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Friday, October 18, 2013
Paul Krugman: The Damage Done
Republicans have made the economy worse:
The Damage Done, by Paul Krugman, Commentary, NY Times: The government is reopening, and we didn’t default on our debt. Happy days are here again, right?
Well, no. ...Congress has only voted in a temporary fix, and we could find ourselves going through it all over again in a few months. ...
Beyond that,... it’s important to recognize that the economic damage from obstruction and extortion didn’t start when the G.O.P. shut down the government..., it has been an ongoing process, dating back to the Republican takeover of the House in 2010. ...
A useful starting point for assessing the damage done is a ... report by ... Macroeconomic Advisers, which estimated that “crisis driven” fiscal policy ... since 2010 ... has subtracted about 1 percent off the U.S. growth rate for the past three years. This implies cumulative economic losses ... of around $700 billion. The firm also estimated that unemployment is 1.4 percentage points higher...
Yet ... the report doesn’t take into account ... other bad policies that are a more or less direct result of the Republican takeover in 2010. Two big bads stand out: letting payroll taxes rise, and sharply reducing aid to the unemployed... Both actions have reduced the purchasing power of American workers, weakening consumer demand and further reducing growth. ...
But why have Republican demands so consistently had a depressing effect on the economy?
Part of the answer is that the party remains determined to wage top-down class warfare... Slashing benefits to the unemployed because you think they have it too easy is cruel even in normal times, but it has the side effect of destroying jobs when the economy is already depressed. Defending tax cuts for the wealthy while happily scrapping tax cuts for ordinary workers means redistributing money from people likely to spend it to people who are likely to sit on it.
We should also acknowledge the power of bad ideas. Back in 2011, triumphant Republicans eagerly adopted the concept ... of “expansionary austerity” — ...that cutting spending would actually boost the economy by increasing confidence. Experience since then has thoroughly refuted this concept...
Are all the economy’s problems the G.O.P.’s fault? Of course not. .... But most of the blame for the wrong turn we took on economic policy, nonetheless, rests with the extremists and extortionists controlling the House.
Things could have been even worse. This week, we managed to avoid driving off a cliff. But we’re still on the road to nowhere.
