This is already a Republican economy...

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This Republican Economy

Quote Paul Krugman:What should be done about the economy? Republicans claim to have the answer: slash spending and cut taxes. What they hope voters won’t notice is that that’s precisely the policy we’ve been following the past couple of years. Never mind the Democrat in the White House; for all practical purposes, this is already the economic policy of Republican dreams.

So the Republican electoral strategy is, in effect, a gigantic con game: it depends on convincing voters that the bad economy is the result of big-spending policies that President Obama hasn’t followed (in large part because the G.O.P. wouldn’t let him), and that our woes can be cured by pursuing more of the same policies that have already failed.

For some reason, however, neither the press nor Mr. Obama’s political team has done a very good job of exposing the con.

What do I mean by saying that this is already a Republican economy? Look first at total government spending — federal, state and local. Adjusted for population growth and inflation, such spending has recently been falling at a rate not seen since the demobilization that followed the Korean War.

How is that possible? Isn’t Mr. Obama a big spender? Actually, no; there was a brief burst of spending in late 2009 and early 2010 as the stimulus kicked in, but that boost is long behind us. Since then it has been all downhill. Cash-strapped state and local governments have laid off teachers, firefighters and police officers; meanwhile, unemployment benefits have been trailing off even though unemployment remains extremely high.

Over all, the picture for America in 2012 bears a stunning resemblance to the great mistake of 1937, when F.D.R. prematurely slashed spending, sending the U.S. economy — which had actually been recovering fairly fast until that point — into the second leg of the Great Depression. In F.D.R.’s case, however, this was an unforced error, since he had a solidly Democratic Congress. In President Obama’s case, much though not all of the responsibility for the policy wrong turn lies with a completely obstructionist Republican majority in the House.

That same obstructionist House majority effectively blackmailed the president into continuing all the Bush tax cuts for the wealthy, so that federal taxes as a share of G.D.P. are near historic lows — much lower, in particular, than at any point during Ronald Reagan’s presidency.

As I said, for all practical purposes this is already a Republican economy.

Since we are now heading into a repeat of last year's teabag shennanigans in Congress, everybody needs to be aware of this, especially the junior republicans & libertarians.

Quote Paul Krugman:As an aside, I think it’s worth pointing out that although the economy’s performance has been disappointing, to say the least, none of the disasters Republicans predicted have come to pass. Remember all those assertions that budget deficits would lead to soaring interest rates? Well, U.S. borrowing costs have just hit a record low. And remember those dire warnings about inflation and the “debasement” of the dollar? Well, inflation remains low, and the dollar has been stronger than it was in the Bush years.

Put it this way: Republicans have been warning that we were about to turn into Greece because President Obama was doing too much to boost the economy; Keynesian economists like myself warned that we were, on the contrary, at risk of turning into Japan because he was doing too little. And Japanification it is, except with a level of misery the Japanese never had to endure.

So why don’t voters know any of this?

Part of the answer is that far too much economic reporting is still of the he-said, she-said variety, with dueling quotes from hired guns on either side. But it’s also true that the Obama team has consistently failed to highlight Republican obstruction, perhaps out of a fear of seeming weak. Instead, the president’s advisers keep turning to happy talk, seizing on a few months’ good economic news as proof that their policies are working — and then ending up looking foolish when the numbers turn down again. Remarkably, they’ve made this mistake three times in a row: in 2010, 2011 and now once again.

At this point, however, Mr. Obama and his political team don’t seem to have much choice. They can point with pride to some big economic achievements, above all the successful rescue of the auto industry, which is responsible for a large part of whatever job growth we are managing to get. But they’re not going to be able to sell a narrative of overall economic success. Their best bet, surely, is to do a Harry Truman, to run against the “do-nothing” Republican Congress that has, in reality, blocked proposals—for tax cuts as well as more spending—that would have made 2012 a much better year than it’s turning out to be.

For that, in the end, is the best argument against Republicans’ claims that they can fix the economy. The fact is that we have already seen the Republican economic future—and it doesn’t work.

The NYT article link.

As was pointed out by Ren in a thread last week, Krugman walks on eggshells and is carefull of what he says — but he certainly finds the right way to say something when it really needs to be said.

Karolina's picture
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Comments

Unfortunate but true. The question is will the nation's credit be down graded again as Tom points out, a down grade is good for the Billionaires who buy the treasuries and will get a higher return.

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Feb. 14, 2011 11:01 am

Japan has been warned of the bond vigilantes for decades, they still borrow on the cheap. They also just posted the worst numbers in about 38 years. Fortunately some Japanese auto manufacturers in the US were bailed out with the Detroit loans, or the numbers would've been worse.

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Jul. 31, 2007 4:01 pm

You Say Republicans And A "Con Game" Really? But Guess What? The Republicans Have Been Running A "Con Game" For Well Over 40 Years And They Have Had Success Doing That And its Because Of The Make-Up Of The Country And Lets Hope They Wont Have Success in The 2012 Election!

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Jul. 31, 2007 4:01 pm

I thought about posting that Krugman piece here....it's way too good, way too true to go unseen and unappreciated

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Jul. 31, 2007 4:01 pm

Karolina,i would say most of the 99% know already what Krugman say is true,that`s why they pressure congress to vote no on the first bailout vote(2008) We don`t get some solid answers to this mess,the last Great Depression & WW2 will look like a "Tea Party". Imagine the Founding Fathers rolling in their graves seeing astro-turf tea baggers(1%) causing "Judgement Day"? We don`t start controlling our money, we might not have any graves to roll in.

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tayl44
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Jul. 31, 2007 4:01 pm

Danny—yes, lets hope we have only good luck in the next election. Or at least a miracle!

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Nov. 3, 2011 7:45 pm

Tayl44—I agree with you!

Right now, posting these truths & petitions on Thom's website is my best & only way of contributing my positive energy to this "war" of power-loving (i.e. non-creative) competitive human minds vs. creative human minds.

Creative minds MUST win, if we are to survive!

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Karolina
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Nov. 3, 2011 7:45 pm

Karolina,more power to you! But i think you know problems so well,you would have some solid solutions for them? Example,the solution to competitive minds vs creative minds is the question,"creative and competitive for what"? One can compete to make the world better and at the same time,create to make the world better. See my point about a solution to regulation for banks or a public bank? With all the positive energy you have,would you feel you gain more by posting "true solutions"? If i keep hearing about dead canaries in the mine with no solid solutions,i might get lost in "bread & circus". as most people are these days and just what the 1% want.

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tayl44
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Quote tayl44:

Karolina,i would say most of the 99% know already what Krugman say is true,that`s why they pressure congress to vote no on the first bailout vote(2008) We don`t get some solid answers to this mess,the last Great Depression & WW2 will look like a "Tea Party". Imagine the Founding Fathers rolling in their graves seeing astro-turf tea baggers(1%) causing "Judgement Day"? We don`t start controlling our money, we might not have any graves to roll in.

Most conservatives do not want to be part of your 99%. Why do you use this term as if everyone agrees? Your so-called 99% is probably closer to 36%. Leave me out of it.

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rigel1
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Jan. 31, 2011 7:49 am

Tayl, did you see economist Joseph Stiglitz on "Democracy Now" this evening? I was so happy to hear him talking about Glass-Steagall — that repealing it was the main reason for all of our economic disaster, that it should be re-enacted right away, that the banksters should be jailed! All the stuff that I was talking about all along!

I had been a bit disappointed last week when Krugman never mentioned Glass-Steagall, but I guess he writes for the NY Times, so he has to choose his words wisely.

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Karolina
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Nov. 3, 2011 7:45 pm
Quote rigel1:Most conservatives do not want to be part of your 99%.
Leave me out of it.
Unless you're a billionaire you're not in the top 1%, which makes you one in the 99%. One in the 99% who actually votes against his/her own interests.

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Karolina
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Nov. 3, 2011 7:45 pm

Karolina,some conservatives still think the earth is flat,i thought you wanted to enlighten people? Excuse me if i thought wrong,i will move on.

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Jul. 31, 2007 4:01 pm

I don't understand what you are reffering to, Tayl.

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Karolina
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Nov. 3, 2011 7:45 pm

Karolina,sorry,i misread your #12 post,funny the web page look different from early. I let your #12 post speak for me,thanks. #11 No, i miss Democracy Now,but happy like you, that the Glass-Steagall act was talk about. Karolina,don`t get your hopes to high on regulations for Wall st/Banks,the economic system is so set/addicted to paper money,any regulation will "kill it". Some say "let it die"! It die,most of us will die with it, It`s same story they use to get the "bailout",we`re all connected whether we like it, or not.If regulation will kill the old system because it so corrupt,the next logical step is create a new system.This is where public banking come to the rescue. The tax-paying people save private banking & Wall st,now public banking is going to save the tax-paying people from corrupt private bankinf & Wall st. A public bank regulated by the "people" will do a lot more than Glass-Steagall act ever could of imagine. You have any money to start a public bank,only about $20 million is needed? Want to make history? You can be the person that end poverty on earth? Glass-Steagall couldn`t do that? A public bank can,how? By giving every living person a credit worth.(aka,fico credit score) Why? To have peace in a world with weapons that can end it, in minutes.

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tayl44
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Jul. 31, 2007 4:01 pm

Japan is monetarily sovereign in Yen and any debt in Yen can be paid by Japan by money creation. Similarly for USA in dollars. It is foolish to downgrade a sovereign nation which has mostly debt in its own currency. The dangerous debt is only in a foreign currency. Japan has deficit spent for tweny years with zero austerity and USA can do the same. See what Koo says in

Koo58.pdf (application/pdf Object)

at http://www.paecon.net/PAEReview/issue58/Koo58.pdf

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pshakkottai
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Jul. 11, 2011 11:27 am

Mitchell recommends it at

http://rodgermmitchell.wordpress.com/2012/03/31/the-end-of-private-banki...

–The end of private banking: Why the federal government should own all banks. « #Monetary Sovereignty – Mitchell

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pshakkottai
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Jul. 11, 2011 11:27 am

Pshakk,we`re on the same page,what do you think is the best and fastest way to public banking? Thanks for info/links.

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tayl44
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Why the Web of Life is Dying...

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