Krugman Letter to Obama_1

Krugman Letter to Obama_1 - Nobel Prize winning economist,...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Nobel Prize winning economist, Paul Krugman, offers advice for the new administration. A Letter to the new president. What Obama must do. Dear Mr. President: Like FDR three-quarters of a century ago, you're taking charge at a moment when all the old certainties have vanished, all the conventional wisdom been proved wrong. We're not living in a world you or anyone else expected to see. Many presidents have to deal with crises, but very few have been forced to deal from Day One with a crisis on the scale America now faces. So, what should you do? In this letter I won't try to offer advice about everything. For the most part I'll stick to economics, or matters that bear on economics. I'll also focus on things I think you can or should achieve in your first year in office. The extent to which your administration succeeds or fails will depend, to a large extent, on what happens in the first year - and above all, on whether you manage to get a grip on the current economic crisis. The Economic Crisis How bad is the economic outlook? Worse than almost anyone imagined. The economic growth of the Bush years, such as it was, was fueled by an explosion of private debt; now credit markets are in disarray, businesses and consumers are pulling back and the economy is in free-fall. What we're facing, in essence, is a yawning job gap. The U.S. economy needs to add more than a million jobs a year just to keep up with a growing population. Even before the crisis, job growth under Bush averaged only 800,000 a year - and over the past year, instead of gaining a million-plus jobs, we lost 2 million. Today we're continuing to lose jobs at the rate of a half million a month. There's nothing in either the data or the underlying situation to suggest that the plunge in employment will slow anytime soon, which means that by late this year we could be 10 million or more jobs short of where we should be. This, in turn, would mean an unemployment rate of more than nine percent. Add in those who aren't counted in the standard rate because they've given up looking for work, plus those forced to take part- time jobs when they want to work full-time, and we're probably looking at a real-world unemployment rate of around 15 percent - more than 20 million Americans frustrated in their efforts to find work. The human cost of a slump that severe would be enormous. The Center on Budget and Policy Priorities, a nonpartisan research group that analyzes government programs, recently estimated the effects of a rise in the unemployment rate to nine percent - a worst-case scenario that now seems all too likely. So what will happen if unemployment
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
rises to nine percent or more? As many as 10 million middle-class Americans would be pushed into poverty, and another 6 million would be pushed into "deep poverty," the severe deprivation that happens when your income is less than half the poverty level. Many of the Americans losing their jobs would lose their health insurance too, worsening
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 10

Krugman Letter to Obama_1 - Nobel Prize winning economist,...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online