Worse than 1937?

Paul Krugman suggests we’re not only repeating President Roosevelt’s 1937 mistake — by cutting off stimulus before the economy is strong enough to stand up on its own — but doing so in an even worse economic situation:

the stimulus fades out fast starting in fiscal 2011, which starts in October 2010. Yet the consensus view is that unemployment will be around as high as it is now.

The point is that we’re doing a 1937 — or actually worse, since unemployment had in fact fallen dramatically before FDR made his big mistake. Fiscal support for the economy will be pulled away with the economy having barely begun to recover.

A year ago, Krugman insisted, repeatedly, that the proposed stimulus package was too small and that 6 or 12 months later — when it would be obvious we needed more — it would be politically infeasible. Why is this man not in charge of something, President Obama!?!?!

Posted by James on Friday, February 19, 2010