Paul Krugman, columnist for The New York Times, is a piece of work. You see, Krugman is always right. And if you don’t agree with him, you’re “crazy.” Krugman begins his July 14 column, “Getting to Crazy”, with this:
“There aren’t many positive aspects to the looming possibility of a U.S. debt default. But there has been, I have to admit, an element of comic relief — of the black-humor variety — in the spectacle of so many people who have been in denial suddenly waking up and smelling the crazy.”
All craziness aside, the only way the United States could default is if President Obama were to deliberately refuse to pay off our bonds. The 14th Amendment, Section 4 forbids Obama from doing this. Obama isn’t going to risk impeachment, is he?
And surely Krugman, our Nobel Prizing-winning celebrity economist, knows that the United States can “print” money. What’s the use of a fiat currency if you can’t print off a few trillion every now and then?
So all this talk of “default” is, uh, crazy. The real worry concerns being backed into the corner and having to “print” more money to make good on our debt. QE2 then becomes QE3 and there’ll be no end to the QE’s. Also, there’s the looming possibility of a credit downgrade. (Kevin Williamson recently wrote a very sobering article for NRO on the repercussions of a credit downgrade.) Anyway, after Krugman gets through his usual invective, he trots out this:
“President Obama has made it clear that he’s willing to sign on to a deficit-reduction deal that consists overwhelmingly of spending cuts, and includes draconian cuts in key social programs, up to and including a rise in the age of Medicare eligibility. These are extraordinary concessions.”
OK, when do these cuts happen? If they don’t happen immediately or in FY2012, they aren’t real, as neither Obama nor Congress have control over anything beyond the next fiscal year. Even if they agree to a budget for FY2013, the next government can override it. The acid test of Obamian seriousness on spending cuts is whether the feds will still be funding NPR, NEA, NEH, cowboy poetry festivals, etc. — in 2012. If cuts are off-loaded to the “out years,” then Obama’s cuts are unenforceable, and won’t correct America’s fiscal death spiral, which is happening now.
Krugman goes on to accuse Republicans of “threatening to force a U.S. default, and create an economic crisis.”
No, that would be President Obama. And he’s waited until this chic late hour to try and resolve the problem but seems incapable of compromise. Why is it that progressives like Krugman think that if two sides in a dispute are at loggerheads that only one side is to blame? Krugman then takes a shot at Reaganomics:
“Supply-side voodoo — which claims that tax cuts pay for themselves and/or that any rise in taxes would lead to economic collapse — has been a powerful force within the G.O.P. ever since Ronald Reagan embraced the concept of the Laffer curve. But the voodoo used to be contained. Reagan himself enacted significant tax increases, offsetting to a considerable extent his initial cuts.”
This is just bad writing — isn’t there an editor at The Times? By “tax cuts” and “rise in taxes,” what Mr. Krugman means is “tax rate cuts” and “rise in tax rates.”
Supply-siders aren’t saying that multiplying by a smaller number produces a larger product. It is apodictic that if you multiply A by B and then you multiply A by C, that the larger of the two products is determined by the larger of B or C. What concerns supply-siders is growing the size of A, which is the economy — B and C are just percentages, as in tax rates. (For subscribers to The Times and those who still take Paul Krugman seriously, “apodictic” means proven, incontestable.)
As for “significant tax increases” under Reagan, this is standard progressive agitprop, and it refers to the payroll tax rate hikes in Reagan’s first term. But in the largest source of revenue to the feds, the personal income tax, Reagan inherited a 70 percent top rate and left office with a 28 percent top rate. Compare that 42 percent cut with the rate hike in the payroll tax. There is no comparison.
Krugman also alleges: “Mr. Bush squandered the surplus of the late Clinton years, yet prominent pundits pretend that the two parties share equal blame for our debt problems.”
The largest deficit for which Republicans were totally responsible was in FY2004 when it hit $412B. The GOP then reduced the deficit to $160B in FY2007 (Table 1.1). But the Democrats are the only party to run trillion-dollar deficits, and this year’s is projected to hit $1.645 trillion. So, “equal blame for our debt problems”? Heavens no, the Democrats are far more to blame for the mess we’re in. Krugman continues with the partisanship:
“First of all, the modern G.O.P. fundamentally does not accept the legitimacy of a Democratic presidency — any Democratic presidency. We saw that under Bill Clinton, and we saw it again as soon as Mr. Obama took office.”
Sheer twaddle. Obama is the most fiscally reckless president ever, and he’s about to ruin the credit rating of the U.S. He took what was a liquidity problem in the financial markets and made it into a question of solvency for the federal government. (If it threatens to ruin the currency, why shouldn’t incompetence be an impeachable offense?)
How did America ever get to the place where trying to cut spending when we’re trillions of dollars in debt can garner accusations of “extremism” and “irresponsibility”? Well, I’ll tell you how: by listening to Paul Krugman. Krugman has for years encouraged Democrats to borrow and spend — he is a principle architect of the federal debt. And now, he can’t address the possibility of fiscal Doom’s Day without getting partisan. Pathetic.
Paul Krugman has resorted to calling people stupid. Now, I wouldn’t call Krugman stupid. But it does seem that Paul Krugman thinks everyone else is stupid.
Jon N. Hall is a programmer/analyst from Kansas City.