Why did I criticize Bush’s deficit-increasing policies, then call for more deficit-increasing policies from Obama?
Part of the answer is the difference in economic conditions. Deficit spending is expansionary when the economy is in a liquidity trap; it does nothing but crowd out other spending when you’re not up against the zero lower bound, and the Fed will just raise rates to offset fiscal expansion.
The other part of the answer is that although the Bushies were happy to use Keynesian arguments to justify their tax cuts, those cuts were all designed to be permanent — that is, they were irresponsible precisely because they weren’t temporary. None of what Obama has done commits that sin: his long-term spending, basically on health reform, is paid for, and everything else, like aid to state and local governments or expansion of unemployment benefits, was both designed to be temporary and has proved temporary in reality.
Ah well — just another day in political Bizzaroworld.
Saturday, December 10, 2011
A Rationalist in an Irrational World
Here is poor Paul Krugman taking on his enemies one more time. Sadly, they don't want to listen. Politics in the US is a dialog of the deaf: