Krugman: America is heading for a "lost decade"

The economist repeats his grim forecast for a budget deal based on spending cuts

Published August 1, 2011 12:02PM (EDT)

Paul Krugman
Paul Krugman

Speaking at a roundtable on ABC's "This Week" on Sunday, New York Times columnist and economist, Paul Krugman repeated his long-held position, that we should not slash spending while the economy is depressed.

"The worst thing you can do in these circumstances is slash government spending, since that will depress the economy even further," he wrote in the Times Sunday, with a sentiment echoed during his Sunday show appearance.

Before party leaders Sunday night announced a debt ceiling deal that is "all spending cuts," as House Speaker John Boehner described it, Krugman offered a grim analysis. He predicted that unemployment would rise again to nine percent again and that America will experience economic consequences comparable to Japan's "lost decade," (when an economic program of frugality hindered recovery from an asset bubble collapse in the 1990s).

Krugman criticized the debt negotiations:

Basically the Republicans said we'll blow up the world economy unless you give us exactly what we want, and the President said OK. That's what happened. . . . We're having a debate in Washington which is all about, "we're going to make this economy worse, but are we going to make it worse on 90 percent of the Republican’s terms or 10o percent of the Republican’s terms?" And the answer is 100 percent.

Watch Krugman's appearance below, including a brief spat with conservative columnist, George Will:


By Natasha Lennard

Natasha Lennard is an assistant news editor at Salon, covering non-electoral politics, general news and rabble-rousing. Follow her on Twitter @natashalennard, email

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