Tags: paul | Krugman | Stimulus | Didnt | Fail | Never | Happened

Krugman: Stimulus Didn't Fail Because 'It Never Happened'

Wednesday, 16 Feb 2011 01:25 PM

Federal stimulus programs designed to kick-start the economy can't be labeled as failures because in reality, they never led to a surge in public spending, says Nobel economist Paul Krugman.

Despite claims that government spending is out of control, when taking into account cutbacks at the state and local levels, there haven't been out-of-proportion hikes in public spending via stimulus programs during the last decade.

"What’s extraordinary about all this is that stimulus can’t have failed, because it never happened," Krugman writes in his New York Times column.

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Paul Krugman
"Once you take state and local cutbacks into account, there was no surge of government spending."

President Barack Obama recently unveiled his $3.7 trillion budget for 2012, which the administration says will put the brakes on public spending by freezing some programs.

The budget assumes the economy will recover and with it, so will the tax base, thus narrowing this year's $1.6 trillion federal deficit to around $600 billion after five years.

Despite spending cuts as well as tax hikes that are to come, the government's total debt would mushroom to $21 trillion by 2016 from $14.2 trillion now, according to the Associated Press.

Republicans say Obama's budget blueprint doesn't address debt issues enough.

"People vote for presidents because they want leadership," says House Budget Committee Chairman Paul Ryan, R-Wis.

"They expect presidents to take on the greatest challenges facing the country. Well, the biggest crisis we have is the debt, and he's doing absolutely nothing to get it under control."

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Federal stimulus programs designed to kick-start the economy can't be labeled as failures because in reality, they never led to a surge in public spending, says Nobel economist Paul Krugman. Despite claims that government spending is out of control, when taking into...
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2011-25-16
Wednesday, 16 Feb 2011 01:25 PM
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