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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: Paul Kern who wrote (103407)	2/6/2009 9:56:15 PM
From: Paul Kern	Read Replies (1) \| Respond to of 541958

Thomson Financial News U.S. economy needs spending, not tax cut -Krugman 02.06.09, 01:48 PM EST WASHINGTON, Feb 6 (Reuters) - Nobel Prize-winning economist Paul Krugman on Friday dismissed the notion that tax cuts would help the recession-hit U.S. economy and said government spending would be more effective in stimulating demand. 'There is no coherent argument that tax cuts should be effective. An additional dollar in public spending is going to do more for the economy than an additional dollar of tax, cuts,' Krugman said during a discussion on the impact of President Barack Obama's economic recovery plan. The Obama administration's $937 billion stimulus package aimed at halting the economy's downward spiral has been bogged down by opposition from Republicans, who favor tax cuts rather than more government spending. The U.S. economy has been mired in recession since December 2007, and evidence is mounting that the downturn is accelerating. The Labor Department reported on Friday that 598,000 jobs were lost in January, the biggest number in 34 years, as the unemployment rate soared to a 16-year high. Krugman said the consumer-driven economy faces at least a $2 trillion short-fall in demand over two years and reiterated that the spending package was insufficient. What is needed, he said, is a stimulus package that is large enough to close the gap. 'We should be looking at around $1.3 trillion range for two years,' he said of what is needed in government spending. Although the government is already running up debt 'we have substantial running room ... up to $4 trillion (in debt) for the next few years,' he said, adding that he would be concerned with a debt figure of $6 trillion. Comment On This Story Krugman said a spending bill of $820 billion would add less than $500 billion to the national debt, while a package of tax cuts would add substantially more. It is critical to ensure that the current downturn does not spiral into deflation, he said. Krugman dismissed fears that steps by the Treasury and the Federal Reserve to boost liquidity in financial markets, including the reduction of the central bank's benchmark overnight lending rate to a range between zero and 0.25 percent, would stoke inflation pressures. 'Inflation does not happen if you print money and it just sits there. There is no imminent inflation threat from any of this. Inflation is not top of the agenda,' he said, adding he was confident the Fed would be able to withdraw excess money from the system once the economy recovers. (Reporting by Lucia Mutikani; editing by Leslie Adler) Keywords: ladler USA ECONOMY/KRUGMAN

To: Paul Kern who wrote (103407)	2/6/2009 11:33:14 PM
From: Steve Lokness	Read Replies (1) \| Respond to of 541958

Paul; Well sure if your only goal is to throw money into the economy, I suppose food stamps are as good as anything. You will never convince me though that welfare programs are good for either the people receiving them or those paying for them. Nor are they good for America as we are just borrowing that money from tomorrow - from our kids to pay for it. You think it is immoral not to dish out welfare - I think it is immoral to borrow from our kids when they have no say in it. I want a strong America - an America where we build things and compete in the world markets. Where working people proudly come home with a check they earn and support their families - we are just going to have to differ on this Paul. I will respect your opinion, but I can not agree with it. steve