Krugman: The Feds Could Take Action To Help Unemployed. Bernstein: Not Gonna Happen!
Paul Krugman, who’s been pushing for government intervention all along (this video is from 2009) points out that our so-called “leadership” on both sides of the aisle is missing in action on policies that might actually help the unemployed : So there are policies we could be pursuing to bring unemployment down. These policies would be unorthodox — but so are the economic problems we face. And those who warn about the risks of action must explain why these risks should worry us more than the certainty of continued mass suffering if we do nothing. In pointing out that we could be doing much more about unemployment, I recognize, of course, the political obstacles to actually pursuing any of the policies that might work. In the United States, in particular, any effort to tackle unemployment will run into a stone wall of Republican opposition. Yet that’s not a reason to stop talking about the issue. In fact, looking back at my own writings over the past year or so, it’s clear that I too have sinned: political realism is all very well, but I have said far too little about what we really should be doing to deal with our most important problem. As I see it, policy makers are sinking into a condition of learned helplessness on the jobs issue: the more they fail to do anything about the problem, the more they convince themselves that there’s nothing they could do. And those of us who know better should be doing all we can to break that vicious circle. Dave Dayen has some thoughts on the response to Krugman’s column by Jared Bernstein, the liberal economist who recently left Joe Biden’s policy team. Bernstein says it was the White House, not the Republicans, who would not consider any kind of direct jobs program. He also says the White House was concerned about the political drawbacks of the “wrong” type of people getting a mortgage modification: Now, the most interesting thing about this is that the Obama Administration, through federal regulators, are RIGHT NOW attempting to negotiate a program of mortgage modification with the country’s major banks, as part of the foreclosure fraud settlement. This raises very troubling issues about what the eligibility would look like on that deal. Clearly, the White House is preoccupied with the “right” type of person getting help; Obama has mentioned this on several occasions. Yet who is that “right” type of person when the banks have engaged in systematic fraud? They didn’t just defraud those deserving of aid, whatever “deserving” means; they defrauded everyone, with their fake documents and breaking of the chain of title and fee pyramiding and the like. There’s no way to slice the salami at this point, and divy up the “deserving” from the “undeserving” of a mortgage modification. That simply doesn’t make sense in this case. However, it is driving the thinking inside Washington, and will almost certainly be a preoccupation with any settlement (if there even is one at this point). That makes a settlement even less valuable. Bernstein adds that “there are ways outside of federal legislation to encourage principal write-downs” and that he will write about them later. Maybe he’s talking about federal and state enforcement actions. But the same artificial constraints of Tea Party rhetoric about deadbeat borrowers applies there as well. And instead of attacking that ludicrous constraint, Bernstein accepts it. Or rather, he reports that his former bosses in Washington and policymakers on the Hill have accepted it. Good to know.
Krugman: The Feds Could Take Action To Help Unemployed. Bernstein: Not Gonna Happen!
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on May 31, 2011. Filed under