Krugman: "Trump's Stimulus Plan Is Quack Medicine"... Emphasizes Need for Congressional Agreement

"Payroll Tax Deferral Measures, Hydroxychloroquine of Economic Policy... Presidential Leadership Needed"

[Asia Economy Reporter Jeong Hyunjin] Paul Krugman, a Nobel laureate in economics and professor at the City University of New York, criticized President Donald Trump's additional economic stimulus measures, such as payroll tax deferral, introduced to prevent the recession caused by the novel coronavirus infection (COVID-19), calling them "Quack" prescriptions.

On the 11th (local time), Professor Krugman pointed out in a column contributed to the New York Times (NYT) that "President Trump is prescribing hydroxychloroquine to fight the recession." Hydroxychloroquine is a malaria treatment recommended by President Trump as a COVID-19 treatment, but it has shown no significant effect on COVID-19 treatment and has raised concerns about side effects.

Regarding the executive orders independently proposed by President Trump on the 7th, Professor Krugman evaluated, "Unfortunately, one of them is stupid, one is trivial, one is unworkable, and another could cause considerable harm." Among these, the payroll tax deferral measure was seen as a particularly problematic plan.

Professor Krugman pointed out that the payroll tax deferral is "a rather rough method from a legal perspective" and would have little effect on economic stimulus. Since the federal government is not reducing taxes but merely postponing collection, taxpayers' actual income does not increase. He described the payroll tax deferral as "the hydroxychloroquine of economic policy," but predicted that "President Trump, surrounded by sycophants, will insist on this policy, believing he is right."

Professor Krugman also expressed concern about President Trump's previous tax cut proposals. He said, "President Trump might try to find a way to retroactively cancel tax obligations after winning the November election," warning that "if he does so, it would create a huge hole in programs like Social Security and Medicare."

Professor Krugman emphasized, "The core issue is that we are facing a crisis," and warned that if urgent economic stimulus measures to support the U.S. economy during the COVID-19 situation end without a swift response, private consumption will collapse and the entire economy will fall into recession. He stressed the need for congressional agreement on stimulus measures. He lamented, "Now is the time for presidential leadership," adding, "America is facing a time of crisis but is cursed with an incompetent and ignorant president surrounded by sycophants."