On ABC’s “This Week” yesterday, Nobel Prize winner economist Paul Krugman predicted higher unemployment as result of the deal tea baggers in the House extorted from Pres. Obama over the weekend:
KRUGMAN: From the perspective of a rational person, in other words, a progressive on the stump, we shouldn’t even be talking about spending cuts at all now. We have 9 percent unemployment. These spending cuts are going to worsen unemployment. It’s even going to hurt the long-run fiscal picture because we have a situation where more and more people are becoming permanently long-term unemployed.
And if you have a situation in which you are permanently going to raise the unemployment rate — which is what this is going to do — that’s actually going to reduce future revenues.
These spending cuts are even going to hurt the long-run fiscal position, let alone cause lots of misery. Then on top of that, we’ve got these budget cuts, which are entirely — basically the Republicans [saying], “We’ll blow up the world economy unless you give us exactly what we want” and the president said, “Okay.” That’s what happened…
We used to talk about the Japanese and their lost decade. We’re going to look to them as a role model. They did better than we’re doing. This is going to go on — I have — Nobody I know believes the unemployment rate is going to be below 8 percent at the end of next year. With these spending cuts it might well be above 9 percent at the end of next year. There is no light at the end of this tunnel. We’re having a debate in Washington which is all about, “Gee, we’re going to make this economy worse, but are we going to make it worse on 90 percent the Republicans’ terms or 100 percent the Republicans’ terms?” The answer is 100 percent.