Tag Archives: deficit reduction

The victory of Paul Krugman

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Paul Krugman - Caricature
Paul Krugman. (Courtesy of DonkeyHotey.)

If ever there were an indication of the influence exerted by Paul Krugman and his intellectual kin, take a look at this:

One day after Republicans rolled out a detailed proposal aimed at eliminating the federal deficit through steep cuts and repealing many of the president’s accomplishments, Mr. Obama told them pointedly in a rare visit that their highest fiscal priority was not his.

“Our biggest problems in the next 10 years are not deficits,” the president said, according to accounts from the meeting, bluntly rejecting an idea that has become Republican fiscal dogma…

Senator Patty Murray, the Washington Democrat and Senate Budget Committee chairwoman who outlined her budget on Wednesday, summed up her party’s objections to Republican austerity measures, which Democrats have said rob the country of needed investment.

“Deficit reduction at the expense of economic growth is doomed to failure,” she said.

Emphases mine. But mostly, Krugman’s.

Another gem from that piece:

“The president seemed to say, ‘If we’re going to do the areas we agree on, you have to also do some of mine,’ ” said Representative James Lankford of Oklahoma, bristling at Mr. Obama’s suggestion. “If we can find the areas we agree on, why can’t we just do those?”

Indeed, Sir Lankford. Why can’t we just enact all the policies that the party who just lost its second straight presidential election wants to implement? It’s truly a modern-day mystery.

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“Pwning” Krugman? Not so much.

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[youtube http://www.youtube.com/watch?v=HOvBkg89a8c]

Andrew Sullivan posted some thoughts — titled “Pwning Krugman” — on the above video:

Still, Scarborough came prepared and clearly prevailed over a Nobel laureate in economics. Not bad for a hack. And he’s dead right about Krugman’s contempt for those with whom he disagrees. It actually weakens his case unnecessarily. And I have to say that over the past five years, I think Krugman has been more right than wrong.

Is Sullivan watching the same video I am? Scarborough not only misrepresented the substance of Krugman’s critique (multiple times, via multiple intentional misreadings of Krugman’s older books), but he seems to have done this deliberately. If he “pwned” Krugman, it’s only in the sense that a Nobel Prize-winning economist doesn’t spend most of his time learning to look good while being consistently wrong on TV. (I should know this: I just saw Krugman speak at a TEDx event a few weeks ago, and he wasn’t any more impressive as a speaker from fifteen feet away as he is on TV.)

What Krugman (oddly enough) didn’t emphasize sufficiently in his exchange with Scarborough is that both of the excerpts from his books came from well before the financial crisis era: 1997 and 2005. Instead, he rather admirably admitted that he had “learned a few things” since that time. This is certainly the case — and, it might be said, contrasts with Sullivan’s depiction of “Krugman’s contempt for those with whom he disagrees.”

(Side note: The New Yorker ran a fascinating profile of Krugman and his wife, the economist Robin Wells, in March 2010. One of the great nuggets from that piece was the revelation that it is Wells, and not Krugman, who tends to write with more vitriol: “On the rare occasion when they disagree about something, she will be the one urging him to be more outraged or recalcitrant.”)

But back to the Krugman/Scarborough debate. In both of the Krugman quotes that Scarborough cites, the crisis was years away. (In the case of the first quote, it was an entire decade away.) As Krugman tried to explain, he wrote about the dangers of the deficit back then precisely because the economy was stronger during those periods. But Scarborough consistently ignored the fact that Krugman has, time and time again, emphasized the foolishness of tackling the deficit during a recovery from a recession. To simply ignore this central qualification of Krugman’s deficit critique is to ignore the entire argument. “Pwning” Krugman? Not in the least.

(UPDATE — 10:51 AM EST 3/6/2013): I’m watching the full debate now. Krugman actually did a substantively much better job of making his point clear — that deficit reduction should be contingent upon a healthier economy — than he did in the brief clip shown above. (He continued to stumble when Scarborough brought up his previous quotes, despite the fact that these words were written during healthier economic times.) Indeed, he seems to have performed much better in the full debate than he even did in that short clip.

One person who agrees with Andrew Sullivan’s depiction of the “pwnage?” Well, Paul Krugman (kinda):

Well, we’ll see how it comes out after editing, but I feel that I just had my Denver debate moment: I was tired, cranky, and unready for the blizzard of misleading factoids and diversionary stuff (In 1997 you said that the aging population was a big problem! When Social Security was founded life expectancy was only 62!) Oh, and I wasn’t prepared for Joe Scarborough’s slipperiness about what he actually advocates (he’s for more spending in the near term? Who knew?)

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On the supercommittee

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For the last week or so, I’ve been reading all over the place about what a colossal failure the Congressional supercommittee has been for failing to reach a deficit deal and, as a consequence, automatically triggering $1.2 trillion of “sequester” cuts. To take one recent example, this week’s Economist stated that “the implications of the committee’s failure are more disturbing than the reaction of the markets has let on” and argued that, going forward, “Congress will be trying to undo the supposedly automatic budget cuts it agreed to only in order to make it impossible for the supercommittee to fail.”

Perhaps this is a naive question, but why is no one floating the possibility that the “failure” of the supercommittee was actually intentional? Or at the very least, semi-intentional. One of the biggest problems with the debt negotiations going all the way back to the debt-ceiling crisis, it seems to me, was that even the members of Congress who wanted to cut a deal felt they didn’t have sufficient political cover to do so. This was especially true on the Republican side, which is facing extraordinary rightward pressures from the Tea Party, Grover Norquist’s cultish no-tax-increases “pledge,” et al.

So then, wouldn’t automatically triggered cuts, in the event of a “failure” to reach a deal, work beautifully for both sides? In that, during months of negotiations, the two parties couldn’t reach any agreement in the traditional sense (writing a deficit-reduction bill and passing it) due to pressures from their respective political bases, instituting the very same type of deal but calling it a “failure” (for which each side can blame the other) is a fancy little way of avoiding criticism by pretending that that the “sequester” cuts were not expected to ever occur. Now, both Republicans and Democrats get to hammer each other for obstructing the deal, but there’s no clear loser — except for the institution of Congress itself, whose approval ratings are, quite frankly, already at rock-bottom anyway. Democrats get to talk about how they’ve cut defense (liberal red meat) and how Obama will veto any attempts to reverse this; Republicans get to crow about taking a step to tackle the deficit (conservative red meat). I wouldn’t necessarily call it a “win-win” situation, but I don’t see how it’s particularly damaging for the parties either. The one “loser” besides Congress in all of this could be Obama, but given the disparity between his approval ratings and those of Congress, it seems the American public has at least a cursory notion of which institution has proved itself so useless for the past couple years.

Am I wrong on this?

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