Last night, when I posted about Obama's plan for a spending freeze, I wrote that the gimmick "just seems dangerous right now from an economic sense." But, I wanted to hear from real economic experts like Krugman and Stiglitz.
Well, Krugman weighed in:
A spending freeze? That’s the brilliant response of the Obama team to their first serious political setback?So, that answers the economic question. Very bad move.
It’s appalling on every level.
It’s bad economics, depressing demand when the economy is still suffering from mass unemployment. Jonathan Zasloff writes that Obama seems to have decided to fire Tim Geithner and replace him with “the rotting corpse of Andrew Mellon” (Mellon was Herbert Hoover’s Treasury Secretary, who according to Hoover told him to “liquidate the workers, liquidate the farmers, purge the rottenness”.)
It’s bad long-run fiscal policy, shifting attention away from the essential need to reform health care and focusing on small change instead.
The Obama administration is sacrificing sound fiscal policy for a short-term political gain. But, the question is whether there will be any short-term political gain. I don't see it. This feels like the White House brain trust is grasping and it's just not authentic. People figure that out pretty quickly -- and that's not good for a President.
