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W21st NYC's List: Krugman
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They might. After all, they blocked out the good news from the Obama era. Two-thirds of Trump voters believe, falsely, that the unemployment rate rose under Obama. (Three-quarters believe George Soros is paying people to protest Mr. Trump.) Only 17 percent of self-identified Republicans are aware that the number of uninsured is at a historic low. Most people thought crime was rising even when it was falling. So maybe they will block out bad news in the Trump years.
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Or to oversimplify things a bit, you can think of European policy as involving a bailout, not of Greece, but of creditor-country banks, with the Greek government simply acting as the middleman — and with the Greek public, which has seen a catastrophic fall in living standards, required to make further sacrifices so that it, too, can contribute funds to that bailout.
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First, we’re now in year eight of a massive setback to economic growth, to living standards; US per capita GDP has barely surpassed 2007 levels, while median income is still far below, and Europe is doing much worse. Technology hasn’t retrogressed; institutions haven’t suddenly gotten far worse. This is about the business cycle, and about business cycle policy. If you want to ignore all that, because in the long run it’s the fundamentals that matter, you’re exactly the kind of person Keynes was mocking:
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The question is how much Greece will transfer to its creditors by running primary surpluses — and yes, at this point that’s the question, there’s no possibility that the creditors will transfer more resources to Greece.
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But as Matt Klein points out — and as I pointed out around a year ago, after a similar CBO projection — there’s a funny thing about that projected rise in the deficit: it’s not about rising entitlement spending or any of the usual things the VSPs want to cut. It’s based on an assumption that interest payments will rise.
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