Friday, November 18, 2011

Krugman on why Super-Committe Failure is a good thing

Paul Krugman on the ridiculous Super-Committee (aka, Catfood Commission II) that emerged from the debt ceiling fiasco earlier this year (Failure Is Good New York Times 11/17/2011)

So the supercommittee will fail - and that’s good.

For one thing, history tells us that the Republican Party would renege on its side of any deal as soon as it got the chance. Remember, the U.S. fiscal outlook was pretty good in 2000, but, as soon as Republicans gained control of the White House, they squandered the surplus on tax cuts and unfunded wars. So any deal reached now would, in practice, be nothing more than a deal to slash Social Security and Medicare, with no lasting improvement in the deficit.

Also, any deal reached now would almost surely end up worsening the economic slump. Slashing spending while the economy is depressed destroys jobs, and it’s probably even counterproductive in terms of deficit reduction, since it leads to lower revenue both now and in the future. And current projections, like those of the Federal Reserve, suggest that the economy will remain depressed at least through 2014. Better to have no deal than a deal that imposes spending cuts in the next few years.
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