Krugman Cuts to the Chase

Here are some bits from a NY Times op-ed by Paul Krugman that cuts to the chase about Obama as a "socialist"...

Job creation has been disappointing, but first-quarter corporate profits were up 44 percent from a year earlier. Consumers are nervous, but the Dow, which was below 8,000 on the day President Obama was inaugurated, is now over 10,000. In a rational universe, American business would be very happy with Mr. Obama.

But no. All the buzz lately is that the Obama administration is ''antibusiness.'' And there are widespread claims that fears about taxes, regulation and budget deficits are holding down business spending and blocking economic recovery.

How much truth is there to these claims? None. Business spending is indeed low, but no lower than one would have expected given widespread overcapacity and weak consumer spending. Business leaders are feeling unloved, but giving them a group hug won't cure what ails the economy.

Ask the Obama-is-scaring-business crowd for some actual evidence supporting their claim, and they'll tell you that business spending on plant and equipment is at its lowest level, as a share of G.D.P., in 40 years. What they don't mention is the fact that business investment always falls sharply when the economy is depressed. After all, why should businesses expand their production capacity when they're not selling enough to use the capacity they already have? And in case you haven't noticed, we still have a deeply depressed economy.

...

... read through the latest survey of small business trends by the National Federation for Independent Business, an advocacy group. The commentary at the front of the report is largely a diatribe against government -- ''Washington is applying leeches and performing blood-letting as a cure'' -- and you might naïvely imagine that this diatribe reflects what the surveyed businesses said. But while a few businesses declared that the political climate was deterring expansion, they were vastly outnumbered by those citing a poor economy.

The charts at the back of the report, showing trends in business perceptions of their ''most important problem,'' are even more revealing. It turns out that business is less concerned about taxes and regulation than during the 1990s, an era of booming investment. Concerns about poor sales, on the other hand, have surged. The weak economy, not fear about government actions, is what's holding investment down.

So why are we hearing so much about the alleged harm being inflicted by an antibusiness climate? For the most part it's the same old, same old: lobbyists trying to bully Washington into cutting taxes and dismantling regulations, while extracting bigger fees from their clients along the way.

Go read the whole article.

In previous columns Krugman has made it very clear that if and when the US government does what these fanatics want, the economy will go into a tailspin just like Ireland which enacted draconian "belt tightening" and got the worst of all possible worlds: declining tax revenues, a further recessionary drop in the economy, and investors stepping back because the economy was too shaky to step in "right now". This siren song of the fanatical right that Obama has to cut taxes and cut taxes and deregulate and deregulate -- in other words, reincarnate Reagan and Bush -- is hooey.

The tragedy is that apparently voters this coming November are going to swallow this line and bring back the disastrous policies of the Reagan-Bush years while ignoring the sound Clinton-Obama years. Incredible!