With everything else going on this week, I wonder if the biggest thing isn’t the fact that congressional Democrats greeted the president’s call for new stimulus spending by telling him, in so many words, to go jump in a lake. Not that their response was surprising or that they had much choice, mind you. Going into a tough election, with Republicans dead set against doing anything, politically it doesn’t seem remotely realistic. But it’s of a piece with the move in international economics circles to say that the time for anti-recessionary spending is over and it’s time for retrenchment.
It all looks a lot like President Roosevelt’s decision to go with the belt-tighteners which tipped the US back into a severe economic downturn in 1937.
As many of you know, Krugman’s been banging this drum for some time.