Paul Krugman: Obama’s Trickle-Up Economics
Helping working families and the unemployed doesn't hurt the economy:
Obama’s Trickle-Up Economics, by Paul Krugman, NY Times: Only serious nerds like me eagerly await the annual Census Bureau reports on income, poverty and health insurance. But the just-released reports on 2015 justified the anticipation. ...
The reports showed strong progress on three fronts: rapid growth in the incomes of ordinary families — median income rose a remarkable 5.2 percent; a substantial decline in the poverty rate; and a significant further rise in health insurance coverage after 2014’s gains. ...
It’s true that the surge in median income comes after years of disappointment, and even now the typical family’s income, adjusted for inflation, is slightly lower than it was before the financial crisis. But the ... overall performance of the Obama economy has given the lie to much of the criticism leveled at President Obama’s policies. ...
Conservatives predicted disaster from these initiatives. Tax hikes on the rich, they insisted, would stall the economy. Obamacare’s combination of regulation and subsidies, they declared, would kill millions of jobs without increasing the number of Americans with insurance.
What happened instead after Mr. Obama was re-elected was the best job growth since the 1990s. But family incomes ... continued to lag. So there was still some statistical basis for the right’s Obama-bashing. Now that statistical basis is gone. ... And it should (but won’t) finally break the grip of trickle-down ideology on much of our political class.
You know how the argument goes: Any attempt to help working families directly, we’re told, will backfire by hurting the economy as a whole. So we must cut taxes on those “job creators” instead, counting on a rising tide to raise all boats.
It would be an exaggeration to say that the Obama administration has done the reverse, but there definitely was an element of trickle-up economics in its response to the Great Recession: Much of the stimulus involved expanding the social safety net, not just to protect the vulnerable, but to increase purchasing power and sustain demand. And in general Obama-era policies have tried to help families directly, rather than by showering benefits on the rich and hoping that the benefits trickle down.
Now the results of this policy experiment are in, and they’re not bad. They could have been better: The stimulus should have been bigger and more sustained, and Republican opposition hamstrung the administration’s economic policy after the first two years. Still, progressive policies have worked, and the critics of those policies have been proved wrong.
Posted by Mark Thoma on Friday, September 16, 2016 at 10:30 AM in Economics, Policy, Politics |
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