According to the New York Times, the GOP’s big win last night “Stirs Economic Jitters Abroad.” Yes, that’s right: our former paper of record reports that “the United States’ allies overseas are concerned that the political upheaval in Washington may pose fresh challenges to the global economy.”
Why is that? Because they are not following the neo-Keynesian playbook favored by the Times’s chief galactic economist Paul Krugman. For months now, Krugman has been skirling that the government, having spent more than $1 trillion on a non-stimulating stimulus package, wasn’t spending enough to achieve economic lift-off, let alone escape velocity. Spend spend spend! — that is Krugman’s mantra.
At least, it’s the first verse. The second goes: “Tax tax tax.” And here we have some folks — really quite a few: count ’em Nancy! — who think government should be smaller, that government should spend less, that the best way to address the deficit and to create jobs is to stimulate economic growth, and that the tried and true way to do that, as old Uncle Milt Friedman reminded us many years ago, is to cut marginal tax rates and reduce burdensome regulation, because — are you following me, Paul? — by doing that you unfetter economic activity, encouraging business to expand.
But here we have the New York Times, in its best hand-wringing mode:
“Despite pledges to curb government spending and the huge U.S. budget deficit, Republicans are expected to address anxiety over unemployment and flagging growth by pushing hardest for an extension of the income tax cuts for everyone, including the rich [!] that were passed during the presidency of George W. Bush — a move that would add to the deficit and, by extension, further weaken the U.S. dollar.”
Don’t you love it? “Including the rich,” i.e., the people who actually create the wealth the rest of us profit by. Not, I hasten to add, that by “rich” Obama seems “rich” — for him almost anyone with a middle-class income qualifies as rich, but then when he travels to India at a cost of $200 million a day, he isn’t picking up the tab.
More worries from the Times: “There is also the risk that Congress, which will be divided next year between Republican control of the House and a fragile Democratic majority in the Senate, will dissolve into gridlock.” You mean they might not be able to, you know, do anything? After the incontinent absence of gridlock these last 18 months, when the Obama administration rammed obscene, and obscenely expensive, health care legislation down the throats of the American people, despite widespread and ferocious opposition, a little “gridlock” might not be such a bad thing. Which would you rather have: cap & trade or gridlock? I know which I would choose.
The Times is right to worry about the sorry condition of the dollar, which has fallen some 15 percent against Europe’s fantasy currency, the euro, since June. But the dollar is depressed because of Obama’s anti-growth (and, incidentally, anti-American) policies.