Economist Disapproves of Bailout

Nobel Prize-winning economist and acclaimed New York Times columnist Paul R. Krugman presented a sobering forecast for the U.S. economy at the First Parish Church of Cambridge yesterday evening.

In a conversation with Professor David R. Gergen of the Kennedy School, Krugman said that he disapproved of the latest version of a U.S. bank bailout plan scheduled to be announced today.

The plan, Krugman said, was on too small a scale, and would prove little better than “rearranging the deck chairs on the Titanic and then bailing out some water.”

Krugman added that he thought that only a stimulus plan 50 percent bigger than the one proposed by the administration of President Barack Obama could rectify the self-reinforcing nature of the current economic crisis.

To solve the current economic problem, the government must be willing to run up a 40 percent budget deficit, Krugman said.

“The risk of not doing it is greater than running up the debt required to do it,” he said.

Gergen poked fun at the current stimulus bill, stating that the proposal’s approval rating is 20 percent lower than that of Obama himself.

But Krugman’s proposal to increase the stimulus package received applause from the crowd.

“I’m on board,” said Allston resident Dan Burgess. “I just finished Krugman’s book, ‘The Conscience of a Liberal,’ and am swayed by his line of argument.”

Some of the feedback following the event appeared to be breaking down along party lines. Legislative Director of the Harvard College democrats William F. Weingarten ’11 said that he admired Krugman’s economic expertise.

“Paul Krugman exemplifies the best of the liberal economic tradition,” he said. “Even if you disagree with him, you can never doubt that his arguments are based on solid logic and verifiable facts.”

But Harvard Republican Club President Colin J. Motley ’10 said that he disagreed with Krugman’s leftist economic policies.

“Krugman has the wrong idea with respect to the domestic economy,” he said. “Krugman disagrees with Obama and advocates a larger stimulus package, so he is in effect going against the popular opinion.”

Yesterday’s event was co-sponsored by the Cambridge Forum and the Harvard Book Store.