Paul Krugman, writing in today’s New York Times notes that President Elect Obama is receiving a lot of advice to think small, but Krugman is urging Obama to be bold and think big. He says, “Barack Obama shouldn’t listen to the people trying to scare him into being a do-nothing president. He has the political mandate; he has good economics on his side.”
“Right now, many commentators are urging Mr. Obama to think small,” Krugman writes, “Some make the case on political grounds: America, they say, is still a conservative country, and voters will punish Democrats if they move to the left. Others say that the financial and economic crisis leaves no room for action on, say, health care reform. Let’s hope that Mr. Obama has the good sense to ignore this advice.”
Krugman says if Obama follows through with his mandate — guaranteed health care, tax breaks for the middle class, paid for with higher taxes on the affluent — that, on top of rescuing the financial system, the federal deficit could top one trillion dollars. Regardless, Krugman urges Obama to push forward, and not back down from his promises.
Krugman writes, “Helping the neediest in a time of crisis, through expanded health and unemployment benefits, is the morally right thing to do; it’s also a far more effective form of economic stimulus than cutting the capital gains tax. Providing aid to beleaguered state and local governments, so that they can sustain essential public services, is important for those who depend on those services; it’s also a way to avoid job losses and limit the depth of the economy’s slump. So a serious progressive agenda — call it a new New Deal — isn’t just economically possible, it’s exactly what the economy needs.”