The Corner

Krugman’s Failed Economy

As Ronald Reagan used to say, “there he goes again.” Specifically, Paul Krugman claiming that the economic distress is because “this is already a Republican economy.”

Really? Republican policies would begin with permanent, fundamental, pro-growth tax reform that would also move the code into the 21st century by enhancing competitiveness, dropping the tax on trillions of repatriated earnings, and ending the hostile environment for investment.

Republican spending policies would include permanent reforms to secure the social safety net for the future generations and reverse the threat posed by federal red ink over the next decade. It would not pursue a dangerous policy of defense cuts that promise a hollowing out the U.S. national-security capabilities. And it would include reforms to use more wisely the funding for core functions of government, such as infrastructure, basic research, and education.

That’s not austerity. That’s reform and a sustainable future.

#more#Of course, it’s not enough spending to satisfy Paul Keynesian who is unhappy with Obama’s tight-fisted outlays of 24.1 percent of GDP for the past two years, higher than any level in past 40 years.

Republican polices would not include the mind-numbing array of “timely, targeted, and temporary” Democratic policy failures during the two years that Obama had a rubber-stamp Congress. Of course that includes the (poorly designed) stimulus, and the anti-growth Obamacare and Dodd-Frank. But it also contains the HIRE Act ($13 billion payroll hiring credit, expensing, $4.6 billion for schools and energy), the Small Business Jobs Act of 2010 (replete with a $30 billion mini-TARP), the state and local bailout Public Law 111-226 ($10 billion in education; $16 billion in Medicaid), cash-for-clunkers, and a first-time homebuyer credit. And far from obstructing the president, Republicans acceded to the payroll-tax holiday, its subsequent extension, trade deals, and veterans’ incentives among other initiatives.

Republican policies would not include regular threats to raise taxes, an enormous expansion of the regulatory state, handing auto companies to unions, creating two new bureaucracies (Consumer Financial Protection Bureau, Independent Payment Advisory Board) exempted from congressional funding review and oversight, attempting to block the creation of new aerospace jobs in South Carolina, killing the Keystone pipeline . . . the list goes on.

This is a bad economy. But it’s not a Republican one.

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