Monday, December 29, 2008

Krugman: 50 Hoovers

by Calculated Risk on 12/29/2008 08:40:00 AM

Paull Krugman writes: Fifty Herbert Hoovers

No modern American president would repeat the fiscal mistake of 1932, in which the federal government tried to balance its budget in the face of a severe recession. The Obama administration will put deficit concerns on hold while it fights the economic crisis.

But even as Washington tries to rescue the economy, the nation will be reeling from the actions of 50 Herbert Hoovers — state governors who are slashing spending in a time of recession, often at the expense both of their most vulnerable constituents and of the nation’s economic future.
State and local governments cut back every down turn, exacerbating the recession.

Krugman doesn't mention it, but most governments also tend to spend every dollar (or more!) during economic booms. Oh well ...

(out hiking today)