By PAUL KRUGMAN
February 12, 2009<\/div>\n
![](\"http:\/\/graphics8.nytimes.com\/images\/2006\/04\/02\/opinion\/ts-krugman-190.jpg\")
By any normal political standards, this week’s Congressional agreement on an economic stimulus package was a great victory for President Obama. He got more or less what he asked for: almost $800 billion to rescue the economy, with most of the money allocated to spending rather than tax cuts. Break out the Champagne! Or maybe not. These aren’t normal times, so normal political standards don’t apply: Mr. Obama’s victory feels more than a bit like defeat. The stimulus bill looks helpful but inadequate, especially when combined with a disappointing plan for rescuing the banks. And the politics of the stimulus fight have made nonsense of Mr. Obama’s postpartisan dreams.<\/p>\n
Let’s start with the politics. One might have expected Republicans to act at least slightly chastened in these early days of the Obama administration, given both their drubbing in the last two elections and the economic debacle of the past eight years. But it’s now clear that the party’s commitment to deep voodoo — enforced, in part, by pressure groups that stand ready to run primary challengers against heretics — is as strong as ever. In both the House and the Senate, the vast majority of Republicans rallied behind the idea that the appropriate response to the abject failure of the Bush administration’s tax cuts is more Bush-style tax cuts… <\/p>\n
For while Mr. Obama got more or less what he asked for, he almost certainly didn’t ask for enough. We’re probably facing the worst slump since the Great Depression. The Congressional Budget Office, not usually given to hyperbole, predicts that over the next three years there will be a $2.9 trillion gap between what the economy could produce and what it will actually produce. And $800 billion, while it sounds like a lot of money, isn’t nearly enough to bridge that chasm…<\/p>\n
Now, the chances that the fiscal stimulus will prove adequate would be higher if it were accompanied by an effective financial rescue, one that would unfreeze the credit markets and get money moving again. But the long-awaited announcement of the Obama administration’s plans on that front, which also came this week, landed with a dull thud. The plan sketched out by Tim Geithner, the Treasury secretary, wasn’t bad, exactly. What it was, instead, was vague. It left everyone trying to figure out where the administration was really going…<\/p>\n
Over all, the effect was to kick the can down the road. And that’s not good enough. So far the Obama administration’s response to the economic crisis is all too reminiscent of Japan in the 1990s: a fiscal expansion large enough to avert the worst, but not enough to kick-start recovery; support for the banking system, but a reluctance to force banks to face up to their losses. It’s early days yet, but we’re falling behind the curve.<\/p>\n
And I don’t know about you, but I’ve got a sick feeling in the pit of my stomach — a feeling that America just isn’t rising to the greatest economic challenge in 70 years. The best may not lack all conviction, but they seem alarmingly willing to settle for half-measures. And the worst are, as ever, full of passionate intensity, oblivious to the grotesque failure of their doctrine in practice. There’s still time to turn this around. But Mr. Obama has to be stronger looking forward. Otherwise, the verdict on this crisis might be that no, we can’t. <\/div>\n<\/blockquote>\n
Well, Krugman is consistent. Unphased by the political reality that it took weeks to get the three Republican votes that allowed the plan to go forward, Krugman continues to blame Obama – rather than his stonewalling adverseries. He’s the op-ed columnist and it’s his right. And his dire predictions are certainly upsetting. His indictment, that "
America just isn’t rising to the greatest economic challenge in 70 years<\/strong><\/font>" may well be the voice of truth. My beef is that his sermon is directed at Obama rather than at "America<\/strong><\/font>." And like others, he’s indicting Geithner for not coming up with a completed plan yet when as he, Krugman admits, there is a "a reluctance to force banks to face up to their losses.<\/strong><\/font>" How does propose we do that? force Banks? That’s a serious question, "How does one do that?<\/strong><\/font>"<\/div>\n <\/p>\n
I guess it’s not up to Krugman to be writing about how to "rise up" in practical terms though it’s what we need to hear. Should we be nationalizing the banks? I guess we’re in a situation that we have to feel more intensely [coming soon to a life near you] before we’ll act in a more aggressive way, and I expect by then it will be too late. Truth is that the net result of Krugman’s prediction is that the Bush Years have left us in the worst of places, and the ongoing oppositionalism of Bush’s Party is going to insure that we feel the impact maximally. If that’s our fate, that’s our fate. It’s hard for me to see how Obama can squeeze out much more than he got. Had Obama come out aggressively with
the<\/strong><\/font> Krugman Plan<\/strong><\/font>, I doubt there would be any Bills being signed at all. So I hope Krugman’s wrong like he was about the oil bubble, though I doubt that he is. And I wish his powers of prediction had focused us on this some time before it happened rather than afterwards. But it’s not Krugman’s fault. And maybe the 2nd Great Depression is just "in the cards" – already underway…<\/div>\n","protected":false},"excerpt":{"rendered":"Failure to Rise New York Times By PAUL KRUGMAN February 12, 2009 By any normal political standards, this week’s Congressional agreement on an economic stimulus package was a great victory for President Obama. He got more or less what he asked for: almost $800 billion to rescue the economy, with most of the money allocated […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_bbp_topic_count":0,"_bbp_reply_count":0,"_bbp_total_topic_count":0,"_bbp_total_reply_count":0,"_bbp_voice_count":0,"_bbp_anonymous_reply_count":0,"_bbp_forum_subforum_count":0,"footnotes":""},"categories":[2],"tags":[],"class_list":["post-2950","post","type-post","status-publish","format-standard","hentry","category-politics"],"_links":{"self":[{"href":"https:\/\/1boringoldman.com\/index.php\/wp-json\/wp\/v2\/posts\/2950","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/1boringoldman.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/1boringoldman.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/1boringoldman.com\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/1boringoldman.com\/index.php\/wp-json\/wp\/v2\/comments?post=2950"}],"version-history":[{"count":0,"href":"https:\/\/1boringoldman.com\/index.php\/wp-json\/wp\/v2\/posts\/2950\/revisions"}],"wp:attachment":[{"href":"https:\/\/1boringoldman.com\/index.php\/wp-json\/wp\/v2\/media?parent=2950"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/1boringoldman.com\/index.php\/wp-json\/wp\/v2\/categories?post=2950"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/1boringoldman.com\/index.php\/wp-json\/wp\/v2\/tags?post=2950"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}