Paul Krugman Illustrates Fact Based Economics –

Why Higher Taxes on the Wealthy Are Not Destructive, and Why The Stimulus That Was, Wasn’t

Conservatives argue that they just have to be right, because in their minds their logic is correct and if data, facts and objective analysis does not confirm their logic, the data, facts and objective analysis must be wrong. 

Several examples of the fallacy of Conservative thinking are exposed by Paul Krugman in several posts on his New York Times Blog.  For example, here is a chart that shows investment and profits as a percent of GDP over the past several decades.

Yes, the red line is profits during the business hating term of Mr. Obama

The blue line is fixed investment as a percent of GDP, and OMG it rose dramatically during the Clinton years, when the Feds enacted higher tax on the rich, you know, the so-called ‘job creators’.  So this experience totally contradicts Conservative policy prescriptions about ‘job killing taxes’.  It just ain’t true.

The red line shows corporate profits as a percent of GDP.  Wow, look at what happened in the first term of that socialist, communist, collectivist, anti-capitalist President Obama.  Yes, profits rose tremendously.  No wonder Wall Street hates the President.

This next chart shows government spending as a percent of potential GDP.  Yes it is falling.  Paul's conclusion,

Spending is still elevated a bit relative to pre-crisis — reflecting higher spending on unemployment benefits and food stamps, plus the ongoing pressures of baby-boomer retirement and rising medical costs. But it’s way down from the peak. Yes, we’ve been engaged in austerity — and this is a major reason the recovery has been so weak.

So yes,  the Stimulus was mild indeed and not the failure that its critics claim.  And if higher taxes and lower spending takes place in FY 2013 and beyond, then just like Conservatives claim the U. S. will start to look like Europe.  There the Republican style austerity has claimed as its victims economic growth.  So if the U. S. does implement European style policies urged on by Conservatives then yes, it will get European like results.