I’m not a big a big Krugman fan. Not that he isn’t an excellent economist but he usually seems more interested, or at least as interested, in pushing a political agenda rather than one grounded in economics.
Having said that, I found this Op-Ed in the NYT today, pretty interesting. I think he’s made some cogent arguments the past few days about concentrating too much on the deficit and this column continues that meme.
The one thing that I do quibble with is his contention that the first deficit was too small. He’s made this argument before, always with the claim that most economists agree with him. A list of those in his corner from him might be instructive.
But too the point, a lot of the commentary that I’ve seen suggests that it’s not a size problem with stimulus so much as it is one of execution. The stimulus was captured by the political class and directed towards those projects which would provide the maximum return in reelection cash. To the extent the Obama administration was a co-conspirator in this heist, they deserve not a little bit of blame.
That’s the reason that I’ve argued before that any new stimulus needs to be directed towards broad tax relief — a suspension of all or part of the payroll tax for instance. Anything to take the ability to direct the expenditure of money away from members of Congress on both sides of the aisle as well as the administration.
The problem isn’t that there wasn’t enough money handed out, it’s who it was handed out to.