Monday, July 9, 2012

New way to blame the 1960s

Robert Samuelson has found a new way to blame today's ills on the 1960s.
Wondering why government can’t restart the sluggish economy? Well, one reason is that we are still paying the price for the greatest blunder in domestic policy since World War II. This occurred a half-century ago and helps explain today’s policy paralysis. The history — largely unrecognized — is worth recalling.

Until the 1960s, Americans generally believed in low inflation and balanced budgets. President John Kennedy shared the consensus but was persuaded to change his mind. His economic advisers argued that, through deficit spending and modest increases in inflation, government could raise economic growth, lower unemployment and smooth business cycles.

None of this proved true; all of it led to grief.
Samuelson is so focused on the 1960s that he seems to overlook the fact that the budget was in balance in the late 1990s and thrown back into deficit in the 2000s through the profligacy of the Bush administration, whose fiscal policies were neatly summed up by Vice President Cheney--"deficits don't matter."