The New York Times is running a story (series) on the "problem of the debt." One of their Op-ed writers, Paul Krugman, counters in an op-ed piece today that the "problem" is overblown.
Should we be more concerned about the debt than unemployment? No.Unemployment is a greater problem. There will come a time when more and more government spending (and debt) will run a greater risk of triggering inflation, but not now. We need to be spending - 'priming the pump' - its called, incur more debt, and help the economy recover.
There are rumblings of a Republican proposal to cut taxes to stimulate the economy. I can guarantee you this has more to do with appealing to the Republican Base than it does to any desire to actually stimulate the economy. Here's why.
A $100 billion tax cut and a $100 billion injection of new government spending will not affect the economy the same way. There are these things called multipliers. They do just what their name suggests - they multiply the impact from a tax cut versus an injection of new government spending. It turns out that cutting taxes has less stimulative effects than an increase in new government spending. In other words, there is more 'bang for the buck' from new government spending than there will be from an equal amount of tax cuts.
With Roubini indicating unemployment will increase to at least 11 percent (earlier post), we need stimulus now.
Should we be more concerned about the debt than unemployment? No.Unemployment is a greater problem. There will come a time when more and more government spending (and debt) will run a greater risk of triggering inflation, but not now. We need to be spending - 'priming the pump' - its called, incur more debt, and help the economy recover.
There are rumblings of a Republican proposal to cut taxes to stimulate the economy. I can guarantee you this has more to do with appealing to the Republican Base than it does to any desire to actually stimulate the economy. Here's why.
A $100 billion tax cut and a $100 billion injection of new government spending will not affect the economy the same way. There are these things called multipliers. They do just what their name suggests - they multiply the impact from a tax cut versus an injection of new government spending. It turns out that cutting taxes has less stimulative effects than an increase in new government spending. In other words, there is more 'bang for the buck' from new government spending than there will be from an equal amount of tax cuts.
With Roubini indicating unemployment will increase to at least 11 percent (earlier post), we need stimulus now.
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