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Over at the Center for Economic and Policy Research's Beat the Press, Dean Baker writes Robert Samuelson Is in the Dark:

It must be great to be a columnist for the Washington Post. You get to rewrite the same columns week after week. You never have to pay attention to facts and data or even make sure that you accurately present the arguments you criticize. Hence we have Robert Samuelson telling us this morning that "economists are in the dark."

Of course he is in large part right. Given its colossal failure in recognizing the risks of the housing bubble it would be reasonable for every university to shut down its economics program, recognizing that it has about as much use as a department of astrology. But Samuelson is shooting blanks when he tells us that Keynesian economics has been proven a failure by the downturn.

This conclusion is surely controversial because many economists attribute the weak recovery to misguided austerity, especially in Europe. Just follow the advice of John Maynard Keynes (1883-1946), they say. When the economy suffers a massive drop in private spending, government should offset the loss by increasing its budget deficits. Europe’s budget cuts were too aggressive, they say, while U.S. "stimulus" policies were not aggressive enough.

Perhaps history will vindicate this appeal to Keynesianism. Or perhaps not. The fact is that the United States did respond aggressively under both George W. Bush and Barack Obama. It certainly didn’t embrace austerity. Federal budgets ran massive deficits — $6.2 trillion worth from 2008 to 2013, averaging 6.4 percent of the economy (gross domestic product). Nothing like this had occurred since World War II. Yet, the economy limped along. Why wasn’t this enough?

Yes, well we have to keep Robert Samuelson away from the really big numbers, he might hurt himself. The reason it wasn't enough is because the shortfall in demand created by the collapse of the housing bubble was even bigger, as some of us yelled at the time. The loss in residential construction was around 4 percentage points of GDP. The loss in consumption due to the loss of housing bubble generated wealth was also around 4 percentage points of GDP. Throw in another 1 percentage point each for the reduction in state and local government spending and non-residential construction and you're up to 10 percentage points of GDP, that comes to almost 1.7 trillion in today's economy.

Blast from the Past. At Daily Kos on this date in 2011Gov. Scott blasted on high-speed rail funds. Gov. Brown says money 'welcome here':

Florida editorial writers and some fellow Republicans are giving newly elected Gov. Rick Scott a thrashing over what can only fairly be described as his loony rejection of federal funding for the first leg of a high-speed rail line that backers hoped would eventually connect Tampa with Miami via Orlando. On the heels of Scott's incomprehensible decision, newly elected Democratic Gov. Jerry Brown says he's eager to see some of that Florida HSR money redirected to California, which has already received more money than any state for its ambitious 800-mile line.

One key Florida Republican, chairman of the House Committee on Transportation and Infrastructure John Mica, expressed dismay that he had been unable to sway Scott from rejecting the HSR funds, a decision he said (being charitable) "defies logic." Many Republican state legislators also are irked. In fact, a veto-proof majority of the Florida Senate is asking the federal government to give the state the $2.4 billion in HSR money even though the governor doesn't want it.

Tweet of the Day:

The State wants every aspect of our lives to be transparent.

To them we say, "You first!"

On today's Kagro in the Morning show, Greg Dworkin rounds up some wacky news, including the death of a snake handling preacher, and how Donald Trump, unable to fire a reporter he doesn't like, has fired his press aide instead. Bill Nye "debates" Marsha Blackburn on climate change. Nick Kristof complains about jargon, but I couldn't understand it. The Dunn trial down in Florida, the vagaries of fire-at-will laws, and the latest GunFAIL stories, and a wider look at the curious place guns occupy in our politics (and pseudo-politics). Not unlike the curious place wealth occupies in the same space. Maybe it's all just part of neo-feudalism?

High Impact Posts. Top Comments. Overnight News Digest.

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