Anyone who is doubting whether President-elect Obama is getting advice on economic policy moderation need look no further than today’s column by New York Times columnis Paul Krugman.
The economic lesson is the importance of doing enough. F.D.R. thought he was being prudent by reining in his spending plans; in reality, he was taking big risks with the economy and with his legacy. My advice to the Obama people is to figure out how much help they think the economy needs, then add 50 percent. It’s much better, in a depressed economy, to err on the side of too much stimulus than on the side of too little. In short, Mr. Obama’s chances of leading a new New Deal depend largely on whether his short-run economic plans are sufficiently bold. Progressives can only hope that he has the necessary audacity.
The only thing, according to Krugman, that brought us out of the Great Depression was World War II, which was little more than a giant fiscal stimulus. I guess FDR’s policies of taking over private industry, raising taxes, and imposing tarrifs aren’t relevant to progressives. Unemployment is edging over 6 percent, based on the November employment data released by the U.S. Department of Labor. I guess that rates as an econommic depression these days.