Krugman: States of Depression

[ProSense]

States of Depression

By PAUL KRUGMAN

The economic news is looking better lately. But after previous false starts — remember “green shoots”? — it would be foolish to assume that all is well. And in any case, it’s still a very slow economic recovery by historical standards.

There are several reasons for this slowness, with the most important being the overhang of household debt that is a legacy of the housing bubble. But one significant factor in our continuing economic weakness is the fact that government in America is doing exactly what both theory and history say it shouldn’t: slashing spending in the face of a depressed economy...if it weren’t for this destructive fiscal austerity, our unemployment rate would almost certainly be lower now than it was at a comparable stage of the “Morning in America” recovery during the Reagan era.

Notice that I said “government in America,” not “the federal government.” The federal government has been pursuing what amount to contractionary policies as the last vestiges of the Obama stimulus fade out, but the big cuts have come at the state and local level...We’re talking big numbers here. If government employment under Mr. Obama had grown at Reagan-era rates, 1.3 million more Americans would be working as schoolteachers, firefighters, police officers, etc., than are currently employed in such jobs.

And once you take the effects of public spending on private employment into account, a rough estimate is that the unemployment rate would be 1.5 percentage points lower than it is, or below 7 percent — significantly better than the Reagan economy at this stage.

- more -

http://www.nytimes.com/2012/03/05/opinion/krugman-states-of-depression.html

This is why Republicans in Congress and State Governorships have been working hard to sabotage the recovery.


http://www.democraticunderground.com/1002322208

[libinnyandia]

1. A story in yesterday's DesMoines Register was about the Republicans' ongoing efforts

to cut even more from the state agencies even as state tax revenue is rising.

[ProSense]

2. Republicans

at the state level are doing everything to justify continued cuts. In Congress, they're doing everything to block legislation to increase funding for public-sector jobs.

Sabotage.