Monday, June 21, 2010

Paul Krugman's advice -- I hope Obama takes it

We are heading into territory where the middle class will no longer exist. There will only be the rich (lest we forget: Duhmbya Bush calls them "the haves and the have-mores"*) and the poor (that would be us, you and me).  In answer to those who want to cut national spending now, Nobel prize-winning economist Paul Krugman has this to say in today's NY Times:

*Bush's remarks to his supporters at a fund-raising dinner: 
This is an impressive crowd: the haves, and the have-mores. [crowd laughs] Some people call you the elite, I call you my base.

EXCERPT: But if we need to raise taxes and cut spending eventually, shouldn’t we start now? No, we shouldn’t.

Right now, we have a severely depressed economy — and that depressed economy is inflicting long-run damage. Every year that goes by with extremely high unemployment increases the chance that many of the long-term unemployed will never come back to the work force, and become a permanent underclass. Every year that there are five times as many people seeking work as there are job openings means that hundreds of thousands of Americans graduating from school are denied the chance to get started on their working lives. And with each passing month we drift closer to a Japanese-style deflationary trap.

Penny-pinching at a time like this isn’t just cruel; it endangers the nation’s future. And it doesn’t even do much to reduce our future debt burden, because stinting on spending now threatens the economic recovery, and with it the hope for rising revenues.