Sunday, January 24, 2010

Krugman Reply

Paul Krugman says it is not the case that Obama Administration pursued Health Care Reform at the cost of attention to Economy. Well, I do not agree. Here are things what could have happened or should have been reasoned:

1. There never was a concrete plan to help Small Businesses as far as Credit goes. It was a natural constituency of Republicans, they would have supported measures to increase credit to small businesses and the jobs picture could have been helped.

2. Krugman mentions about some tax credits for job creation. Clearly Administration did not follow on that.

3. Matthew Yeglesias talked about Germany like 'job sharing' program early on so as not to exasperate reeling job losses. Administration had no intention to follow on that.

4. Again I do not share, but there were plans like Gagnon Plans of increasing liquidity via Fed. Krugman himself lend support for that. Question is what political capital White House spend upon Fed to do this?

5. Krugman should read his fellow columnist Tom Friedman who talks about 'million start-ups'. Did Administration pursue any such plans? I work in Valley and I personally know how so many start ups could be benefited if American Government decided to pick up certain 'equity'. Politically it can be a nightmare, but bringing folks of both parties (since all would have interest in that) and setting up sufficiently independent structure; this could have been pulled off. Administration could have taken help of existing VCs too. Look people did not believe Administration when in early days it pulled off quick bankruptcies of GM and Chrysler; but Administration achieved that. Similarly, it could have pulled off a plan for 'start-ups'; but they did not.

6. Finally, it is Administration's job to be creative here and come up with 'path breaking' plans to generate employment and economy. It cannot say that no such things are specified in Economic Text Books and hence they are going to do Health Care. To argue that exploration of all these means would have been possible while Administration and Congress pursue Health Care Reforms is wrong since Administration failed walk the talk - 'we will do all these things simultaneously'. Once you reject that criticism and still do not do what is needed (job creation and economy); you are free to be irresponsible. That is what this Administration has done.

Krugman or Administration cannot fool American people about the 'bandwidth' of Congress. These guys in Congress barely pull off the regular budget on time and with lot of fits and false starts. Doing 'politics' for everything is what they do. So it would have been wise for Congress and Administration to pursue Job Creation first and then mega projects like Health Care Reform once Economy recovers.

But that is water under the bridge. What matters is even in place of 'job creation'; Administration and Congress could not finish their Health Care Reform. Political selling of that bill was utter failure, Democrats are totally spineless and clueless about the 'governance to complete the ongoing bills' and now we have Administration and Congress with 'eggs' all over their faces.

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