New York Times columnist and Nobel Prize winning economist Paul Krugman has weighed in on his blog this morning on the Senate version of the stimulus. He takes dead aim at the “centrist” compromise that would tear out aid to states and seems to take some perverse pride in attacking aid to education. From Krugman:
The short answer: to appease the centrists, a plan that was already too small and too focused on ineffective tax cuts has been made significantly smaller, and even more focused on tax cuts.
According to the CBO’s estimates, we’re facing an output shortfall of almost 14% of GDP over the next two years, or around $2 trillion. Others, such as Goldman Sachs, are even more pessimistic. So the original $800 billion plan was too small, especially because a substantial share consisted of tax cuts that probably would have added little to demand. The plan should have been at least 50% larger.
Now the centrists have shaved off $86 billion in spending — much of it among the most effective and most needed parts of the plan. In particular, aid to state governments, which are in desperate straits, is both fast — because it prevents spending cuts rather than having to start up new projects — and effective, because it would in fact be spent; plus state and local governments are cutting back on essentials, so the social value of this spending would be high. But in the name of mighty centrism, $40 billion of that aid has been cut out.
My first cut says that the changes to the Senate bill will ensure that we have at least 600,000 fewer Americans employed over the next two years.
We had Michael Steele, the new Chair of the RNC, on the air with George Stephanopoulos, saying that Republicans do not support job creation through any stimulus package because these jobs, like construction jobs to build schools, would be “temporary”, and would not have been created by the private sector. When Stephanopoulos pointed out that the private sector has shed millions of jobs recently Steele seemed confused.
The roundtable on “This Week” had George Will pointing out something that we should all start embracing. He said that there are differences between the Parties, and that Republicans ought not to be expected to agree with Democrats, but to offer their own ideas. If Michael Steele is doing that offering then Democrats ought to be highlighting Steele’s prescription for the economy, which is to leave people out of work until the private sector gets around to hiring them. Spend money to fix roads, bridges, and schools? Nope. Those construction jobs would only be “temporary”. The Republicans could be the best sales force Barack Obama has for this package. Democrats ought to be on the air in Ohio and Florida right now, driving home the Republicans desire to leave people out of work. Just putting Steele’s words out there should be enough to create a firestorm.
Bill Manzi.com 
Your Honor,
Rutting around for “expert” who agree with your position is a game of statistics. If I get more people who agree with me, I win.
Well it does not work that way.
This “stimulus” package is simply pork laden and as the public gets a longer look at it, they smell the rotting meat.
I would like Steele to stand up against any of your media allies and list those stimulating items as 650 million the digital program. And that’s not the worst.
Get the folks money in their pockets first.
I notice you are still ticked at loosing your school building cash.
Jules
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Clock is running on Michael Steele …
“New G.O.P. Chairman Defends Payment to Sister”
-FM
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Jules,
Could you tell about the school construction money? I have to advocate for our fair city, and beyond the direct potential benefit to Methuen combining construction jobs with improving our school infrastructure is a no brainer to me. I would be for the school construction money even if Methuen did not benefit.
Bill
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Funny, Michael Steele looks confused NOT AT ALL. How interesting your take on it. Why don’t you post the entire interview? Let me do it for you.
http://abcnews.go.com/video/playerIndex?id=6830288
1/20/13
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Your Honor,
I understand how you feel. It looks as if the state and town bailouts have been taken off the table.
As I said, it still has to go through senate and house compromises.
Maybe you’ll get what you want.
What happens if Deval doesn’t get his 553 large ones?
Not only will you not get your school buildings, you’ll have tear a couple down.
The problem I have is you dedicated focus on getting a building and no mention of the more important job of turning the economy around.
The school construction is not as bad as many of the other things.
The President is going on the road. I hope he discusses the merits of the individual alotments in the plan such as 650 million for digital TV boxes, etc. rather than eloquent nonsense.
This stimulus plan is now being looked at with suspicion Remember the TARP lost 350 billion somewhere without accounting. (It was under G.W. Bushes watch so save the rancor)
I guess they are still “negotiating”.
Go to wait for the final version.
Jules
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Fred,
Read the item. Saw nothing conclusive. So what is your problem. Now I admit he could not make Obam’s Cabinet. After all he paid his taxes.
I assume you are on a “find the dirt” hunt.
Steele still top drawer.
Jules
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Steele stood tall against putting people back to work, but seem quite flummoxed when his prescription of private sector jobs for unemployed construction workers was questioned. He apparently did not see the latest jobless figures from the private sector. He also is apparently too ignorant to realize that ALL construction work is by definition, temporary. When the building or bridge is complete the job is over and construction workers must then look for a new project. The man is a maroon.
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Your Honor,
You don’t mean that, do you?
Best wait until final version is decided on. Then we can resume name calling.
Jules
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Jules,
A little bit of fun at Patrizia’s expense.(She is a fan of B. Bunny!) However my points about temporary work and construction do not seem to be challenged. I do believe we need to have this debate out in the public on a continuing basis. I fail to see what Steele offers the American public except words of encouragement while they cannot pay mortgages, feed their families, or pay their medical bills since they no longer have health insurance. Saying that we ought to let the system collapse over fealty to some ideological principle is insane, and the Dems should be happy to debate that point all day and night. Lets see how that view plays in Ohio and Florida.
Bill
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When passed, is the stimulus going to help protect from layoffs here in methuen? Ive read there is something like 4 billion in money for police, public safety and teachers. Your thoughts?
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Your Honor,
My problem in countering your argument is that we as a country have changed. More and more we succumb to dependency on government, a Democratic strong point.
Promising a chicken in every pot plays well to the dependent people of Ohio, Florida and a whole host of other places, Massachusetts being notable.
You Dems had a significant in setting this country back, so know you come to the rescue. I can only say the strategy is brilliant. Create havoc, then, like the calvary, ride in and save the day.
You coud not do that in a free country.
Jules
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Stimulus Bill has some potential for help in avoiding layoffs, but Republicans have gutted key provisions that would have helped in that area. The key will be what comes out of the House-Senate Conference Committee. We will root for the House version as far as education and aid to states and cities go.
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Your Honor,
Please tell me the items that would prevent layoffs that the (evil) Republicans gutted.
Are you talking about private sector or government level layoffs?
Jules
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Jules:
“Chicken in Every Pot” … wasn’t that a Hoover promise?
But I’m genuinely curious: can you go back to your 2/9 6:43am post and explain your last line about your version of a free country?
-FM
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Meet the Press had John Ensign (R-NV) yesterday claiming that he didn’t know anywhere in the country where cops and firefighters were about to be laid off. It’s just “fear mongering”. Then he trots out the more tax cuts jump starting the economy argument.
Run over here, take a look at “Lawmakers debate stimulus compromise”
http://www.msnbc.msn.com/id/3032608
-FM
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Fred,
The country has turned dependent on Government largess. Just play back the wining from the Florida audiences. I heard several similar responses from the campaign trail.
In Massachusetts the population is already turned to dependency on the government.
Lots of pots lots of chickens.
Jules
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Jules:
You’re right, now, its it symptom or cause?
I think it’s because the economic system is failing its citizens. We’d have no need of government largess, if we had jobs that paid our needs (and at least some of our wants).
What do you think?
-FM
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Fred,
If you are expecting a lifetime of constant economic stability you haven’t lived long enough.
I’m 71 years old and entered the work force in 1958. Today I’m retired but I still take on work as a consultant.
In all this time I have gone through about 4 recessions and a few inflationary periods. There is no economic stability, either actually or theoretically.
This is true especially during a transition period.
For me it was the end of the textile period followed by the the electronic age. The electronic age gave way to the Digital age and finally the growth of Global business which resulted in movement of technology to other coutries. Now we are at the end of the financial age.
Between each age were problems of recession and inflation, followed by recovery.
I was lucky and was able to keep my jobs or find new ones.
You cannot count on the government to take care of you. They take care of themselves first. As a free man I counted on myself and was successful.
None of people who showed up to Obama’s town hall talk were of an independent nature and embarrassed themselves by begging and wining.
Jules
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Thank you, thoughtful and reasoned post.
Congratulations, especially on your work history …. very commendable. Lucky maybe, but I’m sure skill and education played a major role in your success. I’m a few years behind you, but I’ve lived through a few transitions, not as many as you.
What I think government is here to do is to regulate economies so that those transition periods are less severe, and to help those caught out by them. Governments (representing citizens) make the rules under which the economic system works. There are times when it gets out of whack, and so action is sometimes required. If we are to remain free, it must be from all coercion, from government or economic system.
I’m getting a better sense of your idea of freedom now.
-FM
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