The Corner

‘It’s time for at least a small-scale version of the New Deal’s Works Progress Administration’

New York Times columnist Paul Krugman once again laments the fact that the administration’s first $800 billion stimulus was too small and that now it’s too late to pass a second stimulus big enough to help the economy.

I am always puzzled by Krugman’s complaint. How can he say that the stimulus was too small to have any effects on the economy when only 25 percent of the money has been spent so far? Or does he mean that the money isn’t spent fast enough? If that’s the case, the prescription is to spend faster, not to add spending to the unspent spending. But can the government spend any faster than it does without simply throwing the money out the windows? We know what an embarrassment the stimulus spending has been so far, in spite of the guarantee of oversight and the “no waste” policy.

In any case, the former economist isn’t satisfied with the way things are going. So now he wants an emergency jobs program. Here is his three-step plan: First, give more money to the states so they can keep their overpaid bureaucrats on their payrolls without having to sell any of the public assets that they shouldn’t own in the first place, such as public golf courses, parks, or highways. Especially, Krugman says, don’t fire the teachers because as we all know there is no fat to trim in state budgets before starting to fire teachers, and they are so deserving.

Second, the federal government needs to hire more people. As he puts it, “It’s time for at least a small-scale version of the New Deal’s Works Progress Administration, one that would offer relatively low-paying (but much better than nothing) public-service employment.” And yet, according to David Kennedy, a famous Roosevelt scholar and devotee, “It’s old news that F.D.R.’s New Deal did not end the Depression. On that score, there was little difference between Roosevelt and Herbert Hoover.”

Finally, the government should offer businesses direct incentives for employment. By that, he doesn’t mean an across-the-board payroll tax cut, which would have the instant effect of reducing the cost of current and future employees. Nope, he wants to government to pay businesses to add employees to their payroll.

So in the end, what Krugman wants is to grow the public sector at the state and federal levels. He wants to spend public money and pretend that these dollars fall from the sky and aren’t first confiscated from the private sector. It would be funny if it weren’t so dramatically wrong.

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

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