Deficits Saved the World. But How?
Paul Krugman marshals up some evidence to show that our ability to sustain -- and tolerance to run -- big deficits in 2008 and 2009 pretty much saved the world. These deficits, he says, were "mainly the result of automatic stabilizers rather than discretionary policy."
"Automatic stabilizers" is wonk-speak for policies that kick in automatically during a recession. Medicaid is a good example: When people lose their jobs, they lose their income and suddenly become eligible for Medicaid. Thus, they get help, and the government spends more, automatically. But I'd really like to see a breakdown of how much of the increase in government spending was driven by existing programs that swelled to fit the moment -- those "automatic stabilizers" -- and how much was the product of the Federal Reserve's spending increases and the stimulus package and the Treasury's efforts. Anyone know where to find that data?
July 15, 2009; 12:00 PM ET
Categories: Financial Crisis , Solutions
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