The Debt Hostage Crisis And Paul Krugman’s Political Naiveté

Krugman's Impression of Thomas Friedman

It seems like people lose track of reality pretty easily these days. The reason why we were forced into negotiating with the terrorist Republicans is that they threatened to run our economy off a cliff — unless President Obama acquiesced to their demands. It truly was a hostage situation and Republicans pretty much admitted it. People lost sight of that fact throughout the process and somehow morphed it into a budget fight, as if President Obama welcomed it. This whole mess was forced on him and there was no easy way out.

What were President Obama’s options? From what I know about it, he could either deal with the Republicans and try to get a “compromise” from the hostage takers or he could invoke the 14th Amendment to the constitution and raise it himself. The 14th Amendment option has some issues attached to it, however…

Obama would be greatly extending his executive powers and setting a new precedent, which would have a host of potential ramifications. Furthermore, Obama’s administration officials do not believe that the fourteenth amendment grants the president that power, and elsewhere the Constitution grants Congress the sole authority over borrowing money.

Now I know that isn’t a concern to those who have a vision of the President as a dictator, which ironically comes from the left these days, but thankfully President Obama understands the ramifications of taking that drastic step. Personally, I wish he had done it, but I’m extreme.

There is a third option as well. The President could have let the U.S. AND world economy crash into the ground, pointing fingers the entire time at those dastardly Republicans and repeating “it’s their fault, it’s their fault” — as the country scratched its collective head and wondered why the President didn’t stop it. I don’t think that was ever considered as an option, but it certainly has been hanging over the situation like a stench. I’m glad our president has the best interests of all people in mind when making big decisions like this.

When I read and hear the people on the left screaming about “caving” and “folding” and all sorts of other dramatic characterizations, I can’t help but wonder how they would have handled the negotiations with the hostage takers. They never seem to say how the president should have done it differently, but they speak with such confidence that what the President did was wrong. As you’ll see below, Paul Krugman makes an attempt at answering that question. I take some credit for asking him in the comments of his blog.

The critics on the left frequently say things like “he should tell them” or ” he needs to be more forceful” or “he should just demand that they…” and all of those statements say to me that these people have no fucking clue. “Saying” and “demanding” things is all well and good, but what happens when the person you are making the demands to has fingers in their ears, mumbling “I can’t hear you, na na na na, na”. Then what?

Paul Krugman provides a perfect example of the irrationality of many on the left when it comes to politics. I respect Paul Krugman for his Keynesian economic ideas, but as a political pundit, not so much. Over the last few years, weeks, and days — he has proven to me that his skills in the ways of Washington politics are less than stellar. Here are some snippets from recent blog posts by Krugman. In this one, he embraces the wisdom of Bruce Bartlett, hmmmm….

No time to do any original posting tonight. But for those who missed the first time I linked to it, here’s Bruce Bartlett — an economic adviser to Ronald Reagan — explaining why Obama is indeed a moderate conservative in practical terms.

When you follow the link, Bartlett attempts to force the current situation into a historical model, playing the game of “historical false equivalencies” that many pundits like to do, especially with previous elections from 30 or 40 years ago. Krugman, in a later post, excerpted a large portion of Bartlett’s “wisdom”. The interesting thing to me about Krugman’s embrace of Bruce Bartlett is that Bartlett was one of the architects of Ronald Reagan’s supply-side economics. I shit you not. Bartlett even wrote the book “Reaganomics: Supply-Side Economics in Action” and co-authored the book “The Supply-Side Solution“. I wonder if Paul Krugman embraces supply-side economics now as well, or does he only pick and choose Bartlett’s wisdom as needed. I’m sure the fact that Bartlett mentioned Krugman at the end of his article had nothing to do with Paul linking to his piece.

As I was scanning through Krugman’s posts, I came across another that just smacked of irony. It was the day after he embraced Bruce Bartlett’s ideas about President Obama. In this post, he takes on some Reagan economists. It’s kind of weird that he didn’t mention Bartlett in that post…

First Michael Boskin, now John Taylor: there seems be an epidemic of politically conservative economists who used to be technically competent repeating the obviously wrong falsehood that Reagan ushered in an era of “unprecedented” growth.

You can imagine my surprise when I read that last bit after having just read 3 posts where Krugman goes to great lengths to quote and use to his political ends — one of the people responsible for creating Reagan’s economic disaster. In one day, Krugman is using a Reagan economist for his own political ends and the next he is excoriating them.

I found another post from Mr. Krugman where he uses the “denial” approach — the “I don’t believe them and you can’t make me” approach. Krugman was making a half-hearted attempt to respond to people like me who have been asking him how he would have done it differently. Here is part of his response…(emphasis mine)

But the answer is clear: I would have made a statement declaring that giving in to this kind of blackmail would constitute a violation of my oath of office, and that my lawyers, on careful reflection, have determined that there are several legal options that allow me to ignore this extortionate demand.

Now, the Obama people say that this wasn’t actually an option. Well, I hate to say this, but I don’t believe them.

Wow, you have to give him credit for being honest in just denying ideas that don’t fit with his narrative — just come out and say “I don’t believe them.” And what are those several options that “my lawyers, on careful reflection” have come up with?

And then the other day, Paul Krugman goes even further with his denial and in my opinion, damaged his reputation as an economist as well as that of a political pundit. I’m not sure why I should listen to anything he says after reading this next post.

I guess I have to be explicit at this point: yes, I would vote no.

What about the catastrophe that would result? Several thoughts.


Second, the people who claim that terrible things would immediately happen in the markets also claimed that there would be a big relief rally once a deal was struck. Not so much: the Dow is down 121 right now.

Did you catch that, we shouldn’t trust those people who claimed there would be a big relief rally. But remember, we should listen to Bruce Bartlett, one of the architects of supply-side economics. Paul should at least be consistent with his dismissal of ideas from people who were wrong before. There’s more…

Third, the idea that a temporary disruption would permanently damage faith in US institutions now seems moot; if you haven’t already lost faith in US institutions, you’re not paying attention.

I suppose he is trying to argue that the damage is already done, so fuck it, let’s go all out and default. What the hell, people have already lost faith in US institutions so we might just as well confirm it for them. Great idea, Paul. That may work for your snarky political views, but I doubt that it would do our economy much good.

Deaniac83 at The People’s View has a most excellent analysis of the entire debt deal, where he takes on Krugman as well for his political naiveté. Go read the entire analysis, I think you will be surprised at exactly what was in the deal that you aren’t hearing anywhere else. I loved these two paragraphs…

Read that again. That’s what the media and the whiners are not telling you. The President agreed to no Medicare benefit cuts in the “trigger.” None. The cuts, if they automatically happen, would go to whom? The providers. Who are these providers? Doctors, hospitals, clinics, Medical device makers, service providers, drug manufacturers. Who do you think they mostly donate to in the political season? The entire pressure on these Medicare cuts are on the private medical (and pharmaceutical) industry! So let’s ask that question again. The Medicare “trigger” is a trigger really from whom again? As a matter of fact, both big triggers (Defense and Medicare provider cuts) are triggers for the Republicans!

So while Krugman is correct in pointing out that the Teabaggers will hold everything and its mother hostage in order to get what they want, what they want is already being taken away from them: they will not be able to threaten the deficit reduction group with looming cuts in Social Security, or programs for the poor, civilian or military retirement, or Medicaid, or even Medicare benefits. Instead, if the Republicans do not let the deficit committee act in a manner commensurate with the President’s demand that it include tax revenue increases, they will be setting up big defense cuts and setting themselves up for dry campaign coffers on donations from the medical and pharmaceutical industries.

Finally, I feel compelled to explain that Paul Krugman has never liked President Obama, even before he was elected. Steve Benen sums up Krugman’s dislike for President Obama in this post about Newt Gingrich calling the Obama administration “a Paul Krugman presidency”…

Second, does Newt Gingrich ever actually read Paul Krugman? I don’t know the Nobel laureate personally, but reading his columns, blog, and Twitter feed, and watching his media appearances, I’m left with the impression that Krugman loathes President Obama. He made little effort to hide his aversion to Obama as a candidate in 2007 and 2008, and has been quite candid in the years since about his near-constant frustrations with this White House. At times, I get the sense that Krugman’s take on this presidency borders on contempt.

As I was looking back at Krugman’s opinions on the last Democratic president, Bill Clinton, I found that although he wasn’t a huge fan of some of Clinton’s policies, it didn’t seem to rise to the level of contempt. I’ll let you speculate on why that might be.


13 thoughts on “The Debt Hostage Crisis And Paul Krugman’s Political Naiveté

  1. “The President could have let the U.S. AND world economy crash into the ground, pointing fingers the entire time at those dastardly Republicans and repeating ‘it’s their fault, it’s their fault’ — as the country scratched its collective head and wondered why the President didn’t stop it. I don’t think that was ever considered as an option, but it certainly has been hanging over the situation like a stench. I’m glad our president has the best interests of all people in mind when making big decisions like this.”

    Actually, this is exactly what Krugman suggested back in May during an appearance on This Week with Christiane Amanpour.

    This was obviously not from his perspective as a expert on the economy, but from the perspective of an agenda driven Professional Left ideologue.

    Krugman is now in the business of using his credibility as a Nobel Prize winning Economist to push an ideological agenda, most of the time unaccompanied by any economic analysis.

  2. I never trusted Krugman he’s more someone who clings to idealism and not actual economics. The reason I think that the guy loathes Obama is because he’s a racist but you can’t say that or the media goes ballistic and accuses you of playing the race card. Much of the obstruction coming from the tea baggers and friends is actually partially understandable as they just hate leftism and indeed much of it may come from racist beliefs I can still understand where it comes from. The professional left also known as firebaggers, not so much at all. A lot of it does seem idealogical in nature but much of it also seems rather sinister or dubious in nature, as if they can’t stand him for some reason that is either skin deep or some other reason they wont admit to.

    Notice that Cenk will bash Obama then goes after the right for doing the same and gets mad at them for making racist statements. Well I thought at first that this was a relief but I realized something that he’s doing this to try and paint himself as not racist. It almost seems like he tries really hard not to come out this way, almost too hard as if he has something to hide. Jane Hamsher is clearly a bigot and has shown no real understanding of politics but again she tries to paint herself as not one but seems to fail whenever she tries.

  3. Great link, thanks. I’m getting sick of him, if you read the comments on his blog, it is a bunch of firebagger cheerleaders, going rah, rah, rah, and censoring people like me who actually challenge his liberal creds.

  4. Krugman and Reich have both jumped into this new trend of economists with an agenda. A true “economist” is nonpartisan. While I acknowledge the need for economic think-tanks on the left to provide a coherent counter-narrative to the right wing institutions like CATO and Heritage, both Krugman and Reich need to make a decision. Either they join or lead a think-tank or they return to a non-partisan role in the great debate over supply side or demand side emphasis. One might argue that criticizing the President shows nonpartisan views, but that would be ignoring the colorful commentary and assumptions that accompany any facts or statistics they offer.

    Then again, nonpartisan economists are drab and boring to the average citizen and don’t “sell well” in the view of our Corporate media executives. And we know all too well that both Krugman and Reich do have something to sell.

  5. I agree with you Jim I would haver preferred the “Constiutional Option” -I too am an extreme liberal-but I also see there are good reasons not to have gone with it. I don’t necessarily think it would make him a dictator but the GOP would have taken advantage of the “optics” of this and accuded him of it just the same.

    Arguably confidence could have been hurt in the market.

    From what rumours have suggested-apparently Biden said something about this-he would have had he no other choice.

    As it is the final deal is not nearly as horrendous as it could be-as the “mandatory cuts” aren’t mandatory but wouldn’t go into effect til 2013 and Congress could vote against them-or Obama could veto it-it is clear that if we take back the House in 2012 there is nothing to worry about.

  6. Speculate why that may be? I graduated with my MBA in the top one percent of my class. I being a black female, always astonished my white male professors, when I received the best grade in my class. Having a successful accounting firm for the past 25 years, I wouldn’t hire Krugman to negotiate my cleaning contract.

  7. Senator Reid delivered a bipartisan budget agreement to our president on July 25. Our president shot it down and extended the dispute he publicly complained about. The agreement offered on July 25 was rejected because our president feared it did not push the next round of the debt fight past the next presidential election.

    Our president put partisan politics ahead of our country’s finances. Getting reelected is more important to our president than repairing the financial damage done to our country over the past ten years.

  8. why don’t you find some other place to troll and lie about. I’ve been paying attention to whats actually going on and not some fantasy that you seem to believe in.

  9. Reality is so much different than what you read at the brainwash blogs that you visit CH. Here is Senator Reid completely denying the spin that Republicans have attempted on that July 25th, non-deal. Like Richard Pryor said, “who you gonna believe, me or your lying eyes?” Here is the reality of that deal.
    And here is a Washington Post story about the same subject, there was no agreement. But lie if you must, it’s just another lie on the pile that keeps growing every day.

  10. The stock market tanked as bad as ever and now the msnbc Chris Mathews is trying to spin it as Obama’s fault. Some real progressive that asshole is. I can’t believe I used to like the guy!

  11. Matthews was raised in a Republican family, his brother even once ran for Lt. Govenor of PA in 2006 as a REPUBLICAN. Chris even has said he voted for George W. Bush in 2000, so claims to be centrist. However, of all the talking heads on MSNBC, Chris, Lawrence O’Donnell and Joe Scarborough have actually worked in Washington politics.

  12. I posted this response to a comment over at ABL, I thought I’d share here too.

    I guess political naiveté loves company. I suggest you read the piece again. Krugman clearly embraced Bartlett’s ideas, why would he write three posts linking to it and pasting a long excerpt if he didn’t.

    And you proved my point for me, thanks. Why in the hell would Krugman cite someone who he disagrees with so profoundly on economic policy? Did you miss my point about that?

    “I wonder if Paul Krugman embraces supply-side economics now as well, or does he only pick and choose Bartlett’s wisdom as needed.”

    A question, not a statement. You do know what a question mark signifies right.

    You say “IF EVEN a conservative recognizes that Obama’s policies and economic leanings are conservative”…did you read Bartlett’s piece, it’s a classic example of trying to force a current situation which is completely different, onto a historical model. It’s intellectually dishonest, even though people just love to do that shit. And once again, you seem to be missing my point that a the source of his confirmation of his idiocy is a man who thinks that giving tax breaks to the wealthy is going to lift all boats. Do you trust the judgement of someone so fucking stupid? I personally NEVER quote asshole Republicans to make a point, but someone with a “conscience of a liberal” seems to have no problem using a Republican’s talking points for his own political ends.

    President Obama is a moderate liberal for sure, a pragmatist and not anti business. That doesn’t make him a conservative and it’s dishonest to go there with it, no matter how many historical analogies that are completely different he pulls out of his ass.

    And President Obama has talked many times about Social Security not being the problem and being solvent, you just weren’t listening. So accusing him of not using it as a teachable moment shows your ignorance. This quote is from his April budget speech, a very liberal proposal, loved by most liberals when delivered.

    “That includes, by the way, our commitment to Social Security. While Social Security is not the cause of our deficit, it faces real long-term challenges in a country that’s growing older.”

    Here is Jack Lew from a USA Today piece
    ” The budget put forward by President Obama​ last week is a blueprint for how we can live within our means and win the future. As this begins the budgeting process in Washington, we need to be clear about the causes of the pressing fiscal problems we face. Specifically, looking to the next two decades, Social Security does not cause our deficits.

    Social Security benefits are entirely self-financing. They are paid for with payroll taxes collected from workers and their employers throughout their careers. These taxes are placed in a trust fund dedicated to paying benefits owed to current and future beneficiaries.”

    And just to throw it back in your face, here is Paul Krugman’s reaction to the President’s speech in April.
    I don’t see anything about moderate conservative in there. Krugman says

    “Overall, way better than the rumors and trial balloons. I can live with this. And whatever the pundits may say, it was much, much more serious than the Ryan “plan”.

    I guess if Krugman can live with the Presidents proposal, it must not be “moderate conservative”.

    I’m not the only one pointing out Paul Krugman’s lack of consistency either.

    And really, cutting domestic spending of any kind is a “conservative” idea? I know many believe that, but if you look at polls, it isn’t just conservatives in this country who think spending is out of control. And it is that sort of thinking that plays into the Republican meme that Democrats just want to spend, spend, spend.

    Not all spending is good…Marcus Bachmann getting money to convert gay people to straight…are you all for that spending too. If you think there isn’t waste in domestic spending or programs that need to be modified, then you really need to get your head out of the sand. Remember, politicians have been passing these bills for years and to believe that everything they’ve done over the years is completely necessary spending is pretty freakin politically naive.

    But like I said, political naivete loves company.

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