Krugman: Hardly 'Hard-line'
For years now, New York Times columnist Paul Krugman has been writing the same column over and over again with this simple message: austerity bad, spending good. He continues in this vein with "The Chutzpah Caucus." With "Krugman's Still Wrong" at National Review, Michael Tanner of the Cato Institute provides a vigorous counterpoint to Krugman's austerity argument, and in a post at Krugman-in-Wonderland, economics professor William L. Andersen writes: "I'm not sure what Krugman means by claiming that the world is in 'austerity' when national governments across the globe have accelerated spending and especially borrowing." But what I'd like to address is a few of Krugman's "facts"; what he's forever calling "the data":
Keynesian economics says not just that you should run deficits in bad times, but that you should pay down debt in good times. And it's silly to imagine that this will happen, right?
Wrong. The key measure you want to look at is the ratio of debt to G.D.P., which measures the government's fiscal position better than a simple dollar number. And if you look at United States history since World War II, you find that of the 10 presidents who preceded Barack Obama, seven left office with a debt ratio lower than when they came in. Who were the three exceptions? Ronald Reagan and the two George Bushes.
To corroborate Krugman's facts, check out the historical tables at the Office of Management and Budget and click on Table 7.1 -- Federal Debt at the End of Year: 1940-2018. On the right side of the chart is: "As Percentages of GDP." If Krugman is referring to Gross Federal Debt" as a percentage of GDP, then it appears that he's right on this. Therefore, we must conclude that President Obama is in the same league as Reagan and the two Bushes, right?
Wrong. Obama is in a league all by his lonesome. Just look at the run-up in debt under Obama in Table 7.1. At the end of fiscal 2012, debt to GDP was 103.2 percent. That's the first year it's been over one hundred percent since 1947. Krugman continues:
So debt increases that didn't arise either from war or from extraordinary financial crisis are entirely associated with hard-line conservative governments.
Krugman needs to brush up on his history; he's forgetting the Afghanistan, Iraq, Gulf and Cold wars. Also, with the double-digit inflation and interest rates, Reagan inherited a pretty nasty financial crisis. And as for the 2008 financial crisis, that's been over since 2009; so what's Obama's excuse for the exploding debt since?
In addition to the first and last year's debt numbers for each president, Krugman might also look at the internal numbers. If he would, he'd see that in each successive year of Clinton's first term, the debt to GDP percentage went up. Also, over eight years, Clinton had an average debt to GDP of 64.2 percent, whereas George W. Bush had an average of 62.7 percent -- while waging two hot wars. Indeed, Clinton had five years with higher debt to GDP percentages than any of W.'s, except for the last one in fiscal 2008, about which, more, soon. But first we come to the part in Krugman's analyses that is ignorant if not dishonest:
And in America, at least, we have a pretty good record for behaving in a fiscally responsible fashion, with one exception -- namely, the fiscal irresponsibility that prevails when, and only when, hard-line conservatives are in power. [...]
The funny thing is that right now these same hard-line conservatives declare that we must not run deficits in times of economic crisis. Why? Because, they say, politicians won't do the right thing and pay down the debt in good times. And who are these irresponsible politicians they're talking about? Why, themselves.
These last statements would be particularly embarrassing if made by a normal man, but they bring us to the heart of Krugman's Big Lie. You see, presidents aren't responsible for fiscal matters, Congress is. Congress passes budgets and sends them to the president, who only signs or vetoes them. And as for paying down the debt in good times; the only times since 1969 that the public debt has been paid down were from 1998 through 2001, and that's when Republicans ("hard-line conservatives"?) controlled both houses of Congress and were in control of the budget.
The reason that the deficit in 2008 got out of hand might have had something to do with the fact that we were waging two wars in the middle of a raging recession and had a financial crisis, to boot. Given Krugman's own criteria and the debt to GDP ratios in the rest of his tenure, shouldn't these facts earn W. a pass from Krugman? In any event, 2008 was different because it was the first time in 12 years that an all-Democrat Congress had been in control of the budget process. And the first thing the Dems did was set a new record deficit: -$458 billion, according to Table 1.1.
Like the Benghazi terrorist attack, the reality (of the federal debt) doesn't fit the narrative. So change the "reality" to fit the narrative. Krugman and other progressives push the idea that presidents control everything, even the budget, to absolve congressional Democrats of their part in running up the debt. But the president can't spend a dime unless Congress approves it. How dumb does Professor Krugman think Americans are?
Progressives, especially propagandists like Krugman, often say that this or that happened on a president's "watch." Progressives employ this device in order to focus all blame (or all credit) on one person and away from those actually responsible.
If Democrats aren't capable of accepting the responsibility for their trillion-dollar deficits, they shouldn't be in Congress. But they have a champion in Krugman, who from his perch in Princeton absolves them of all guilt. Years ago on a TV talk show, someone said that the younger Bush inherited the recession, and Krugman promptly chimed in that it happened on Bush's watch. (There's your causality, America.)
What's really pathetic about Krugman's narrative here is the "hard-line conservatives" shtick. Certainly Reagan and the two Bushes were "conservative," but "hard-line"? Please. Reagan signed a payroll tax increase that saved Social Security for a generation, and W. got the biggest increase in entitlements since the Great Society with his Medicare prescription drug program. That's hardly "hard-line."
Perhaps the reason Mr. Krugman is so cavalier about debt and the hardship it poses for future generations is because, like Lord Keynes, he is childless. But maybe Krugman's cats are his children.
See also: "Austerity: Krugman's False Message" by Christopher Chantrill
Jon N. Hall is a programmer/analyst from Kansas City.