Donald Trump Embraces Paul Krugman’s Economic Plan

One of the clear dividing lines between liberals and conservatives is the efficacy of government stimulus spending to jumpstart economic activity. The liberal, Keynesian, perspective is best exemplified in the modern era by Obama’s stimulus spending, both large scale public works and the smaller “cash for clunkers” program. This, in the view of most analysts, ballooned the federal debt and did little to nothing to actually “create or save” jobs. In fact, much like FDRs WPA, etc., a strong case can be made that Obama’s actions have dragged out the recession for years.

Beyond the economic distortion, there is the problem of debt. You can’t borrow money for large scale stimulus spending without paying it back… with interest. Conservatives, at least rhetorically, have been in favor of reducing the national debt (this is not the same as the deficit which is a whole different subject) because it reduces interest payments and allows for tax cuts or spending on actual goods and services.

Put into perspective, we spend more on interest on the national debt that we do on the US Marine Corps and the US Air Force combined. We spend nearly as much on the debt as we do on the US Army.

Nevertheless, many voices on the left, like Paul Krugman, insist we need a huge infusion of money into infrastructure spending to fix things:

Friday’s employment report was a major disappointment: only 38,000 jobs added, a big step down from the more than 200,000 a month average since January 2013. Special factors, notably the Verizon strike, explain part of the bad news, and in any case job growth is a noisy series, so you shouldn’t make too much of one month’s data. Still, all the evidence points to slowing growth. It’s not a recession, at least not yet, but it is definitely a pause in the economy’s progress.
…
For the simplest, most effective answer to a downturn would be fiscal stimulus — preferably government spending on much-needed infrastructure, but maybe also temporary tax cuts for lower- and middle-income households, who would spend the money. Infrastructure spending makes especially good sense given the federal government’s incredibly low borrowing costs: The interest rate on inflation-protected bonds is barely above zero.

But unless the coming election delivers Democratic control of the House, which is unlikely, Republicans would almost surely block anything along those lines. Partly, this would reflect ideology: although right-wing economic predictions have been utterly wrong, there’s little indication that anyone in that camp has learned from the experience. It would also reflect an unwillingness to do anything that might help a Democrat in the White House. Remember, every Republican in the House voted against a stimulus even during the darkest days of the slump, when Mr. Obama was at the peak of his popularity.

Now we find that Krugman doesn’t have to count on Hillary winning the White House. Donald Trump has embraced the same policy and the same logic. I posted a little while ago that Trump’s infrastructure plan looked like it had been pilfered from Maryland Democrat Congressman John Delaney, now it looks like it came from Obama’s White House:

Trump on paying for infrastructure: “So you’d be paying so little interest right now. This is the time to borrow.” pic.twitter.com/V5FGR0a9a7

— Sopan Deb (@SopanDeb) August 11, 2016

We can argue the merits of the plan until the cows come home, but the fact that Trump has embraced a key liberal Democrat idea, should give anyone who is still under the illusion that Trump harbors any conservative instincts pause.

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