Monday, October 18, 2010

For all you deficit hawks,
a graph:

From Krugman:

What is to notice here? US government spending (in blue) has continued on its pre-crisis trajectory! For all the fuss about all the extra money being spent on ill-advised government sponsored projects, the blue figures are not the ones that are disconcerting. 

The red line is revenue. Why has it tanked? The US is in a recession of course! 

I am a firm proponent of government sponsored recovery. As the saying goes, "We're all Keynesians now."  It is only clear too than when private investment freezes up, the government must step in to fill the void or the economy will grind to a halt a la 1930. However, as Obama himself admitted in a Times Magazine last Sunday, “there’s no such thing as shovel-ready projects.” Inefficient spending is a problem, but in times like these it is not as bad as not spending at all.

That red line would not be creeping upward if not for the solid trajectory of the blue one.

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