Krugman Continues To Demonstrate He Is Entirely Clueless

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Hilarious!  Krugman in his never ending wail against the imaginary “austerity” measures being taken makes some patently absurd statements as “proofs” against commonly held thoughts regarding debt and deficits.

He offers these arguments…..

Let’s start with the common claim that stimulus programs never go away.

In the United States, government spending programs designed to boost the economy are in fact rare — F.D.R.’s New Deal and President Obama’s much smaller Recovery Act are the only big examples. And neither program became permanent — in fact, both were scaled back much too soon.

Well, yes and no.  The programs ended, but the spending never did.  I can’t imagine someone who purports to be knowledgeable about such issues never bothering to look at the facts. 

In the years of 2008 and 2009 the US government embarked on unparalleled bailouts and stimulus programs.  By the end of 2009 we had increased our annual spending by nearly $1 trillion.  And even though all of those programs have supposedly ended by now, we’re still spending at those levels!  And worse, we now planning on spending even more.

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In Krugman’s delusional world, this stimulus ended way too soon!  And, yet, the government is still spending at the stimulus level! 

But, even more, here is the historical ending of government spending since FDR.

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Yeh, Paul, you delusional nutter, we stop spending way too soon, if we had ever, you know, in fact, stopped spending.  Throughout this graph, you can see when the imaginary slashers of government spending have caused recovery to by stymied too soon.   

Krugman then offers “proof” about programs which “end”.

What about programs designed to aid those hurt by a depressed economy? Don’t they become permanent fixtures? Again, no. Unemployment benefits have fluctuated up and down with the business cycle, and as a percentage of G.D.P. they are barely half what they were at their recent peak. Food stamp usage is still rising, thanks to a still-terrible labor market, but historical experience suggests that it too will fall sharply if and when the economy really recovers.

It is true, unemployment benefits will go up and down by the very nature of the program.  I don’t believe anyone argues that isn’t the case.  But, that’s a leftist for you, they create strawmen arguments in order to win the argument.  But, in the case of food stamps, or what is currently known as SNAP, he’s simply ignoring reality.  In fact, if one follows his link, he demonstrates his reality avoidance.  He graphs this……

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Now, don’t get me wrong.  I’m not arguing the virtues of the Food Stamp program.  I’m just pointing out that Krugman is delusional or dishonest.  Likely both.  Here, Krugman is showing costs.  Sure, it may temporarily drop back down.  But, to pretend that the costs aren’t going to generally increase as time progresses is to ignore the very history he’s graphed.  Let’s look at it in another manner.

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The numbers are in thousands.  Source.  Again, sure, if the economy turns around we can expect to see the number of participants decline a bit.  Is it going to decline below the levels of the late 90s?  Of course, not.  This program, left alone, will only continue to increase has it has since its inception.  The very nature of this program requires an ever expanding participation.  Population growth and the relative definition of poverty means that this program will only grow. 

Again, one can argue the merits of the program, but pretending that it well just go away when the economy recovers is delusional. 

I can’t figure out if Krugman just doesn’t understand or if he intentionally misleads people.  The people concerned about our deficits aren’t talking about what’s happening right now, they’re looking to prevent a crisis which is occurring in Europe right now. 

There’s nothing more harmful than just throwing money away on interest of money borrowed with no plan to repay it.  Here is some very optimistic projections.

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In just 5 years, our interest payments will be more than our welfare budget.  Interest payments are money you can’t do anything with.  Already we spending over $200 billion a year on interest alone. Paul, what could we do with an extra $200 billion laying around?  This is more than twice the amount we’re spending on Foodstamps.  But, it is because of such programs and lack of fiscal oversight that this has occurred, thanks to the likes of Krugman.  It is his advocacy which prevents the government from helping in a responsible manner. 

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25 Responses to Krugman Continues To Demonstrate He Is Entirely Clueless

  1. philjourdan says:

    “but historical experience suggests that it too will fall sharply if and when the economy really recovers.”

    BUT (the BIGGGGGGG Butt), historical experience never tells us WHEN the economy will recover. And given the BIGGGGGG Butt, it never will.

  2. Pingback: Suyts on Krugman | ManicBeancounter

  3. manicbeancounter says:

    Two of the issues you deal with here have been called the “ratchet effect” and the debt servicing effect. They are very relevant, but do not account for the full extent of the fiscal issues that the USA – or other Western nations – face. Also included are:-
    1. Size of government. The bigger the size of government in relation to GDP the greater government will magnify the downswing, as tax revenues fall and welfare expenditure increases.
    2. Structural deficits at the start of the downturn.
    3. The Keynesian Multiplier and the “slack” in the economy.
    4. Fiscal Tipping Points. Large deficits and further downturns lead to higher interest rates, higher debt-servicing costs and bigger deficits. To save the economy from bankruptcy, massive tax hikes are need and huge cuts in public expenditure. Lack of prudence early on leads to massive austerity later.

    I enlarge on these points at
    http://manicbeancounter.com/2013/05/07/suyts-on-krugman/

    • suyts says:

      Yes, the size of government is important, of course, a smaller government would be less apt to get in such a predicament. Your #4, the tax hikes cause a further downward spiral, which is what we’re seeing in much of Europe, today.

      Were I ‘king for a day’, I would slash spending but accompany them with tax cuts to spur the economy. Something like for every $2 in spending cuts, $1tax cuts. This would reduce deficits and yet allow more capital in the private sector to allow for growth. The growth would, in turn, increase govt revenue even further.

      • ThePhDScientist says:

        Yes tax cuts haven’t been tried – good idea!

        • manicbeancounter says:

          You should try thinking this one through a bit.
          The problem of the US economy was that it entered a steep recession with a structural deficit. That is, even in a year of average growth, government expenditure was greater than tax receipts. Obama’s response was to “temporarily” amd massively increase government expenditure. The wishful thinking was that this extra injection of expenditure would boost the economy sufficiently to increase the government tax receipts sufficiently to
          1. Offset the increase in the deficit through the boost in expenditure.
          2. Eliminate the existing deficit.
          In approximate numbers, the US had a deficit of around 6% of GDP when Obama came to office and growing. His “boost” of $1trillion added maybe 4% to the deficit. To have worked, the economy would have had to have grown by maybe 15-20% over a few years. There was little or no boost to the economy, and this temporary boost has just ratcheted up total government. Obama’s fix has made the underlying problem worse. That problem is bloated government spending massively more than its tax receipts. The LONG TERM solution is to cut government expenditure. Given the size of the problem, there are two options.
          1. Endure a few years of pain as government is cut back.
          2. Ignore the problem, hoping private sector growth will wither it. If there is another recession the problem will balloon, so the US Government will end up like Greece and Spain. That is having to make phenomenal cuts in public expenditure to offset both the deficit and falling tax receipts.

        • PhilJourdan says:

          Not according to Krugman or you.

  4. ThePhDScientist says:

    Now show us how well austerity has worked for Europe! LOL 😉

    • suyts says:

      You really don’t read my posts, do you?

    • suyts says:

      Europe’s idea of austerity is to increase taxes. There’s been very little actual government spending cuts in Europe.

      • ThePhDScientist says:

        Haha no, no cuts at all! LOL Fantasy land….

      • ThePhDScientist says:

        Not always because they’re usually so full of cherry picked facts that I can’t make it through till the end…

      • suyts says:

        You would be more informed if you had read my economic posts. I didn’t say there hasn’t been any spending cuts. I said the tax increases have been disproportionately more. Most of the governments in Europe are spending near or at the same pre-recession. Their reaction has always been to raise taxes first. And when they burned through that money they were forced to make modest cuts, not because they thought it was something fun to do, but because they simply ran out of money and credit.

        • ThePhDScientist says:

          Oh so there have actually been cuts. And there have been tax increases. And still Europe is doing worse than the United States. Now we’re supposed to believe the fantasy that the only way to save the economy is tax cuts and spending cuts!

          Yes let’s just cut medicare and social security! But keep that defense budget – look at all those terrorists in Boston!

        • PhilJourdan says:

          Typical liberal – they tell the people they will never cut SS or medicare, and that is the first thing cut. Obama already cut medicare $900b. Now he wants to cut SS. yet those funds are still in the black. But that is the first place they propose cutting.

          No brain, no intelligence, no truth, no honesty. The new motto of the liberals.

        • suyts says:

          So, you believe we can run deficits in perpetuity? Or that medicare and social security don’t need reformed?

          Europe is doing worse than the US because their deficit spending was worse. manicbeancounter alludes to this in his comment above. The higher the debt, the more deficit spending, the worse conditions will be when one has to address reality. It isn’t complicated. Many of the nations in Europe were/are decidedly socialist. They created a debt burden they couldn’t deal with. And that’s the point of deficit reduction now as opposed to later. We could wait until it’s a urgent crisis, but, it seems a bit silly to do so.

          Recall, prior to the recession, by many measures, because of the government spending, the EU was doing much better than the US.

        • ThePhDScientist says:

          Like Germany?

        • suyts says:

          Have you checked the condition of Germany’s economy lately? You really should read my posts on economics. You’d be much more informed than you are. Germany is getting sucked down that great socialist abyss. Much of the capital supporting the PIIGS is being sucked out of Germany and other wealthier nations of the Euro zone via the ECB. Their next quarter is likely to be a contraction with no end in sight.

      • PhilJourdan says:

        A simpler retort would have been “What austerity?”. Perhaps he can lead us to where it has been implemented.

  5. david says:

    ThePhDScientist says:
    May 7, 2013 at 7:35 pm
    Oh so there have actually been cuts. And there have been tax increases. And still Europe is doing worse than the United States. Now we’re supposed to believe the fantasy that the only way to save the economy is tax cuts and spending cuts!
    =======================================================================
    PHD dude, you are again debating strawmen of your own creation in you usuall and infantile manner. Tax and spending cuts, without getting rid of massive government red tape, and without reducing the cost of energy, the life blood of EVERY economy, will do little.

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