Princeton Professor and New York Times columnist Paul Krugman said President Barack Obama erred by saying Friday that the private sector is "doing fine," but Krugman agreed with the substance of the president's argument that public sector job cuts are hurting the economy.
"That was an unfortunate line," said the Nobel Prize-winning economist Monday on CBS's "This Morning." "The president bungled the line."
"The truth is the private sector is doing better than the public sector, which is not well enough," he said. "The real story of this economy is that cutbacks at the public sector are what's hurting the recovery."
Krugman continued, "By this point in Obama's presidency if we had normal public sector job growth, we'd have 800,000 more people -- firefighters, schoolteachers, police officers. Instead, we've got 600,000 fewer. So right there it's like 1.4 million jobs we should have had in the public sector and of course those would translate into more private sector jobs too -- so that's what he was trying to get at."
"And of course, he screwed up the line."
Obama said Friday that the private sector was "doing fine," in comparison to public sector job cuts. "We've created 4.3 million jobs over the past 27 months. The private sector is doing fine," he said. "Where we’re seeing weaknesses in our economy have to do with state and local government, oftentimes cuts initiated by, you know, governors or mayors who are not getting the kind of help that they have in the past from the federal government and who don’t have the same kind of flexibility of the federal government in dealing with fewer revenues coming in."
Obama's correct about the jobs picture -- the private sector has gained about 4.2 million jobs since early 2010, while 607,000 fewer people work in the public sector since he took office. Mitt Romney and the Republican party jumped on the line, with the former Massachusetts governor blasting Obama for being "out of touch."
Obama later clarified that it's "absolutely clear the economy is not doing fine."
Krugman said a Lehman Brothers-like financial crisis was less likely in Europe than a "nasty recession," which he said was likely already underway and would have a relatively small effect on the U.S.