The Real State of the Union

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March of the Peacocks
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CloseLinkedinDiggFacebookMixxMySpaceYahoo! BuzzPermalink By PAUL KRUGMAN
Friday's (1/28/01) Paul Krugman column contains the following assessment of the core problem with the state of the union, along with an indictment of the Obama administration for failing to address it. The whole column is worth a look, and a class consideration as to why the political system is unable to deal with it--linking the "why's" to our readings for Monday and from Ricci..

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The nature of America’s troubles is easy to state. We’re in the aftermath of a severe financial crisis, which has led to mass job destruction. The only thing that’s keeping us from sliding into a second Great Depression is deficit spending. And right now we need more of that deficit spending because millions of American lives are being blighted by high unemployment, and the government should be doing everything it can to bring unemployment down.

In the long run, however, even the U.S. government has to pay its way. And the long-run budget outlook was dire even before the recent surge in the deficit, mainly because of inexorably rising health care costs. Looking ahead, we’re going to have to find a way to run smaller, not larger, deficits.

How can this apparent conflict between short-run needs and long-run responsibilities be resolved? Intellectually, it’s not hard at all. We should combine actions that create jobs now with other actions that will reduce deficits later. And economic officials in the Obama administration understand that logic: for the past year they have been very clear that their vision involves combining fiscal stimulus to help the economy now with health care reform to help the budget later.

The sad truth, however, is that our political system doesn’t seem capable of doing what’s necessary.


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