Paul Krugman on Government Handouts

Question: When is a hand up a handout?

Paul Krugman: Oh you can do . . .  Look.  I’ll give you an example of handouts I really disapprove.  The French have . . . Where the French have screwed up, they have essentially made it possible to retire with most of your salary at age 55.  And so everybody drops out at age 55.  And hey, you know, we can’t afford that.  They can’t afford that.  There is . . . it’s not . . .  It’s not such . . .  Our crucial thing it is really becoming a perk.  You know or I can talk about . . . yeah.  I could talk about the . . . the deals given to some government employees in New Jersey who manage to retire with full benefits after 25 years.  And we can’t . . . we can’t afford that.  So those are things.  But the . . . the aid to the poor has never been a large budget item in the United States.  And the idea that this is somehow a terrible thing to help out people in distress, that’s . . .  I’ve never bought into that.

You need some kind of basic program for people in distress.  You know right now we’ve got temporary assistance for needy families which is, I think, too harsh; too cruel a program.  And I would like to have more . . .  You need something . . .  We have the earned income tax credit for low income workers, which is a very good program and I would like to see it substantially bigger.  You need guaranteed health insurance, which is a crucial safety net.  You need some sort of basic guaranteed retirement income, which we have this very good program called Social Security, which fortunately survived the onslaught of the ideologues back in 2005.  You can   . . .  Look the British government under Tony Blair and now Gordon Brown has made a major assault on poverty and inequality.  It’s not one thing you hear very much about in the U.S.  Everybody talks about Blair and the war; but on the domestic front he’s doing a very serious attempt to reduce inequality, and very sensibly.  And it has, in fact, helped people at the bottom.  And it has raised the floor under people’s living standards without doing any harm to the British economy.  So that . . . you can do these things.

Krugman doesn’t believe there’s anything wrong with helping people in distress.

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