Krugman, a liberal cheerleader when preaching from his perch at the New York Times, has truly outdone himself with a recent column.
The man could not be more of a drooling, sycophantic shill for Obama if this was Obama's run for 8th Grade Class President and he sought to be in charge of the campaign.
by Paul Krugman
(* Ed. Note -- apparently there was a typo in the NYT headline. I've fixed it.)
Quotes, with observations in the footnotes:
- President Obama’s new budget represents a huge break, not just with the policies of the past eight years, but with policy trends over the past 30 years.1
- The stimulus bill that Congress passed may have been too weak and too focused on tax cuts.2
- The administration’s refusal to get tough on the banks may be deeply disappointing.3
- For this budget allocates $634 billion over the next decade for health reform.4
- On another front, it’s also heartening to see that the budget projects $645 billion in revenues5 from the sale of emission allowances.6
- the Obama administration is signaling that it’s ready to take on climate change.7
- Many will ask whether Mr. Obama can actually pull off the deficit reduction he promises. Can he actually reduce the red ink from $1.75 trillion this year to less than a third as much in 2013? Yes, he can.8
- Bear in mind that from 2005 to 2007, that is, in the three years before the crisis, the federal deficit averaged only $243 billion a year.9
- getting the deficit down to around $500 billion by 2013 shouldn’t be at all difficult.10
- According to the Obama administration’s budget projections, the ratio of federal debt to G.D.P., a widely used measure of the government’s financial position, will soar over the next few years, then more or less stabilize. But this stability will be achieved at a debt-to-G.D.P. ratio of around 60 percent.11
- Furthermore, the Obama budget only tells us about the next 10 years. That’s an improvement on Bush-era budgets, which looked only 5 years ahead.12
- I at least find it hard to see how the federal government can meet its long-term obligations without some tax increases on the middle class.13
- But I don’t blame Mr. Obama for leaving some big questions unanswered in this budget. There’s only so much long-run thinking the political system can handle in the midst of a severe crisis.14
1 You know, with, like, things that have historically, and repeatedly, worked. Such as the fact that tax cuts stimulate the economy and within a few years increase receipts. No other government action has proven itself so remarkably, consistently, effective.
But few things hack off the Dems and the Left more than the fact that Reagan was correct about that. Except, perhaps, for the fact that JFK held the same view. So Obama is breaking with that tradition of success, and instead is trying lots of new things that are slight shifts on things which have been tried many times in the past, and not worked. Compare, e.g., Jimmy Carter.
2 No competent economist has claimed that there are too many tax cuts in this porkfest of a bill. This, of course, automatically excludes Paul Krugman, at least when he's wearing his New York Times hat--where he's often careless about facts.
3 Because, after all, taking over 35% of Citigroup, and most of AIG, well, that's just not going far enough. Nationalization and all being such a reliable solution to "the real problems" of failing institutions in the past. Just look at how the UK did with nationalizing its industries in the 1960s, and how it led to the UK's (cough) massive economic expansion during the 1970s. And look how well Amtrak has done in making passenger rail so profitable for the USA.
4 What does "health care" five and more years from now have to do with an "emergency stimulus bill"? This budget "is not just about economic recovery, it's about pursuing left-wing social policy through the confiscation and redistribution of wealth." And I'm not even going to make a detailed listing of the kind of failures becoming more and more associated with Canadian and British "Universal Coverage." But Krugman loves it, so spending a fortune must be good.
5 "Revenues"? A/k/a taxes. Taxes that get passed on to the average citizen in the form of higher producer prices, utility bills, reduced output, etc.
6 As for "emission allowances", see note 4. How are we going to pay for that? Further, when your electric bills jump, will you blame Obama or your power provider? If you complained to the President, how would he respond?:
a) "Wait, now, think about this. . . This is a direct consequence of those emission controls we set up with your support" or b) "We need to go after those greedy Power Companies!"7 Europe isn't. Neither is China or India. And don't be too sure about support from Democrats. In any event, it's telling that Krugman, and Obama, talk about "taking on" weather rather than terrorism.
8 No, he can't. The money he's counting as revenue simply isn't there, as the Wall Street Journal detailed. Indeed, that article used 2006 income, not post-downturn income, which obviously will be substantially lower for all quinitiles. And this year's deficit will be larger than Krugman assumes.
9 Krugman's "average" hides the fact that for the past few years, the Federal budget deficit had been declining until the credit crunch first surfaced in 2007. The increased deficit, and decline in incomes, in the first years of the Bush Administration, was a product of 2000-2003 recession and the 9/11 attacks, as even Krugman's employer the New York Times conceded.
10 Yes it will. There's something absurdly hypocritical about labeling a plan that doubles the annual deficit "very, very good" and "an improvement on Bush-era budgets." As a side point, the total debt (not deficit, the entire debt) went over 500 billion for the first time in 1975. I don't have to approve of the fiscal discipline of the Bush Administration--and much more so its Democratic and GOP-lead Congresses--but surely a deficit twice as large as Bush's isn't obviously an improvement.
11 Krugman doesn't say where this number comes from. The total US Debt is (as I write) $10.9 Trillion. The US GDP in 2008 was $14.3 Trillion. So the current figure is 10.9/14.3 or 76 percent Got that? It's already over 60%, and would have to drop significantly to reach that level. Plus the economy is certainly going to continue its severe downturn in 2009, which means that percentage is going to go up, not down. So the deficit will rise in 2010, 2011, and so on. We'll be lucky to see 60% inside of 15 years (or 30 years if we truly tackle Social Security)--because, among other things, an effort to pay down that much debt quickly would further damage the economy. Krugman appears to rely on made up numbers.
12 Oh, yeah, because 10-year plans are so practical and reliable in this day and age. A 10-year plan at the start of Bush's admin would have been ignorant of 9/11, the succeeding Iraq War, and the 2007 downturn. Obviously, all three events would have totally invalidated the successive years' projections. Five years is about as far forward as one can make a useful projection, and even there, it's almost certainly rendered obsolete within 2-3 years. That doesn't mean it's a complete waste of time to make 5 year projections, because some advance thinking does pay off. But nothing projected 7-10 years from now is going to be worth jack. Vague plans rather than detailed budgets, are all that's worth doing for that second five years. The probability of at least one substantial course-altering event occurring in any five-year period approaches 100%.
13 Oh, by all means, then, agree with Obama and increase long-term obligations by at least 5%, which is the effect of heath care "reform"--i.e., socialized medicine--alone. That's a great idea!!
14 Uh, pardon me, but doesn't it make far, far more sense that the "long term thinking" regarding this crisis should focus more on the crisis, rather than upon attaching thousands of earmarks to a pork-laden "stimulus package", one third of which won't even get paid out within the next 2 years? How is that going to "stimulate" anyone but the cronies that got Obama elected? Is "hope" and "change" just classic Chicago Machine-style politics?: "Hey, Lou! I got this phat job fer ya. I just wanted to say thanks for gettin' me that key district!"
(NOfP contributed some of the post's links)