The Deal Will Lead To Less Fiscal Stimulus
In an otherwise typically intelligent col;umn, Paul Krugman seems oblivious that The Deal will lead to less government spending NEXT fiscal year. Krugman writes:
I’m often asked how I can oppose that deal given my consistent position in favor of more stimulus. The answer is that yes, I believe that stimulus can have major benefits in our current situation — but these benefits have to be weighed against the costs. And the tax-cut deal is likely to deliver relatively small benefits in return for very large costs.
I think Krugman overstates the stimulative effect of The Deal because he completely ignores that the deficit caused by The Deal will be used to bludgeon federal government spending. What The Deal does is trade out fiscal spending stimulus for tax cut stimulus. Which is the opposite of what Krugman says we need:
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