Bill Black: Krugman and Obama’s Dangerous Austerity Myths

Yves here. I have to confess, it is frustrating to see Krugman say many of the right things but not be willing to go too far afield of orthodox thinking.

By Bill Black


Austerity in response to the Great Recession has proven to be an economic weapon of mass destruction. On January 10, 2013, Paul Krugman (Nobel Laureate in Economics) and President Obama launched the same dangerous austerity myth in remarkably similar language.

January 10, 2013
Coins Against Crazies
By PAUL KRUGMAN

Lately, revenue has fallen far short of spending, mainly because of the depressed state of the economy. If you don’t like this, there’s a simple remedy: demand that Congress raise taxes or cut back on spending. And if you’re frustrated by Congress’s failure to act, well, democracy means that you can’t always get what you want.

Remarks by the President in Nomination of Secretary of the Treasury

And thanks in large part to [Treasury Secretary Geithner’s] steady hand, our economy has been growing again for the past three years, our businesses have created nearly 6 million new jobs.
And we’ve begun to reduce our deficit through a balanced mix of spending cuts and reforms to a tax code….

I know that many, perhaps most Americans, would read these quotations and think: “of course, they’re repeating obvious truisms.” Both quotations are, however, dangerous myths.