Tonight’s NewsHour debate between me and Robert Reich was about the role of Keynesian fiscal policy in the context of the today’s budget agreement. Reich was not supportive of the agreement because it precluded another stimulus package which, in his view, would create jobs. I was supportive because it was a start on budget consolidation path to restore sound fiscal policy which would reduce uncertainty over the exploding debt and thereby create investment and jobs. I think Jeffrey Brown gave us both a chance to make our case and provide historical evidence on what works and what doesn’t.
Such historical evidence will certainly play a role in the upcoming debates about the role of government in the economy. In this regard I see that Paul Krugman is on the attack again, this time about an article I wrote in the Wall Street Journal. Here is the paragraph from my article he criticizes following the pull out quote from Richard S. Grossman which he links to.
“With lessons learned from the century’s tougher decades, including the Great Depression of the ’30s and the Great Inflation of the ’70s, America entered a period of unprecedented economic stability and growth in the ’80s and ’90s. Not only was job growth amazingly strong—44 million jobs were created during those expansions—it was a more stable and sustained growth period than ever before in American history.”
So what’s the problem?