We're Doomed Without Another Stimulus: Krugman

Jobs report offers scary echoes of 1930s stagnation

By Jason Farago, Newser Staff

Posted Jul 3, 2009 7:35 AM CDT

(Newser) – Yesterday's grim jobs report is the clearest sign yet that the US desperately needs another fiscal stimulus, writes Paul Krugman in the New York Times. This is 1930s redux: a Democratic president has pushed through an insufficient program, while strapped state governments cancel out federal spending with their own budget cuts. If President Obama doesn't act, he'll be facing his "personal 1937."

Further stimulus won't be easy. Republican leaders are united in opposition, "unconstrained by facts or logic," and Krugman's fellow economists are "recycling old fallacies" about the dangers of public spending. Obama's team, particularly Council of Economic Advisers chief Christina Romer, has a good understanding of the dangers of repeating the 1930s. "What I don't know," writes Krugman, "is whether the administration has faced up to the inadequacy of what it has done so far."

[Images (4)]

[Quotes (2)]

Larry Summers, Christina Romer, Tim Geithner and Barack Obama at the White House. (AP Photo/Gerald Herbert)

Christina Romer, chairwoman of the Council of Economic Advisers, testifies on Capitol Hill in Washington before the Senate Banking Committee. (AP Photo/Jose Luis Magana, File)

Job seekers line up for a career fair, Thursday, July 2, 2009 in Oak Brook, IL. Employers nationally cut a larger-than-expected 467,000 jobs in June and the unemployment rate climbed to a 26-year high... (AP Photo/M. Spencer Green)

President Barack Obama makes remarks about innovation and jobs, Thursday, July 2, 2009, in the Rose Garden of the White House in Washington. (AP Photo/Pablo Martinez Monsivais)

« Prev« Prev | Next »Next » Slideshow

As in the 1930s, the opponents of action are peddling scare stories about inflation even as deflation looms. So getting another round of stimulus will be difficult. But it’s essential. - Paul Krugman

The GOP responded to the latest job numbers by proclaiming the failure of the Obama economic plan. That’s ludicrous, of course; the White House warned it would be several quarters before the plan had any major effects. - Paul Krugman

« Prev« Prev | Next »Next » Slideshow

To report an error on this story, notify our editors.

More Newser Stories

Obama Scrambles for Jobs Plan

But problem may be too big to fix

(NEWSER) - As he announced the appointment of Alan Krueger yesterday, President Obama promised a speech outlining his new jobs agenda next week—but behind the scenes, Obama and company haven’t actually agreed on that agenda yet, the Washington Post reports. The president is considering a number of options, including a tax credit for companies hiring new workers, an infrastructure bank, clean-energy tax cuts, and revamping the unemployment system so that it pays companies to hire out-of-work people. More»

Feds Have Given Up on Economy

'Short term is when government can be most effective': Paul Krugman

(NEWSER) - Not only has the US economy been "stuck in a rut," but now a "destructive passivity has overtaken our discourse," writes Paul Krugman in the New York Times . The common wisdom today is that there is nothing the government can do in the short run to help the economy, so we should concentrate on the long run. "This gets things exactly wrong," says the Nobel Prize winner. "The truth is that creating jobs in a depressed economy is something government could and should be doing." More»

Washington Has Abandoned the Unemployed

Krugman: Why are we obsessed with the deficit when millions need jobs?

(NEWSER) - One-sixth of American workers can’t find full-time jobs, and things aren’t getting any better for them: There are nearly five times more jobless people than there are job openings, and the "average unemployed worker has been jobless for 37 weeks." Yet all we hear about from Washington is talk of reducing the deficit, notes Paul Krugman in the New York Times . “We’re well on the way to creating a permanent underclass of the jobless. Why doesn’t Washington care?” More»

Obama Didn't Need to 'Focus' on Economy...

...he needed the guts to do something worthwhile to save it

(NEWSER) - Recently prognosticators—like Evan Bayh, in this article —have been accusing Barack Obama of “focusing on health care rather than job creation.” So Paul Krugman of the New York Times has a question: What does that even mean? Are they saying Obama should have pursued a bigger stimulus? Been tougher on the banks? “If not, what are they saying? That he should have walked around with furrowed brow muttering, ‘I’m focused, I’m focused’?” More»

Government Isn't Bigger

Obama hasn't expanded spending—and that's too bad

(NEWSER) - The Obama presidency has mobilized hundreds of thousands of conservatives to clamor against the "big expansion of government spending," but said expansion simply didn't happen—and that's the problem, writes Paul Krugman for the New York Times . The president hasn't created new benefits for the poor, large new infrastructure projects aren't underway, and health care reform has yet to kick in. "Where’s all that spending we keep hearing about? It never happened." So why does everyone think it did? More»

NEWS FROM OUR PARTNERS

What is Newser?

Face it: there's too much news. At Newser, we choose the most thought-provoking and entertaining stories from hundreds of US and international sources and reduce them to a headline, picture, and two paragraphs. And we do it 24/7—you can come back morning, noon, night (and in between) for something new that matters. Read less, know more.

Learn more »

Partnering with: Slate

View Newser on the mobile website

We're Doomed Without Another Stimulus: Krugman