You probably have to spend $800 billion a year to achieve a full economic recovery. Anything less than $500 billion a year will be much too little to produce an economic turnaround.
Spending on that scale, at a time when the weakening economy is driving down tax collection, will produce some really scary deficit numbers. But the consequences of too much caution — of a failure on your part to do enough to stop the economy’s nose dive — will be even scarier than the coming ocean of red ink.
In fact, the biggest problem you’re going to face as you try to rescue the economy will be finding enough job-creation projects that can be started quickly. Traditional WPA-type programs — spending on roads, government buildings, ports and other infrastructure — are a very effective tool for creating employment. But America probably has less than $150 billion worth of such projects that are “shovel-ready” right now, projects that can be started in six months or less. So you’ll have to be creative: You’ll have to find lots of other ways to push funds into the economy.
As much as possible, you should spend on things of lasting value, things that, like roads and bridges, will make us a richer nation. Upgrade the infrastructure behind the Internet; upgrade the electrical grid; improve information technology in the health care sector, a crucial part of any health care reform. Provide aid to state and local governments, to prevent them from cutting investment spending at precisely the wrong moment. And remember, as you do this, that all this spending does double duty: It serves the future, but it also helps in the present, by providing jobs and income to offset the slump.
The biggest, most important legacy you can leave to the nation will be to give us, finally, what every other advanced nation already has: guaranteed health care for all our citizens. The current crisis has given us an object lesson in the need for universal health care, in two ways. It has highlighted the vulnerability of Americans whose health insurance is tied to jobs that can so easily disappear. And it has made it clear that our current system is bad for business, too — the Big Three automakers wouldn’t be in nearly as much trouble if they weren’t trying to pay the medical bills of their former employees as well as their current workers. You have a mandate for change; the economic crisis has shown just how much the system needs change. So now is the time to pass legislation establishing a system that covers everyone.
What should this system look like? Some progressives insist that we should move immediately to a single-payer system — Medicare for all. Although this would be both the fairest and most efficient way to ensure that all Americans get the health care they need, let’s be frank: Single-payer probably isn’t politically achievable right now, simply because it would represent too great a change. At least at first, Americans who have good private health insurance will be reluctant to trade that insurance for a public program, even if that program will ultimately prove better.
So the thing to do in your first year in office is pass a compromise plan — one that establishes, for the first time, the principle of universal access to care. Your campaign proposals provide the blueprint. Let people keep their private insurance if they choose, subsidize insurance for lower-income families, require that all children be covered, and give everyone the option to buy into a public plan — one that will probably end up being cheaper and better than private insurance. Pass legislation doing all that, and we’ll have universal health coverage up and running by the end of your first term. And that will be an achievement that, like FDR’s creation of Social Security, will permanently change America for the better.
Now on internal evidence alone, I doubt Krugman’s authorship. Would the Paul Krugman we all know and love have really admitted that Obama’s campaign proposals “provide the blueprint” to get us to universal coverage? No, I don’t think so, either. I suspect that Emmanuel, Axelrod and Plouffe had Krugman rendered to Austria and subjected to audiotapes of Hayek and van Mises until Krugman signed the letter they’d written for him.
Still, it makes very nice reading.