Krugman Examines "Obama Gap"

Economist Paul Krugman is warning that the $775 billion Obama economic recovery plan is too heavy on tax cuts, and falls short of the level of public investment needed to get the economy moving.

Paul Krugman: The Obama Gap - NYTimes.com

...Mr. Obama’s prescription doesn’t live up to his diagnosis. The economic plan he’s offering isn’t as strong as his language about the economic threat. In fact, it falls well short of what’s needed.

Bear in mind just how big the U.S. economy is. Given sufficient demand for its output, America would produce more than $30 trillion worth of goods and services over the next two years. But with both consumer spending and business investment plunging, a huge gap is
opening up between what the American economy can produce and what it’s able to sell.

And the Obama plan is nowhere near big enough to fill this “output gap."

...To close a gap of more than $2 trillion — possibly a lot more, if the budget office projections turn out to be too optimistic — Mr. Obama offers a $775 billion plan. And that’s not enough...

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Posted by Chuck Bell at 9:23 AM