. . . when you (almost) agree with Krugman.
He is right about this:
The root of our current troubles lies in the debt American families ran up during the Bush-era housing bubble. Twenty years ago, the average American households debt was 83 percent of its income; by a decade ago, that had crept up to 92 percent; but by late 2007, debts were 130 percent of income.
All this borrowing took place both because banks had abandoned any notion of sound lending and because everyone assumed that house prices would never fall. And then the bubble burst.
What weve been dealing with ever since is a painful process of “deleveraging”: highly indebted Americans not only cant spend the way they used to, theyre having to pay down the debts they ran up in the bubble years.
Congresss new stimulus may not work, then, because were still not dealing with the original problem. Too many people still owe too much money, and the nations financial institutions havent been able to clear out the mess so that we can go on with life.
Heres another problem: Does anyone think that Congress will be able to hold this “one-year” holiday on a portion of Social Security taxes to just one year if unemployment, come Christmas 2011, is still closer to 10 percent than to 5 percent? Politically, its going to be hard for members of either party, ahead of an election, to start taking more cash out of peoples paychecks.
Congress could extend the payroll-tax break for another year that is, to when the Bush tax cuts re-expire. The payroll-tax holiday, then, would be indefinitely tied to the Bush tax cuts, taking us in the wrong direction on entitlement programs.
Original Source: http://www.nationalreview.com/corner/255140/its-never-great-morning-nicole-gelinas