Film-maker stands against Krugman: Paul Krugman starts his new column in hopeful fashion.
We assume that Krugman is right on the substance all through today’s column. But in our view, he is dreaming a dream in this opening passage—or perhaps he’s simply making a category error:
KRUGMAN (11/26/12): These are difficult times for the deficit scolds who have dominated policy discussion for almost three years. One could almost feel sorry for them, if it weren’t for their role in diverting attention from the ongoing problem of inadequate recovery, and thereby helping to perpetuate catastrophically high unemployment.We assume Krugman is right on the substance—and he discusses a fair amount of substance in today’s column. But good God! If he thinks the deficit-scold movement is losing its political clout, he should probably watch the tape of yesterday’s Meet the Press.
What has changed? For one thing, the crisis they predicted keeps not happening. Far from fleeing U.S. debt, investors have continued to pile in, driving interest rates to historical lows. Beyond that, suddenly the clear and present danger to the American economy isn’t that we’ll fail to reduce the deficit enough; it is, instead, that we’ll reduce the deficit too much. For that’s what the “fiscal cliff” — better described as the austerity bomb — is all about: the tax hikes and spending cuts scheduled to kick in at the end of this year are precisely not what we want to see happen in a still-depressed economy.
Given these realities, the deficit-scold movement has lost some of its clout...
David Gregory had assembled a six-member pundit panel. All six seemed to be spouting the talking-points of the deficit-scold movement. To our ear, this included Al Sharpton—and for unknown reasons, it even included film-maker Ken Burns.
Why was Burns part of a panel about the fiscal cliff? We have no idea. To our ear, he seemed to have no idea what he was talking about when budget issues were discussed.
But Burns did seem to know all the scripts which drive the fiscal-scold movement. Just so you’ll know, the “Carly” to whom he swears allegiance in this first Q-and-A is Fiorina, not Simon.
Are the deficit scolds losing steam? Someone forgot to tell Burns:
GREGORY (11/25/12): Ken Burns, David [Brooks]’s colleague, Tom Friedman, wrote a column recently and I put a portion of it on the screen because I think it gets to the leadership challenge for Obama, what he’s got to do to really apply leverage on Capitol Hill. Tom Friedman writes this: "I get why the president needs to stress that the wealthy will have to pay higher taxes before he can go to the base for spending cuts to restore long-term fiscal balance, but here’s what I hope we’ll see more from the president. A sense of excitement, a sense that if we can just get this grand bargain done, we can really unlock roads again. If everyone has to take their castor oil, the rich more, the middle class some, make them feel that it will enable us to all get stronger, make them feel that we are embarking on a new journey not to punish but to solve. Not to sock it to the successful but to create more abundance for all." A sense of some civic duty.Presumably, Burns meant to say that the spending cuts were going to be really painful. But there he was, the inventor of twee, stressing agreement with Fiorina and repeating the standard points about the need to stop kicking the can down the road and the need for Obama to lead us toward spending cuts which were going to be really painful.
BURNS: That’s right. Not kicking the can down the road which is very easy. You can see all the ways that can happen. I agree with Carly. As someone who just came out of witness protection along with Big Bird since the first debate, breathing a sigh of relief, but we know the pain is going to be distributed. And I think that’s the important part and what he has to do is lead in that regard.
You have to insist on keeping the campaign promises but you also have to figure out where you’re going to make the revenue [sic] cuts. And that’s going to be really painful, but it’s true. There is some clear sailing on the other side of that that permits us to have some flexibility, kind of flexibility we have not had in an awfully long time.
Did Burns know what he was talking about? To our ear, he showed no sign of having a clue about the budget issues under discussion—but he did seem to know all the scripts.
Eventually, Burns engaged in a second Q-and-A concerning the fiscal cliff. In this exchange, he states solidarity with David Cote, the Honeywell CEO who served on the Bowles-Simpson commission:
GREGORY: Ken, I want to get you in on this in this way, which is how does Speaker Boehner`s threat this week to bring health care into all of this affect it all? This is what he wrote in an op-ed on Wednesday about putting health care on the table. They still want to repeal it. As was the case before the election, he writes: "Obamacare has to go. We can’t afford it. We can’t afford to leave it intact. That’s why I’ve been clear that the law has to stay on the table as both parties discuss ways to solve our nation's massive debt challenge. Congress has a constitutional responsibility to conduct thorough oversight of the executive branch, and congressional oversight will play a critical role in repealing Obamacare going forward."We're all just so self-indulgent!
They didn’t defeat it legislatively. They haven’t defeated it in the court. This is going to be their last chance, presumably.
BURNS: This is a little bit of red meat, still, back to the constituency, but I think the deal has to get done. The demographics are there from the last election. They have to make the point. I think what Cote was saying, too, about you’ve got all these independent free agents. We’re—we’re a culture now that’s so indulgent. You know, we fantasize about apocalyptic things. We’re—we have secession movements, fads coming up. We’ve got all this stuff going on.
And what I think this is about is about process. It’s getting down to the deal. You have to give a clear path for the Republicans to say yes, as you’ve suggested, David [Brooks], and you have to get it done.
Now, he’s going to posture every once in a while. The president has to posture to his base. But in the end, you’re going to have to sit down and make a deal. That's how this government works. Anything else short of it is not the way this government works. And we've spent too long frozen in some other kind of independent free agency where everybody gets to be their own talking head.
Clearly, Burns had nothing whatever to say about the fiscal cliff. But he seemed to agree with everyone else: We absolutely must make a deal. And the pain must be shared.
Why was the mop-top on this show discussing fiscal issues? Why did he agree to take part, since it’s obvious he had nothing to say about these matters?
We can’t answer those questions. But while we assume that Krugman is right on the substance, we’ll guess he’s totally wrong on the politics. The fiscal scolds are still ruling the world, as Burns’ empty-headed script-reading seemed to show.
Gregory had six different panelists in this discussion. To our ear, all six were reciting a uniform set of scripts.
Later, Burns threw in a few race plays. This might have given us liberals the sense that our interests were being represented on yesterday’s panel.
Sorry. Liberal interests were not represented by this know-nothing seeker of corporate funds, who should have been dragged off by the lobe of his ear and made to stand in a corner. Race complaints are the (very) small price that is paid to keep us rubes on board.
Burns played that role on yesterday’s show—but he agreed with “Carly” on the obvious need for shared pain. Obama needs to lead us to a deal! He needs to do so right now!
Carly said it—and Ken agreed! In our view, the deficit scolds were in firm control as consent was manufactured on yesterday’s Meet the Press.
Greg Sargent watched the same program: Greg Sargent also saw the gang in rapt agreement, especially when they all agreed about the obvious meaning of "Lincoln."
Wealth and power were in control on yesterday morning's Meet the Press. Dearest darlings, it takes big (corporate) bucks to make those PBS films!
Bob's political analysis is independenat of whether or not Krugman is right on substance. But, it should be noted that some prominent economists disagree with Krugman.ReplyDelete
E.g., when Bush was running a $400 billion deficit -- less than half of today's -- a prominent economist said that Bush was irresponsible. "We have a world-class budget deficit," he said, "not just as in absolute terms, of course -- it's the biggest budget deficit in the history of the world -- but it's a budget deficit that, as a share of GDP, is right up there."
This economist called the deficit "comparable to the worst we've ever seen in this country. ... The only time postwar that the United States has had anything like these deficits is the middle Reagan years, and that was with unemployment close to 10 percent." Take away the Social Security surplus spent by the government, he said, and "we're running at a deficit of more than 6 percent of GDP, and that is unprecedented."
Who was this deficit-scold economist? Paul Krugman.
Is it inconsistent to tell people to put on a coat in the winter but not to wear it in the summer?Delete
What might be right in one situation can be very, very wrong in another, David in Cal.
Simply put, Krugman argues that the deficit should be reduced during an economic boom, but it is foolish to do so during an economic depression. If you want to know why, Krugman explains it in his books, columns, and blog posts.
The scolds, by the way, are those who want you to wear that coat in the middle of the summer.
What don't you (or your linked writer) get about the difference between 8% unemployment and 5% unemployment?Delete
Whether Krugman has always been right is, of course, quite irrelevant -- except to you, whose existence is defined by seeking apparent (but usually not real) discrepancies in people like Krugman.
Mysterion & urban legend:Delete
Why feed the trolls?
Further for Dav in Cal -- stomping on the brakes when you should be stomping on the accelerator is not leadership.Delete
I agree, Please don't feed the trolls it only encourages them. A reaction is what they are after.Delete
I watched about 20 minutes of Meet the Press yesterday, when the panel of deficit scolds began their BS I could take it no longer and hit stop and then delete. It was disgusting, I thought Ken Burns made an absolute fool of himself. The whole thing was a disgrace.ReplyDelete
An Arizona negotiation expert recommends that President Obama play a waiting game.ReplyDelete
He maintains that Obama would lose more by negotiating than forcing the hand of the doomsayers that have been predicting a catastrophe. A catastrophe that Krugman says is not happening.
OTOH, James Kwak says if saving entitlement is more important than fighting the recession, Obama is better off doing nothing.
A few Republican leaders say they will violate the oath to Norquist if Obama agrees to cuts in entitlements.
Obama would be foolish to buy into this, as any cuts will be known for all eternity as the Obama cuts to Social Security and Medicare.
It'a a trap that I am pretty sure the President sees. At least I HOPE he sees it.
gravymeister, I agree with you from a political POV. However, from an actuarial POV the entitlements are unsustainable. They're unaffordable long-term in their present forms.ReplyDelete
I wish Mr. Obama would behave like a stateman and cut the entitlements simply because it's necessary to do so. Were he to do that, I think in a few years it would be recognized that more cuts are needed. The "Obama cuts" in Medicare and SS would come be regarded as moderate actions.
SS is NOT unsustainable -- so you're just a liar on that one.Delete
For the other so-called "entitlements" sustainability *is* in question for exactly one reason -- health care costs.
It's not Medicare and/or Medicaid that's unsustainable -- it's the US healthcare system.
"Filmmaker stands against Krugman"ReplyDelete
Poor, poor, Bob. Rupert Pupkin in a blogger suit.
Shorter 9:14 -- I hate Somerby, but have nothing to say.Delete
"However, from an actuarial POV the entitlements are unsustainable. They're unaffordable long-term in their present forms. "ReplyDelete
Who's talking long term? The problem is you shouldn't cut spending in the midst of an economic downturn as you are suggesting.
And if you are going to cut spending there are much better places to do it.
But the better action on Social Security is to remove the cap on payroll taxes.
Yes, as a general theoretical rule you shouldn't cut spending during an economic downturn. (More precisely, you shouldn't cut the deficit during a downturn. A spending cut combined with a tax cut would be OK in Keynesian theory.)Delete
However, there are reasons to think that this general rule isn't an appropriate guide right now.
1. We may not be in an economic downturn. Today's lousy economic may be the new normal, given all the anti-business steps taken by the Obama Administration.
2. It's not clear that high government spending really cures a downturn. FDR, Bush, and Obama all had stimulus programs. None of them worked.
3. We cannot afford the current deficit going forward. Borrowing and printing trillions of dollars will lead to disaster. This article explains the seriousness of our current deficit spending
Then cut the bloated Defense budget, end the drug war, shut down the pork-laden Homeland Security Department, and go after the contractors who scammed the Treasury in Iraq.Delete
What other existential problem can I solve for you in 10 seconds using common sense?
Also, your 1, 2 and 3 are all your own opinion...Delete
And you're wrong in each case:
1 - We ARE in a downturn,
2 - FDR and Obama stimulus programs DID work to reduce unemployment below the rates it would otherwise have been. A notable economic failure of FDR's term, for example, was not the stimulus but the austerity,
3 - the US budget deficit is not the serious problem you and your GOP theorists bruit. People who have been correct about recent economic history disagree strongly.
More easy wisdom wasted on a troll.
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