American Morning, February 6, 2009

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CHETRY: All right. Well, still ahead, the he mother of the octuplets speaking out for the first time. A lot of people just fascinated with this case. We're going to explain why she says she felt compelled to more than double the size of her already large family. And Cuba off limits to American tourists. President Obama could change all of that, but is the tiny nation even ready for the potential flood of visitors? We'll find out when the "Most News in the Morning" comes right back. It's 24 minutes after the hour.

ROBERTS: Welcome back to the Most News in the Morning. The Senate is scrambling to get a recovery package to the president's desk. My next guest says the time for economic shock and awe is now. Paul Krugman is a professor of economics and international affairs at Princeton University's Woodrow Wilson School. He's also the author of "The Return of Depression Economics." Also the most recent winner of the Nobel Prize in Economics. Paul Krugman joins us now from Washington. Paul, it's great to see you this morning. You know, when talking about the stimulus package that's before the Senate now, you say that you agree with "Financial Times" columnist Martin Wolf who called it too small, too wasteful and too ill-focused. Can you sort of explain that a little more? What do you think needs to change?

PAUL KRUGMAN, ECON. PROF., WOODROW WILSON SCHOOL, PRINCETON UNIV.: OK, I mean, we're almost certainly going to be back for a second installment, this is not big enough. We're looking at it probably $2.5 trillion shortfall in spending in this economy and even a $900 billion package is not going to be enough to, you know, it will mitigate but it isn't really enough to deal with it. So it's too small. It's too wasteful. There seems in there especially the business tax cuts are just basically zero bang for the buck. There's a substantial part of it that was there to win some more senators over, but doesn't do much. And it's, you know, I'm not so much on the ill focused. I think it's 70, 80 percent of the stuff is exactly what we should be doing and then there are some other stuff that isn't very good. But you know, -- but look, it's a whole lot better than nothing. That's a whole lot better than the Republican plan which was more of Bush.

ROBERTS: Although, of course, in recent days John McCain said better no bill than this bill. What do you think about that statement?

KRUGMAN: That's totally -- these are scary times. We are in, if you look at the basic structure, what's been happening, it does look like the beginning of the Great Depression. Twenty-first century version of it, but it's got enough parallels that you got to act and you got to act strongly because if we don't, this downturn could not only be very severe but it can get entrenched. We can get caught in a trap. So, hit it hard with a big plan now.

ROBERTS: Yes. I mean, you're talking a recent editorial about the attitude in Washington. Let me just pull a quote from that.


ROBERTS: You say, "Somehow Washington has lost any sense of what's at stake -- over (ph) the reality that we may be falling into an economic abyss and that if we do, it will be very hard to get out again." I mean, if you could be up there on Capitol Hill talking to all of these people, what would you say to them?

KRUGMAN: I'd say look, you know, you're playing games. You're picking out small items in this bill and saying oh, isn't that silly when the conversation particularly in the Senate, the last few days has been as if this was an ordinary year where it was all theater, you could just play politics. And, you know, this is really, really frightening. The economy, this is the most frightening thing I've seen in my lifetime in the economy, and you cannot - we have to act. We have to do something. Doing nothing is really not an option right now.

ROBERTS: Let me just back up and get you to elaborate on that. You just said, "It's the most frightening thing that you have ever seen in the economy." Can you elaborate a bit?

KRUGMAN: Sure. We've had severe recessions before but those recessions were more or less understandable. They were more or less created. We had a severe recession in the early '80s, because the Federal Reserve wanted a recession to curve inflation. This is a situation that's out of control. The Federal Reserve, which is our normal guardian against recessions, has put its pedal to the metal. The interest rate is zero and the economy is still in a freefall. So this is something that is just sliding. It's the whole world that's caught up in it, and it's the kind of slump that we know both from Japan ten years ago and from the 1930s, the kind of slump that can dig itself in, that can become something that just doesn't go away.

ROBERTS: Wow. Strong language this morning from Paul Krugman. Paul, it's good to see you this morning. Thanks for coming in.

KRUGMAN: Thank you.

CHETRY: 7:30 right now here in New York, and perhaps an illustration of what Paul Krugman was just talking about. We're getting the latest government jobs report in about an hour from now. And economists that have been surveyed by are predicting right now around 540,000 jobs will be lost, and this is January alone. Unemployment right now already at a 15-year high from retail, banking, manufacturing. Companies across the board are shedding jobs and putting a freeze on new hires. Russia agreeing to help the United States deliver nonmilitary cargo to Afghanistan. Russia's foreign -- Moscow's foreign minister saying that his country will cooperate with the United States getting much needed goods to NATO troops on the ground. Washington was facing a possible setback after a U.S. base closed in Kyrgyzstan after Russia agreed -- until Russia agreed to step in and help. And Olympic swimmer Michael Phelps has been suspended now for three months by USA Swimming. He also got his training stipend revoked during that time. It comes after the infamous picture of him allegedly smoking pot made the rounds in tabloids across the world. Kellogg's Cereal also pulling its endorsement deal with the Olympic champion. The mother of octuplets under fire this morning for more than doubling the size of her already large family and she's speaking out in an exclusive with NBC's Ann Curry. Nadya Suleman talked about her childhood and what led her to have the decision to have so many more children. Alina Cho has been following this story for us. You know, a lot of people not only wondering why she would do it but why the doctors involved would say it was OK.

Originally broadcast, 2.6.09