- Paul Krugman: The Obama Recovery
- Links for 12-29-14
- 'Federal Tax Revenues During the 1980’s'
- 'The Obama Bounce'
Posted: 29 Dec 2014 12:24 AM PST
The economy is doing better. Will it continue?:
The Obama Recovery, by Paul Krugman, Commentary, NY Times: ... As you may know, back in 2010 Britain's newly installed Conservative government declared that a sharp reduction in budget deficits was needed to keep Britain from turning into Greece. Over the next two years growth in the British economy, which had been recovering fairly well from the financial crisis, more or less stalled. In 2013, however, growth picked up again — and the British government claimed vindication for its policies. Was this claim justified?
No, not at all. What actually happened was that the Tories stopped tightening the screws — they didn't reverse the austerity that had already occurred, but they effectively put a hold on further cuts. ... And sure enough, the nation started feeling better.
To claim that this bounceback vindicated austerity is silly. ...
Meanwhile, back in America we haven't had an official, declared policy of fiscal austerity — but we've nonetheless had plenty of austerity in practice, thanks to the federal sequester and sharp cuts by state and local governments. The good news is that we, too, seem to have stopped tightening the screws: Public spending isn't surging, but at least it has stopped falling. And the economy is doing much better as a result. ...
What's the important lesson from this late Obama bounce? Mainly, I'd suggest, that everything you've heard about President Obama's economic policies is wrong.
You know the spiel: that the U.S. economy is ailing because Obamacare is a job-killer and the president is a redistributionist, that Mr. Obama's anti-business speeches (he hasn't actually made any, but never mind) have hurt entrepreneurs' feelings, inducing them to take their marbles and go home.
This story line never made much sense. The truth is that the private sector has done surprisingly well under Mr. Obama... What held us back was unprecedented public-sector austerity... Sure enough, now that this de facto austerity is easing, the economy is perking up. ...
Will this improvement in our condition continue? Britain's government has declared its intention to ... engage in further austerity, which does not bode well. But here the picture looks brighter. Households are in much better financial shape than they were a few years ago; there's probably still a lot of pent-up demand, especially for housing. And falling oil prices will be good for most of the country...
So I'm fairly optimistic about 2015, and probably beyond, as long as we avoid any more self-inflicted damage. ...
Posted: 29 Dec 2014 12:06 AM PST
Posted: 28 Dec 2014 09:03 AM PST
PGL at Econospeak:
Posted: 28 Dec 2014 09:03 AM PST
The Obama Bounce: Dean Baker is, of course, right: this is not a boom, and comparisons to the 1990s are insane. Still, growth has clearly picked up, and the public seems to be noticing. So what can we say about the Obama non-boom?
I'd argue that much of what we're seeing reflects the tapering off of austerity. ... Spending hasn't rebounded yet, but at least it has stopped shrinking: ... And it's important to realize that, despite all the rhetoric about how Obamacare/antibusiness rhetoric/Kenyan Islamic atheism is destroying business, the private sector has actually been relatively strong under Obama. ...
The point is that relatively good private sector performance has been masked by public-sector cutbacks; this is the opposite of what you usually hear, but that's no surprise.
What about the prospects looking forward? ... Overall..., the next year and probably the next two years are likely to be pretty good. This doesn't mean that the overall track record of policy has been good — we've wasted trillions in foregone output, damaged the lives of millions if not tens of millions. But it will feel a lot better than the years before.
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