Poor Paul Krugman had to write his Friday column on the day after last quarter’s spectacular economic results were announced. What did he have to say about the good news? I’ll spare you the suspense. He wasn’t impressed.
Krugman actually admits that “it’s possible that we really have reached a turning point.” Still, he can’t bear to give President Bush any credit: “If so, does it validate the Bush economic program? Well, no.”
It’s at this point that Krugman’s reasoning becomes impenetrable. He sniffs at the supposed ease with which economic performance can be improved: “Stimulating the economy in the short run is supposed to be easy, as long as you don’t worry about how much debt you run up in the process.” The key question is “not whether the proposals provide any short-term stimulus, but whether they are the most effective way to provide stimulus.” Meaning what? Beats me. The tax cuts are looking awfully effective at the moment.
Krugman concludes: “To put it more bluntly: it would be quite a trick to run the biggest budget deficit in the history of the planet, and still end a presidential term with fewer jobs than when you started. And despite yesterday’s good news, that’s a trick President Bush still seems likely to pull off.” To put it bluntly: it would be quite a trick to write a more dishonest sentence. Budget deficits are the effect, not the cause, of bad economic times. As times improve, budget deficits will come down and turn into surpluses. In judging the efficacy of the tax cuts, the question is not whether there are more jobs at the end of Bush’s term than at the beginning, when the recession that followed the bursting of the late-90’s bubble was just starting. The question is whether there are more jobs a year after the tax cuts than there were before. I don’t see Mr. Krugman taking any bets on that one.
By the way, the evidence seems to be getting clearer and clearer that the “jobless” data are badly flawed. An increasing percentage of Americans are self-employed or working as temps, so “payroll” data are increasingly meaningless. My guess is that this recovery (like the last recovery that began in the early 1990’s) is not actually “jobless,” as the pundits say, but rather that more people are working for themselves and as temps, and are therefore not showing up on payrolls even though they are happily employed.
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