Tuesday, August 13, 2002

Argentina [NYT]
In fact, the last two times the United States confronted recessions, the Republican administrations then in office did exactly the opposite of what Mr. O'Neill is now telling Argentina to do. When the elder George Bush faced a downturn in 1992 far less severe than Argentina's, the federal deficit rose to nearly 5 percent of gross domestic product; under Ronald Reagan in 1983, deficit spending was more than 5 percent of G.D.P.

At the moment, Argentina's provincial governments are being chastised as especially prodigal. But the Center for Economic and Policy Research in Washington has calculated that the provincial deficits are relatively minor, amounting to only 0.5 percent of G.D.P. in 2000 and 1 percent last year, and may be providing the only real stimulus to the economy.

"In response to a depression, this is not a lot of spending, especially since the central government is not doing anything to alleviate poverty," said Mark Weisbrot, a director of the center. Since the inflation and growth rates in 2001 were negative, as they have been for several years, "that money was a boost to the economy by definition."...

Had Argentina not privatized social security at the urging of the I.M.F., it would actually have shown a budget surplus in recent years. Indeed, according to another study published by the Center for Economic and Policy Research early this year, government spending in Argentina has remained remarkably steady, at about 19 percent of G.D.P. throughout the 1990's.

Unlike economists, the Bush administration remains unwilling to adjust its initial analysis. Administration officials like Otto J. Reich, the assistant secretary of state for Western Hemisphere affairs, continue to argue that the problem is Argentina itself, not the policies that have been imposed on it.

"You shouldn't take Argentina as the failure of a particular model," Mr. Reich said during a news conference here last month. The real problem, in his view, is that "in some countries those policies were implemented properly and in others they were not."

1. The guy in charge of this is named Otto fucking Reich?
2. Let's privatize our Social Security too!

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