Krugman nails it

by

by David Safier

Read today's Paul Krugman column, Fifty Herbert Hoovers. He takes apart the insanity of massive cuts in state budgets.

No modern American president would repeat the fiscal mistake of 1932, in which the federal government tried to balance its budget in the face of a severe recession. The Obama administration will put deficit concerns on hold while it fights the economic crisis.

But even as Washington tries to rescue the economy, the nation will be reeling from the actions of 50 Herbert Hoovers — state governors who are slashing spending in a time of recession, often at the expense both of their most vulnerable constituents and of the nation’s economic future.

These state-level cutbacks range from small acts of cruelty to giant acts of panic — from cuts in South Carolina’s juvenile justice program, which will force young offenders out of group homes and into prison, to the decision by a committee that manages California state spending to halt all construction outlays for six months.

Now, state governors aren’t stupid (not all of them, anyway). They’re cutting back because they have to — because they’re caught in a fiscal trap.

Krugman realizes the states have no alternative to cutting since, unlike the feds, they have to balance their budgets. But he also says cutting essential services when they're needed most is crazy. Likewise cutting public works projects when we have huge numbers of workers laid off in the private sector.

He doesn't give a completely satisfactory answer to the dilemma. But the first step toward fixing an absurd situation is recognizing its absurdity.

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3 thoughts on “Krugman nails it”

  1. Attend the America’s Web of Debt event on Saturday, Jan. 17th, sponsored by Democracy for America – Tucson, where the subject even the vaunted Krugman avoids, namely “fractional-reserve banking, Federal Reserve policies and Congress’ inability to grasp the problem”, will be the topic at hand.

    Author of the book Web of Debt, Ellen Brown, will speak. Panelists, including UofA’s Dr. Leila Hudson, and the audience will respond.

    St. Mark’s Presbyterian Church, 3809 E 3rd St
    1-3pm
    $5 at the door

    It would be great if our members of Congress would attend and give their insight, or maybe just understand a bit better what our current banking system is doing to our democratic institutions.

  2. We don’t need to have her here to blame her for the fiscal iceberg she drove our ship of state directly into. She used gimmicks and looked through rose colored glasses to come up with her budget projections that has now resulted in this fiscal nightmare.

    Republicans (Other than the 4 RINOs in each house that enabled her) had nothing to do with the exorbitant increases in spending and her uncontrolled expansion of entitlements in her quest to turn Arizona into a Nanny State.

    I hope she does not get confirmed so she has to return to Arizona and clean up this mess she has made. Luck for her, she belongs to a party that is very good at cutting and running, and that’s exactly what she’ll do.

  3. Arizona is hobbled by a state constitutional mandate to balance the budget coupled with a constitutional amendment requiring a 2/3 majority to raise taxes. Gov. Napolitano has done the best she can to mitigate the disaster, while getting heaps of scorn from conservatives who refuse to acknowledge that it is their ideology that deserves most of the blame. Like you mentioned in a previous post, the GOP won’t have her to blame in the next 2 years.

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