Nobel Prize-winning economist Paul Krugman used some of President Barack Obama’s language on Friday in describing the spending cuts the president signed into effect.
While the federal sequester isn’t as bad as the “fiscal cliff” debate that tied up Congress and the White House at the end of 2012, Krugman told MSNBC host Ed Schultz, “it’s bad, and of course, it’s degrading government services. Not only are cuts the wrong thing to be doing right now, but these are especially dumb cuts.”
Before making them official, Obama called the cuts “dumb” and “arbitrary” following a meeting with GOP and Democratic party leaders. A report that 700,000 jobs would be lost on account of the spending cuts, Krugman said, was conservative, given the effects of similar cuts across Europe.
“This was designed to be stupid,” Krugman said. “The whole point was, this was supposed to be a doomsday device that would force the [Democratic and Republican] parties to reach an agreement. Of course, they didn’t, and here it goes.”
While the effect of the spending cuts would take time to manifest, Krugman told Schultz, they would definitely be felt by late 2013.
“This is exactly what the doctor did not order,” he said.
While the spending cuts were conceived as a fix for the federal deficit, Krugman said, this was not the time to implement that kind of measure. Instead, he said, the government should be taking advantage of low interest rates and a high number of unemployed construction workers to invest in infrastructure and education.
“What kind of spending would it take to keep us on the track that we’re on right now?” Schultz asked, noting a continued pattern of private sector job growth despite Republican resistance to a new jobs bill since the stimulus package of 2009.
“If we would just stop cutting, the growth would probably keep going,” Krugman answered. “If spending had grown as fast in this recovery as it has in past recoveries, we’d be spending something like $200 billion a year — state, local and federal — more, maybe $300 billion a year more. Maybe $300 billion a year more. We’d have about a million and a half more public sector workers than we do right now, because we’ve been laying them off at [an] unprecedented pace. So, I think $300 billion a year of additional spending would be appropriate and would mean, if we did it, that we would be pretty close to full employment at this point.”
Watch Krugman discuss the spending cuts with Schultz, aired Friday on MSNBC, below.