Nobel laureate Paul Krugman is calling once again in his NYT op-ed for additional spending, saying that the stimulus that has been enacted at the moment is good but truly insufficient.
The good news is that the American Recovery and Reinvestment Act, a k a the Obama stimulus plan, is working just about the way textbook macroeconomics said it would. But that’s also the bad news — because the same textbook analysis says that the stimulus was far too small given the scale of our economic problems. Unless something changes drastically, we’re looking at many years of high unemployment.
And the really bad news is that “centrists” in Congress aren’t able or willing to draw the obvious conclusion, which is that we need a lot more federal spending on job creation.
I really think additional spending spells out doom for the US. But at the same time, I am still curious to see the stimulative effects of a tax cut. It sure puts more money in the pockets of consumers, but they don’t really create jobs. Or at least if they do, it doesn’t have the kind of job creation effect as the other option that is spending.
More from NYT.