Krugman offers defense of public spending in Obama plan despite his continuing criticism of it

Nobel Prize-winning economist Paul Krugman takes a break from picking apart the Obama economic stimulus plan to pursue his utmost passion: bad-mouthing conservatives.

He criticizes them for criticizing run-away public spending that has not worked with the nation's financial institutions and will not work with the economy. While he maintains the American public favors Obama, I do not believe the American public favor any plan that does not promise immediate and broad results.

The Obama plan does not. Neither does spending another $350 billion on financial institutions still taking receipt of corporate jets such as Citigroup or remodeling offices at $1 million apiece such as the former new head of Merrill Lynch.

History tells us that FDR's New Deal did not work. The Second World War finally rescued the economy after more than eight years of misery. Krugman denies that truth in favor of bashing conservatives. That's good work if you can get it, and you can on the editorial page of The New York Times, but it does not represent much honesty.

Krugman should stick to economic and not politics. The argument between spending and tax cuts is a legitimate one. And conservatives are speaking for me in questioning Obama's plan.

How about no more spending or tax breaks? The companies already are laying off incredile numbers. Let the chips fall where they may and then let's rebuild.

Start by guaranteeing health insurance for every American so they don't die and emergency rooms don't overfill and hospitals go bankrupt. We must have a basic safety net.

Now is time for complete honesty with the American people. And the Democrats have been going out of their way to try and refute a preliminary analysis of the Obama plan by the non-partisan Congressional Budget Office.

It says the plan is a real loser for an economy needing immediate action. Krugman neglects to mention the CBO report. Spending for spending's sake is reckless and allows the Chinese to do with capitalism what they couldn't do with Communism ... vanquish us, hold us hostage.

But here is what Krugman has to write:

First, there’s the bogus talking point that the Obama plan will cost $275,000 per job created. Why is it bogus? Because it involves taking the cost of a plan that will extend over several years, creating millions of jobs each year, and dividing it by the jobs created in just one of those years.

It’s as if an opponent of the school lunch program were to take an estimate of the cost of that program over the next five years, then divide it by the number of lunches provided in just one of those years, and assert that the program was hugely wasteful, because it cost $13 per lunch. (The actual cost of a free school lunch, by the way, is $2.57.)

The true cost per job of the Obama plan will probably be closer to $100,000 than $275,000 — and the net cost will be as little as $60,000 once you take into account the fact that a stronger economy means higher tax receipts.

Next, write off anyone who asserts that it’s always better to cut taxes than to increase government spending because taxpayers, not bureaucrats, are the best judges of how to spend their money.

Here’s how to think about this argument: it implies that we should shut down the air traffic control system. After all, that system is paid for with fees on air tickets — and surely it would be better to let the flying public keep its money rather than hand it over to government bureaucrats. If that would mean lots of midair collisions, hey, stuff happens.

The point is that nobody really believes that a dollar of tax cuts is always better than a dollar of public spending. Meanwhile, it’s clear that when it comes to economic stimulus, public spending provides much more bang for the buck than tax cuts — and therefore costs less per job created (see the previous fraudulent argument) — because a large fraction of any tax cut will simply be saved.

This suggests that public spending rather than tax cuts should be the core of any stimulus plan. But rather than accept that implication, conservatives take refuge in a nonsensical argument against public spending in general.