Krugman – another classic column

. . . [T]here 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.

A number of commentators seem shocked at how unreasonable Republicans are being. “Has the G.O.P. gone insane?” they ask.

Why, yes, it has. But this [is] the culmination of a process that’s been going on for decades. . . . And may I say to those suddenly agonizing over the mental health of one of our two major parties: People like you bear some responsibility for that party’s current state.

Let’s talk for a minute about what Republican leaders are rejecting.

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. . . .

Yet Republicans are saying no. Indeed, they’re threatening to force a U.S. default, and create an economic crisis, unless they get a completely one-sided deal. And this was entirely predictable.

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.

As a result, Republicans are automatically against anything the president wants, even if they have supported similar proposals in the past. Mitt Romney’s health care plan became a tyrannical assault on American freedom when put in place by that man in the White House. And the same logic applies to the proposed debt deals.

. . . If a Republican president had managed to extract the kind of concessions on Medicare and Social Security that Mr. Obama is offering, it would have been considered a conservative triumph. But when those concessions come attached to minor increases in revenue, and more important, when they come from a Democratic president, the proposals become unacceptable plans to tax the life out of the U.S. economy.

Beyond that, voodoo economics has taken over the G.O.P.

[E]ven the administration of former President George W. Bush refrained from making extravagant claims about tax-cut magic, at least in part for fear that making such claims would raise questions about the administration’s seriousness.

Recently, however, all restraint has vanished — indeed, it has been driven out of the party. Last year Mitch McConnell, the Senate minority leader, asserted that the Bush tax cuts actually increased revenue — a claim completely at odds with the evidence — and also declared that this was “the view of virtually every Republican on that subject.” And it’s true: even Mr. Romney, widely regarded as the most sensible of the contenders for the 2012 presidential nomination, has endorsed the view that tax cuts can actually reduce the deficit.

Which brings me to the culpability of those who are only now facing up to the G.O.P.’s craziness.

Here’s the point: those within the G.O.P. who had misgivings about the embrace of tax-cut fanaticism might have made a stronger stand if there had been any indication that such fanaticism came with a price, if outsiders had been willing to condemn those who took irresponsible positions.

But there has been no such price. 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. Paul Ryan, the chairman of the House Budget Committee, proposed a supposed deficit-reduction plan that included huge tax cuts for corporations and the wealthy, then received an award for fiscal responsibility.

So there has been no pressure on the G.O.P. to show any kind of responsibility, or even rationality — and sure enough, it has gone off the deep end.

If you’re surprised, that means that you were part of the problem.

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11 Responses to Krugman – another classic column

  1. KB Keynes says:

    Nicholas,

    I am amazes at the popularity of Austerity economics being expansionary for an economy.

    All the evidence is that Keynes was correct Austerity only works in good times and makes things worse in bad times yet this concept seems to be gaining in popularity.

    do you have a reason for this at all?

  2. Nicholas Gruen says:

    Austerity can be good in bad times – more austerity would have been good in the 1970s. The main time that austerity is bad is when you’re in a liquidity trap (or, as we showed, when you need to stimulate the economy really fast).

    My psychological insights are no better qualified than anyone else’s, but I guess I’ve come to the conclusion that certain things are hard wired into the human psyche. One is that tariffs are a good thing. It really doesn’t matter how much you explain why they’re not, 70 percent of the population will not only think that you’re wrong, if given the choice (as for instance they were in 1975 and 1993) they’ll vote that you’re wrong.

    As a believer in democracy it pains me to say it but the art of trade liberalisation is the art of so structuring one’s politics and one’s economic institutions that the public doesn’t get the chance to vote directly on the matter. That’s what we’ve done in moneteary policy and why I’m such a strong supporter of doing the same in fiscal policy. Often against those who seem to think that more ‘democratic’ fiscal policy will be better than more technocratic fiscal policy. As I argued here, the evidence points strongly in the opposite direction (And I’m still hoping Matt will respond.)

    By the same token it’s disastrous in a liquidity trap for the public to be the decision maker on whether to ‘hunker down’ – get the government to tighten its belt just like they are (what an exquisitely mangled analogy that is!) – or to reflate and stimulate.

    I’d also say that charismatic persuasion is also important. Hawke, Keating, Reagan and Thatcher all had this. Howard had it too, but mostly on cultural matters. If you’ve got that, and you get into power and have a bit of luck you can turn things around. I think had Hawke and Keating engineered the fiscal stimulus we wouldn’t have heard the end of it. Every week they’d come out and tell us how many more people would be unemployed if we’d followed the Coalition ‘back down the time tunnel’. They would have defended the Education spending (funny isn’t it, they probably wouldn’t have given it the hallucinatory name – “Building the Education Revolution” – hallucinations have a habit of being exposed as mirages) and in so doing they would have won the argument. The alternative – which is what we are presented with now, is the idea that the ALP Govt is hopelessly spendthrift – a ridiculous proposition – at least in comparison with the last 2/3rds of the previous government’s reign.

  3. KB Keynes says:

    Thanks Nicholas, only onw objection the 1970s were mostly good times which meant Austerity would have worked and should have been implemented.

  4. Mr Denmore says:

    Has anyone seen the parallel between the Republicans’ obstinacy and wilful obstructionism and the Abbott strategy here? Just as the Republicans/Tea Party have refused to recognize the legitimacy of the Obama administration, the Opposition parties here do not, and have never, accepted the Gillard minority government. In fact, Labor has helped this along by behaving as if it is in Opposition. They forever buy into Abbott’s framing and play a defensive game. Their lousy communication skills were shown up the other night by Keating, who put the economic case for the carbon tax in a couple of pithy sentences. And they spend their lives running away from the fiscal stimulus after basically accepting dishonest coverage by the Murdoch papers and the ABC. We seem to have found ourselves in a stage of post-truth politics where no lie is big enough. It’s frankly disturbing.

  5. observa says:

    “Has anyone seen the parallel between the Republicans’ obstinacy and wilful obstructionism and the Abbott strategy here?”

    Yes. Between Obama and Gillard, black women everywhere must be thanking their lucky stars Condolleeza Rice preceded them both and Abbott agrees wholeheartedly with them.

  6. Mr Denmore says:

    Oh yes! Abbott, friend of underprivileged black women. How could I forget?

  7. Benjamin says:

    How has the far right crazy managed to make such an impact? Is the middle mute?

  8. Mr Denmore says:

    Benjamin – one word: media

  9. Patrick says:

    Wow, it’s all the Republican’s fault.

    Whilst it is hard to judge how everyone has gone before the act is over, I probably would have taken the $4trn cuts against $800m tax raises. But I am happy to wait and see what they do take.

    And one can hardly be Paul Krugman with a straight face – Obama didn’t seem to realise that there was a deficit until , oh, two weeks ago. His most recent budget entailed roughly $&àtrn increase in the deficit, not a reduction.

    So the Republicans may be mad, but the other guys are stupid/delusional…not sure there is a compelling case to be stupid or delusional or both instead of crazy.

  10. wizofaus says:

    Patrick, curious – what makes you so sure that increasing the deficit is not the least of all evils at this stage?

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