Paul Krugman: 'Setting Their Hair on Fire"

From Friday's column here.

First things first: I was favorably surprised by the new Obama jobs plan, which is significantly bolder and better than I expected. It’s not nearly as bold as the plan I’d want in an ideal world. But if it actually became law, it would probably make a significant dent in unemployment.

Of course, it isn’t likely to become law, thanks to G.O.P. opposition. Nor is anything else likely to happen that will do much to help the 14 million Americans out of work. And that is both a tragedy and an outrage. . . .

O.K., about the Obama plan: It calls for about $200 billion in new spending — much of it on things we need in any case, like school repair, transportation networks, and avoiding teacher layoffs — and $240 billion in tax cuts. That may sound like a lot, but it actually isn’t. The lingering effects of the housing bust and the overhang of household debt from the bubble years are creating a roughly $1 trillion per year hole in the U.S. economy, and this plan — which wouldn’t deliver all its benefits in the first year — would fill only part of that hole. And it’s unclear, in particular, how effective the tax cuts would be at boosting spending.

Still, the plan would be a lot better than nothing, and some of its measures, which are specifically aimed at providing incentives for hiring, might produce a relatively large employment bang for the buck. As I said, it’s much bolder and better than I expected. President Obama’s hair may not be on fire, but it’s definitely smoking; clearly and gratifyingly, he does grasp how desperate the jobs situation is.

But his plan isn’t likely to become law, thanks to Republican opposition. . . .

The good news in all this is that by going bigger and bolder than expected, Mr. Obama may finally have set the stage for a political debate about job creation. For, in the end, nothing will be done until the American people demand action.

(Emphasis added.) I've learned a lot by reading Paul Krugman's columns (took one economics course in college). And he's proven himself to be correct vis-à-vis the outcomes of Obama's economic policies (like the stimulus) so far. Krugman fully well understands the obstacles that Obama has faced in Congress but thinks - as most Americans do, even Republicans - that Obama isn't scrappy enough.

Tonight Obama was pretty scrappy.

If he can get the people behind him - and he said he'd go out and take his jobs program to the people - there may be hope for some much-needed legislation. (See here.) (Ezra Klein gives the President "a very solid B+.")

(I recommend reading Krugman's post in its entirety, since he also talks about the Fed and its hair not being on fire about jobs vs. inflation.)

I have to say, I was impressed with what I heard of Obama's speech. (I'll have to go back and read (or watch) the beginning of it.) It was a new, non-wimpish tone for him, almost ridiculing the Republicans' pledges to Grover Norquist (while not naming him by name) never under any circumstances to increase taxes, except for a "carve-out" for payroll taxes.

Obama also alluded to Warren Buffett's recent NYT Op-Ed about his paying less in taxes, as a percentage of income, than his secretary does.

Good for Obama.

(I don't think Chris Matthews made his case in poo-pooing this.)