...let’s give the president the benefit of the doubt, and suppose that $38 billion in spending cuts — and a much larger cut relative to his own budget proposals — was the best deal available. Even so, did Mr. Obama have to celebrate his defeat? Did he have to praise Congress for enacting “the largest annual spending cut in our history,” as if shortsighted budget cuts in the face of high unemployment — cuts that will slow growth and increase unemployment — are actually a good idea?This falls into the "don't make me laugh" category. As Lew Rockwell recently wrote, there are no "cuts" in spending at all, despite the rhetoric:
In the first place, no one is talking about actual cuts, not even the supposedly radical Republicans. These are cuts in projected spending, meaning that everyone is dealing with symbolic changes in a future that is just as symbolic. Even on paper, the only way to consider these cuts is to compare them with the GDP and the national debt -- both of which are slated to rise. Forgetting those two metrics, and looking at the actual numbers, there are no cuts at all and only increases.I will go even further. Despite Krugman's constant claims that prosperity will return if the government throws enough new money around and if the highest marginal tax rates are raised from 35 percent to 39.6 percent, he is absolutely wrong.
Even the dating of the Republican’s balanced budget is ridiculous. So the budget will be fully balanced in 2040? That’s three decades from now. Few of the people in office will still be in office, and many will be dead. To see how viable this is, consider how many political plans of the year 1982 still survive today.
The problem is not with "idle" resources; the problem lies in the fact that the Obama administration, along with the other Usual Suspects in Congress, academe, and the media, cannot recognize that there are huge swaths of malinvested resources still dragging down the economy. It does not matter how many dollars the government throws at housing; the government encouraged the wasting of billions of dollars for something that cannot be sustained in any normal market, and no one in authority still is willing to admit any mistakes.
To make matters worse, the Obama administration continues to insist that granting huge subsidies to corn-based ethanol and electric "wind farms" ("subsidy farms" is the more appropriate term) will help lead us out of the recession. Earth to Obama (and Krugman and the others): it is impossible to subsidize oneself into prosperity. Any benefits accrued to one party MUST be confiscated from another when subsidies are involved. An economy built upon subsidies is an economy that will continue to shrink.
Krugman still is of the belief that if the political classes pretend we are prosperous and throw enough money into the economy, then suddenly everything magically will rise and the prosperity train will be on the tracks. This is utterly delusional, but delusion seems to be the watchword at the NY Times and in Washington.