Want a holiday downer? Try Paul Krugman. He says the government simply must pump more money into stimulating the economy. And he sounds a warning about devastated state budgets that may, before too long, hit home in Arkansas. Until now, we've been doing better than most, but revenue took a sharp tumble in June and, modest as the forecast for state tax flow is this year, it may not be modest enough.
All of this is depressingly familiar to anyone who has studied economic policy in the 1930s. Once again a Democratic president has pushed through job-creation policies that will mitigate the slump but aren’t aggressive enough to produce a full recovery. Once again much of the stimulus at the federal level is being undone by budget retrenchment at the state and local level.
So have we failed to learn from history, and are we, therefore, doomed to repeat it? Not necessarily — but it’s up to the president and his economic team to ensure that things are different this time. President Obama and his officials need to ramp up their efforts, starting with a plan to make the stimulus bigger.