The Obama-McConnell tax-cut deal will probably pass Congress, with both good and bad elements. Krugman says the deal will boost the economy in the short-term but isn’t addressing the heart of the problem. Highly indebted Americans are paying down their debts and not spending in while others who can spend are not spending more. To solve our nation’s economic problems, the government should be spending more while the private sector is spending less to support employment while debts are being paid down. This is a form of stimulus, which will be expensive but is worth it if it is done well and rights the economy. The tax deal will likely not give the nation much “bang for the buck,” he says, and the country will be having this conversation again in 2012.
Krugman is a New York Times columnist.