Here’s the narrative you hear everywhere: President Obama has presided over a huge expansion of government, but unemployment has remained high. And this proves that government spending can’t create jobs.
Here’s what you need to know: The whole story is a myth. There never was a big expansion of government spending. In fact, that has been the key problem with economic policy in the Obama years: we never had the kind of fiscal expansion that might have created the millions of jobs we need.
So much, in Krugman’s view, for the Tea Party cry of “stop the spending!” In fact, Krugman argues, we need to START the spending (and investment – not the same thing as pure “spending”), because so far, other than tax cuts, it hasn’t really started in a big way.
