Tuesday, January 26, 2010

“Paul Krugman ain’t gonna like this”

That’s what Spot said to himself when he read that President Obama proposed a (partial) spending freeze for the federal government, and he was right. Krugman commented on it today in his blog, The Conscience of a Liberal, in a post entitled Obama Liquidates Himself.

A spending freeze? That’s the brilliant response of the Obama team to their first serious political setback?

It’s appalling on every level.

It’s bad economics, depressing demand when the economy is still suffering from mass unemployment. Jonathan Zasloff writes that Obama seems to have decided to fire Tim Geithner and replace him with “the rotting corpse of Andrew Mellon” (Mellon was Herbert Hoover’s Treasury Secretary, who according to Hoover told him to “liquidate the workers, liquidate the farmers, purge the rottenness”.)

Here’s the stinger:

It’s bad long-run fiscal policy, shifting attention away from the essential need to reform health care and focusing on small change instead.

By that, Krugman means, at least Spot think he does, that health care spending is a problem to more than the federal budget: it is a national income killer. By literally every measure, we spend an order of magnitude more money on health care per capita than other industrial countries, and we get less for it.

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