Absence of Evidence for the Pain Caucus Case
links for 2010-08-03

Less to Expansionary Fiscal Policy than Meets the Eye...

Hey, Small Spender - Paul Krugman Blog - NYTimes.com

From Paul Krugman:

Hey, Small Spender : What’s going on here? Basically, the Obama stimulus didn’t contain a lot of public works — and those works, such as they are, have only partially come on line. Meanwhile, aid to state and local governments wasn’t enough to prevent substantial cuts. So by this measure [of government purchases of goods and services], government spending has gone nowhere.

Now, the picture looks a little different if you look at all government spending, a number that includes Social Security, Medicare, and other transfer payments.... As best as I can tell, the main cause of the rise in total spending is a surge in spending on safety net programs, which are spending more because more people are in distress. Unemployment insurance alone seems to account for almost half the rise. In short, the giant increases in government spending we keep hearing about are a myth; if there had been more truth to that myth, the economy wouldn’t be as depressed as it is.