WASHINGTON |
I might point out that Dr. Paul Krugman appears in The Ames Tribune. If Iowa is reading him there has to be merit in that for Republicans.
9:34 pm - February 02, 2013 — Updated: 9:34 pm - February 02, 2013
(Reuters) - President Barack Obama (click here) on Tuesday will propose that Congress pass a small package of spending cuts and tax reforms to put off the "harmful consequences" of huge automatic spending cuts known as the "sequester" for a few months, a White House official said.
"Uncertainty around the sequester is already having a negative impact on our economic growth, and if it was to take effect it would cost hundreds of thousands of American jobs and have devastating impacts on our economy," the official said.
The small budget package would "allow Congress more time to reach a solution that permanently avoids the sequester and significantly reduces the deficit in a balanced way," the official said.
Obama will speak at 1:15 p.m. EST.
9:34 pm - February 02, 2013 — Updated: 9:34 pm - February 02, 2013
By Paul Krugman
New York Times
...At this point, (click here) you might have expected austerity advocates to consider the possibility that there was something wrong with their analysis and policy prescriptions. But no. They went looking for new heroes and found them in the small Baltic nations, Latvia in particular, a nation that looms amazingly large in the austerian imagination.
At one level this is kind of funny: austerity policies have been applied all across Europe, yet the best example of success the austerians can come up with is a nation with fewer inhabitants than, say, Brooklyn. Still, the International Monetary Fund recently issued two new reports on the Latvian economy, and they really help put this story into perspective.
To be fair to the Latvians, they do have something to be proud of. After experiencing a Great-Depression-level slump, their economy has experienced two years of solid growth and falling unemployment. Despite that growth, however, they have only regained part of the lost ground in terms of either output or employment — and the unemployment rate is still 14 percent.
So what do we learn from the rather pathetic search for austerity success stories? We learn that the doctrine that has dominated elite economic discourse for the past three years is wrong on all fronts. Not only have we been ruled by fear of nonexistent threats, we’ve been promised rewards that haven’t arrived and never will.
It’s time to put the deficit obsession aside and get back to dealing with the real problem — namely, unacceptably high unemployment.
