In the US, Stimulate Demand by Reversing Local Austerity

Paul Krugman for Krugman & Co. @ Truthout - One question that arises when we talk about the possibility of reversing the disastrous push for austerity runs something like this: “O.K., you say you want more government spending, but what should it spend money on?” The truth is that I think the perceived lack of shovel-ready projects in the United States was overstated even in 2009, but it was a real concern.

The point I want to make is that matters now are actually a lot easier: we could get a fairly big fiscal bang just by resuming aid to state and local governments, which would allow them to reverse the big cuts they have recently made.  Read more.