Paul Krugman, economist and New York Times op-ed columnist, wrote a column today entitled “Let’s Not Be Civil.” He loves President Obama’s deficit reduction plan, which would essentially raise taxes on the so-called “wealthy,” cut Medicare funding for seniors by a half trillion dollars to pay for Obamacare, and rely on unspecified savings.
Krugman hates Rep. Paul Ryan’s deficit reduction plan, which proposes long-term restructuring of major entitlement programs like Medicare and Medicaid, elimination of tax loopholes for the well-connected like President Obama’s buddies at General Electric and the lowering of income tax rates across the board for all Americans. Krugman urges the Democrats opposing the Ryan plan not to be civil or try to reach a bi-partisan agreement with Republicans, whom he accuses of intellectual dishonesty.
Krugman cites the consulting firm Macroeconomics Advisers’ criticism of the Heritage Foundation analysis underpinning the Ryan plan. Krugman has faith in the intellectual honesty of Macroeconomics Advisers because it
makes its living telling businesses what they need to know, not telling politicians what they want to hear
If Krugman had a decent track record in offering sensible economic policy prescriptions for the country, then maybe we can forgive his obvious political biases and respect the fact that he did after all win the Nobel Prize for economics. However, the wisdom Krugman may possess as an academician is entirely lacking when he enters the arena of public policy debates. Moreover, he is the one who is intellectually dishonest.
The basic point is that the recession of 2001 wasn’t a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.
Realizing by 2009 how embarrassing his “housing bubble” recommendation turned out to be, he tried to deny that what he had written was one of his usual pieces of policy advocacy and said it was “just economic analysis.” For now on, Krugman’s op-ed articles should come with a disclaimer.
Krugman has a habit of trying to re-characterize or even deny what he had said in earlier pieces he wrote when, as often was the case, he was proven wrong by real world events. During a spirited debate with Bill O’Reilly on “Meet The Press” (8/7/2004), for example, O’Reilly pointed out how wrong Krugman had been in saying that the Bush tax cuts were going to be disastrous for the economy. Krugman denied he had ever said such a thing and called O’Reilly a liar. And then, when O’Reilly refused to back down, Krugman admitted:
I said the tax cuts were not going to be effective at creating jobs… this was not the kind of stimulus program that was going to be effective.
What are the facts? At the same point in the George W. Bush and Barack Obama presidencies, the unemployment rate was 5.8% in March 2003 and 8.8% in March 2011 respectively.
By February 2004 – the year of the Krugman-O’Reilly confrontation – the unemployment rate was 5.6 percent, the lowest in two years and below the average of the 1980s (7.3 percent) and ’90s (5.8 percent).
And what did Macroeconomics Advisers, the consulting firm whose opinion Krugman seems to respect so much when it serves his needs, say about the Bush tax cut program in 2002? Macroeconomics Advisers’ president described the tax package as
a remarkably well-timed application of counter-cyclical fiscal policy
Macroeconomics Advisers also had some positive things to say about the Obama stimulus program in terms of providing some net boost to the economy, although it called the program “messy and inefficient.” It said that the stimulus was a “’bridge’” not long enough to reach a sustainable recovery” and warned against sunsetting the Bush tax cuts unless the economy is already booming.
Krugman is guilty of what he often accuses his adversaries of doing – cherry picking whatever fits into his ideological straight-jacket. Moreover, he doesn’t have the intellectual honesty to admit when he is wrong. Either he denies ever saying what turned out to be wrong or he tries to revise its meaning in hindsight.
To find out how Krugman rewrites his latest column after events prove him wrong once again, we may have to wait a couple of years.
Joseph Klein is the author of a recent book entitled Lethal Engagement: Barack Hussein Obama, the United Nations and Radical Islam