The Triumph Of Zombie Economics

Paul Krugman:

How, after the experiences of the Clinton and Bush administrations — the first raised taxes and presided over spectacular job growth; the second cut taxes and presided over anemic growth even before the crisis — did we end up with bipartisan agreement on even more tax cuts?

[. . . T]he Obama stimulus — which itself was almost 40 percent tax cuts — was far too cautious to turn the economy around. [. . .] A policy under which government employment actually fell, under which government spending on goods and services grew more slowly than during the Bush years, hardly constitutes a test of Keynesian economics.

We're all supply siders now. Yesterday, the NYTimes editorialized:

All other things being equal, those measures could help to raise economic growth by as much as a percentage point. All other things, however, will not remain equal.

New stimulus spending is undermined if it is offset by cuts in existing spending — and, in the next Congress, Republicans will clamor for immediate budget cuts. Senator Mitch McConnell, the Republican minority leader, praised the tax-cut deal last week, precisely because he believes it will begin to force spending cuts. John Boehner, the incoming House speaker, has called for a spending level in 2011 that is more than $100 billion lower than President Obama wanted, though he has not said which programs he would cut to achieve those savings.

So the fight has just begun, and only one thing is sure. Unless Mr. Obama finds his voice and develops a plan to rebut calls for premature spending cuts, the tax-cut deal will not do as much good as he says it will. [. . .] he needs to say “no” to spending cuts that would undermine the stimulus in the tax-cut deal[.]

There is little confidence that Obama will say no. As Krugman writes:

Right now Mr. Obama is hailing the tax-cut deal as a boost to the economy — but Republicans are already talking about spending cuts that would offset any positive effects from the deal. And how effectively can he oppose these demands, when he himself has embraced the rhetoric of belt-tightening?

The Deal was a terrible mistake.

Speaking for me only

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  • Display: Sort:
    This is who Obama is (5.00 / 2) (#1)
    by Dadler on Mon Dec 20, 2010 at 11:25:57 AM EST
    A. Big. Piece. Of. Absolutely. Nothing.

    That he cannot make the obvious, rational, passionate rebuke to Republican wreckonomics, then I can only conclude he is one of them.

    No other explanation.

    There is weak and then there is complicit.

    He may be both, but the former makes the latter so much more disgusting.

    Wreckonomics! (5.00 / 1) (#2)
    by Militarytracy on Mon Dec 20, 2010 at 12:18:00 PM EST
    That is exactly what Obama practices.

    Train-Wreckonomics (none / 0) (#14)
    by smott on Tue Dec 21, 2010 at 07:42:47 AM EST
    BTD echoes Rove (5.00 / 1) (#3)
    by waldenpond on Mon Dec 20, 2010 at 12:18:09 PM EST
    Except for tone, because with this comment, I believe Rove is laughing his @ss off as he rightfully should.

    Nice one (5.00 / 1) (#4)
    by Big Tent Democrat on Mon Dec 20, 2010 at 12:19:25 PM EST
    I'll use it in the Open Thread.

    And It's Not Only (5.00 / 3) (#6)
    by The Maven on Mon Dec 20, 2010 at 01:09:28 PM EST
    the Republicans who have been talking about pushing for spending cuts early next year, as there are reports that Obama plans to "pre-empt" the GOP's plan to require cuts as part of a debt-ceiling package by himself calling for a wide menu of cuts in the State of the Union address, including much of what the Simpson-Bowles Catfood Commission put forth.

    Obama has been talking about the need for goverment to display its belt-tightening bona fides for a while now, and this would present for him a perfect opportunity to place himself in the so-called serious middle by painting most congressional Democrats as being too willing to run up debts that "our children and grandchildren" will ultimately have to pay off.

    I fully expect that between the president's likely proposals and the final deal worked out in February with the GOP (once again excluding most Dems from the negotiations), virtually all of the stimulus portions of the recent tax deal will have been fully neutralized.  And Obama -- along with his hardcore defenders -- will hail it as a triumph of bi-partisan cooperation.  Ugh.

    aha, another 'pre-emption' of Republican policy (5.00 / 0) (#7)
    by ruffian on Mon Dec 20, 2010 at 01:31:38 PM EST
    aka early adoption.

    By golly, he's going to (5.00 / 5) (#8)
    by Anne on Mon Dec 20, 2010 at 01:45:46 PM EST
    be a better Republican president than any Republican could ever have hoped to be - even if it kills...us.

    I bet Obama can't believe (5.00 / 2) (#9)
    by KeysDan on Mon Dec 20, 2010 at 02:44:21 PM EST
    how well the "Deal" finally went down, exceeding his own expectations to persuade his base,  seeming to momentarily doubt their unquestioning love.  He announced the "Deal" sheepishly even likening it to hostage taking.  But, after the successful spinning, the media flacks found the "Deal" to be a stroke of genius. And, after scolding his base for purism, most of his supporters continued on  as enablers.  By the time he signed the bill into law, it was no longer odious or distasteful, but a cause for celebration. Of course, there will be remorse in short order.

    Hey, it's only ONE trillion. (none / 0) (#5)
    by observed on Mon Dec 20, 2010 at 12:41:12 PM EST
    So--still think Obama is smart?

    I don't think he's smart (5.00 / 1) (#10)
    by Dakinikat on Mon Dec 20, 2010 at 04:05:44 PM EST
    I think he's like Ben Nelson of Nebraska. He's a Republican, but the only way he could get elected to office was to pose as a Democrat. We Democrats appear to be more gullible.  Republicans punish those who don't support their Bircher agendas in primaries. We keep giving DINOS more chances.

    I think there's a (5.00 / 2) (#11)
    by Anne on Mon Dec 20, 2010 at 04:31:16 PM EST
    "how many Dems does it take to change a light bulb?" kind of question in there somwhere...

    Answer: Why do we need to change it?  If you look really, really hard, I'm pretty sure you can see that it works just fine.  Besides, what's wrong with a little darkness...some people think it's kind of romantic.  And even if you don't think so, I mean, who just wants to hear you whine about it?  This is the new light bulb-reality - can't you learn to like it?  I mean, do you know how hard it is to change a damn light bulb, especially when someone else controls the electricity?  Honestly, I can't believe what a  light-bulb purist you are - what do you want, perfection?  In a light bulb?  What's wrong with dim, for heaven's sake - you can still see, can't you?  Why do you hate light bulbs???


    lol!~ (none / 0) (#12)
    by nycstray on Mon Dec 20, 2010 at 05:14:06 PM EST
    Why do you hate light bulbs???

    Hmm: How many Dems does it take (none / 0) (#13)
    by Towanda on Mon Dec 20, 2010 at 11:03:20 PM EST
    . . . to change a light bulb?


    Dems just hope for change that they can believe in.  And then they claim that's the same thing as real change.