Krugman Laying It on a Little Thick

Paul Krugman, whom I otherwise admire, is laying it on a little thick these days about how he was right all along in predicting the inadequacy of the fiscal stimulus package. He's also very proud of the fact that he was right about the political ramifications of that inadequacy, namely that should the stimulus plan prove too timid, the Obama administration won't be able to go back to an already reluctant Congress and ask for a second round of fiscal stimulative medicine.

I don't know about you but, to me, this whole line of reasoning sounds unhelpful at best, conceited and a bit disingenuous at worst.

First of all, announcing the stimulus plan before the Inauguration and having it passed a few weeks into the new presidency was itself a political, psychological and economic coup. It gave the country a much-needed psychological boost that translated into an unexpected and welcome rally in all assets (T-bonds excepted of course). Even if you ignore its effects on the financial markets (which Professor Krugman often dismisses as irrelevant), the plan also had an undeniable effect on the economy: the "green shoots", while a little overrated and maybe temporary in nature, were real enough.

Second of all and more importantly, the stimulus package is back-loaded, meaning most of its effects haven't been felt yet. In other words, it's way too early to pass judgment on it, especially when, according to the Government Accountability Office's report released two days ago, less than 10% of the $787 billion has been spent.

There is no need at the present time to start lobbying for a second stimulus package when the first has just started working its way through the economy and when many people are doubting its very efficacy.

Comments

[whidbey:]

Your appraisal of the stimulus package seems a little disingenuous itself. "Back loaded" political coup? It might also be called a quick pay-off to the faithful with a little something for the longrun. And, why back loaded? Was that to benefit the unemployed waiting for some stimulus? OR was it to stretch out the pay-off over the man's term? Poorly planned and poorly executed is the hallmark of the rank amateurs the man brought in to run is recovery efforts.

Of course Krugman dismissed the affects on the financial markets, the plan did not include financial elements which were in still other bills that both Bush and Obama kept separate from stimulus. And the results of the stimulus producing green shoots, is just wishful thinking of the delusional; that is you.

The whole political exercise is larded with pay offs to the hacks that got the administration elected, and they are designed to be stretched out to hold Congress the next four years. Are you really an analyst or just an apologist? Thanks but, No thanks.

Jul 10 01:37 PM

[Valley Boy:]

The stimulus package probably will expedite some necessary infrastructure and maintenance projects. But other than that, the way the package is structured, it just serves to give a boost to those of us who are politically connected and dependent on government spending. The rest of us figure that it is yet another burden to bear.

Jul 10 03:11 PM

[Ferdinand E...:]

I wonder if Krugman thinks that because he got a Nobel Prize, he is more competent than some other people on the Nobel short list - if those morons in the commitee bothered to put one together. Yes, he gets a lot right, but he also gets a lot wrong. Too much of the latter for me to pay any attention to him.

Jul 11 09:24 AM

[jaume ribe,...:]

Krugman stays on what he has said from the very beggining, and he's not the only. Read Joseph Stiglitz about the subject.

Jul 11 10:12 AM

[Bill Jencks:]

Ah yes, Krugman. Fairly evident that this man is neither this nor that in economics. On the one hand, although benign to Obama, he criticizes his stimulus policies -- not enough bailout. Regarding the Republican Right, who purport less bailouts, he is a well defined enemy. It is obvious to me that he is slyly maintaining his own unsoiled position within academia by giving such a non-opinion. If America were to suddenly fall economically tomorrow, Krugman would be the first to scream "See, I told you so...!!!". And if the Stimulus does work, he would find some way to come with some credit. Either way his esteemed reputation in neutral academia would be maintained.

What else can you say about an economist who insists loudly in the media that there is not enough stimulus -- and then refuses to reveal the exact, curative figure that defines Enough Debt? And what can you say about a man who, when prodded by the the question. "...And, Mr Krugman, how is America to pay back all this horrendous debt that you propose?", this sends him rushing and hiding in the media bushes.

The man is empty of useful economic ideas.

Jul 16 08:48 PM