Wednesday, October 24, 2012

Paul Krugman: Romney Victory Could Mean 'Double-Dip Recession'

If Mitt Romney is elected president, then the economy may experience another recession, according to Paul Krugman.

"I think there's a real chance that he'll manage to pursue a policy in the first couple of years that simultaneously blows up the deficit and depresses the economy," the Nobel Prize-winning economist said on HuffPost Live Wednesday. "Tax cuts for the rich, who won't spend them, and slash spending for the poor and the middle class, who will be forced to cut back. And so we end up managing to have a simultaneous deficit explosion and double-dip recession."

Tax cuts for the rich do not help economic growth, according to two recent studies, and some analyses have found that Romney's proposed tax cuts would help the wealthy the most. Romney also has promised to slash government spending by roughly one-fifth, which economists say would hurt consumer demand. But it is unclear whether Romney would be able to cut government spending so dramatically if Democrats maintain a majority in the Senate.

Krugman said that over the long term, Romney's economic policies could lead to a "depression," saying: "It's the Republican policies that are much more likely to make us end up like Greece."

(More here.)

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