
Ever since the riots over austerity have been going on in Europe, I have been waiting for an explanation of exactly what it entail. No luck. The press is incompetent. If you are going to label this era with a term, it shouldn’t be a chose your own definition. The public needs specifics.
Cindy Munford on September 19, 2011 at 4:38 PM
My new favorite website.
shibumiglass on September 19, 2011 at 4:53 PM