The point, then, is that we’d be in much better shape if we were following Reagan-style Keynesianism. Reagan may have preached small government, but in practice he presided over a lot of spending growth — and right now that’s exactly what America needs.
Under one president, real per capita government spending at that point was 14.4 percent higher than four years previously; under the other, less than half as much, just 6.4 percent.
O.K., by now many readers have probably figured out the trick here: Reagan, not Obama, was the big spender. While there was a brief burst of government spending early in the Obama administration — mainly for emergency aid programs like unemployment insurance and food stamps — that burst is long past. Indeed, at this point, government spending is falling fast, with real per capita spending falling over the past year at a rate not seen since the demobilization that followed the Korean War.
"If you actually look at the actual track record of government spending (and) government employment," Krugman said this weekend, "Reagan is the Keynesian and Obama ... has been the anti-Keynesian."
Well, let's check the actual record.
Real spending at the end of Reagan's first term was up 9.7% compared with the year before he took office. Under Obama, that figure will be above 16%, according to the White House Office of Management and Budget.
While spending did top out 23.5% of GDP in 1983, Reagan cut it to 22% the next year, and still lower after that. Under Obama, spending shot up to 25% of GDP in 2009, and it's stayed at or above 24% since.
Deficits in Reagan's two terms never exceeded 6% of GDP. Under Obama, they've never been under 8%.
Nor is it true that Reagan added government jobs while Obama cut them. The federal workforce shrank more than 40,000 in Reagan's first term. Obama has boosted federal jobs by 142,000, according to the Bureau of Labor Statistics.
The only way Krugman can claim otherwise is to lump in postal workers and state and local employees into his calculations. Trouble is, the U.S. Postal Service operates independently and has to cover its own costs — which is why it's been cutting jobs since 1999.
And presidents have no control over state and local employment, except insofar as their economic policies produce growth to support those jobs — which Reagan's did and Obama's didn't. But apparently it's better to bend the facts than adjust one's faith.
Some people are born on third base and go through life thinking they hit a triple. - Barry Switzer
Life is hard; its harder when you're stupid - John Wayne
Originally Posted by Greatest Fan of All
I'd be fine with a MAC coach...even Frank (a lesser mistake than Bo). Over Bo? ABSOLUTELY
Aside from the comparison to Reagan, I think Keynes is very misunderstood and his theories are grossly mis-applied to current political ideologies.
Keynes was near-genius in mathematics, and you have to take the bulk of his work in the context of his times. Yes, he favored government spending to stimulate the economy out of the depression and war era to create employment. If you read his books, however, never once did he suggest that was the preferable long term solution, in fact he explicitedly said in his writings that it was a short term fix. He and FDR had many very heated disagreements. They couldn't stand each other.
Just dusted off "The Means to Prosperity" from the shelf of the home library (dang, haven't looked at this this thing since grad school, still full of yellow highliter pen), some excerpts:
"Nor should the argument seem strange that taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance than an increase of balancing the budget"
"For the increased spending power of the taxpayer will have precisely the same favorable repercusssions as increased spending power due to loan-expenditure"
True, his models couldn't explain the supply shocks of the 70's. But most economic historians agree that had he been alive at the time he would have adjusted accordingly. His largest theme was full employment, and at times when the market is hesitant, then the government should step in. But at all other times, the private sector should lead the way. He always favored the free market, and only advocated for government stimulus at times of crisis (which was the bulk of his lifetime and writings) to smooth out the demand curves, but he never argued for that type of permanent economic model despite claims by both political parties to this day that those were his intentions.
I think the big question in Krugman's repeated calls for spending, spending, and more spending is he treats all spending as equal. While it is true that spending that stimulates productivity will create positive results, what happens when that spending does not go to productivity? Look what Obama presses in his spending, alternative energy that can not stand on it's own, plugging budget deficits, and social programs.
This seems to be a far cry from the Keynesian spending that built infrastructure that promoted business, spurred new profitable industries, and made our workforce more productive. I just don't see how the conclusion can be reached that government spending works when the spending isn't the same.