Democrats and the Deficit: PAUL KRUGMAN

THE COMPLETE ARTICLE
The New York Times

OP-ED COLUMNIST
Democrats and the Deficit
By PAUL KRUGMAN
Published: December 22, 2006

Given a choice between cutting the deficit and spending more on good things like health care reform, Democrats in Congress should choose the spending.


Now that the Democrats have regained some power, they have to decide what to do. One of the biggest questions is whether the party should return to Rubinomics — the doctrine, associated with former Treasury Secretary Robert Rubin, that placed a very high priority on reducing the budget deficit.

The answer, I believe, is no. Mr. Rubin was one of the ablest Treasury secretaries in American history. But it’s now clear that while Rubinomics made sense in terms of pure economics, it failed to take account of the ugly realities of contemporary American politics.

And the lesson of the last six years is that the Democrats shouldn’t spend political capital trying to bring the deficit down. They should refrain from actions that make the deficit worse. But given a choice between cutting the deficit and spending more on good things like health care reform, they should choose the spending.

In a saner political environment, the economic logic behind Rubinomics would have been compelling. Basic fiscal principles tell us that the government should run budget deficits only when it faces unusually high expenses, mainly during wartime. In other periods it should try to run a surplus, paying down its debt.

Since the 1990s were an era of peace, prosperity and favorable demographics (the baby boomers were still in the work force, not collecting Social Security and Medicare), it should have been a good time to put the federal budget in the black. And under Mr. Rubin, the huge deficits of the Reagan-Bush years were transformed into an impressive surplus.

But the realities of American politics ensured that it was all for naught. The second President Bush quickly squandered the surplus on tax cuts that heavily favored the wealthy, then plunged the budget deep into deficit by cutting taxes on dividends and capital gains even as he took the country into a disastrous war. And you can even argue that Mr. Rubin’s surplus was a bad thing, because it greased the rails for Mr. Bush’s irresponsibility.

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Outsourcer in Chief: PAUL KRUGMAN

THE COMPLETE ARTICLE
The New York Times

OP-ED COLUMNIST
Outsourcer in Chief
By PAUL KRUGMAN
Published: December 11, 2006

Privatization through outsourcing is one reason the Bush administration has failed on so many fronts.

According to U.S. News & World Report, President Bush has told aides that he won’t respond in detail to the Iraq Study Group’s report because he doesn’t want to “outsource” the role of commander in chief.

That’s pretty ironic. You see, outsourcing of the government’s responsibilities — not to panels of supposed wise men, but to private companies with the right connections — has been one of the hallmarks of his administration. And privatization through outsourcing is one reason the administration has failed on so many fronts.

[...]

...the presumption that the private sector can do no wrong and the government can do nothing right prevents us from coming to grips with some of America’s biggest problems — in particular, our wildly dysfunctional health care system.

[...]

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They Told You So: PAUL KRUGMAN

THE COMPLETE ARTICLE
The New York Times

OP-ED COLUMNIST
They Told You So
By PAUL KRUGMAN
Published: December 8, 2006

I’d like to offer some praise to those who correctly predicted the folly of the Iraq war.

Shortly after U.S. forces marched into Baghdad in 2003, The Weekly Standard published a jeering article titled, "The Cassandra Chronicles: The stupidity of the antiwar doomsayers." Among those the article mocked was a "war novelist" named James Webb, who is now the senator-elect from Virginia.

The article's title was more revealing than its authors knew. People forget the nature of Cassandra's curse: although nobody would believe her, all her prophecies came true. And so it was with those who warned against invading Iraq. At best, they were ignored. A recent article in The Washington Post ruefully conceded that the paper's account of the debate in the House of Representatives over the resolution authorizing the Iraq war — a resolution opposed by a majority of the Democrats — gave no coverage at all to those antiwar arguments that now seem prescient.

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Bush & Super Rich Screwing America

Bush & Super Rich Screwing America
Krugman, Fox TV via Yahoo Finance, 7-12-06

Two More Years: PAUL KRUGMAN - Bully in Chief

THE COMPLETE ARTICLE

The New York Times

OP-ED COLUMNIST
Two More Years
By PAUL KRUGMAN
Published: December 4, 2006

We need people in Washington who are willing to stand up to the bully in chief. Unfortunately they’re still in short supply.

Excerpt

I’m worried, however, that Democrats may have counted on the Iraq Study Group to provide them with political cover. Now that the study group has apparently wimped out, will the Democrats do the same?

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Economic Storm Signals: PAUL KRUGMAN - Tough 2007

THE COMPLETE ARTICLE
The New York Times

OP-ED COLUMNIST
By PAUL KRUGMAN

Economic Storm Signals

Published: December 1, 2006

The odds are very good that 2007 will be a very tough year.

"It's tough to make predictions," Yogi Berra is supposed to have said, "especially about the future." Actually, his remark makes perfect sense to economists, who sometimes have trouble making predictions about the present. And this is one of those times.

We're now two-thirds of the way through the fourth quarter of 2006, so you might think we'd already know how the quarter is going. Yet, economists' assessments of the current state of the U.S. economy, never mind the future, are all over the place.

And here's the bad news: this kind of confusion about what's going on is what typically happens when the economy is at a turning point, when an economic expansion is about to turn into a recession (or vice versa). At turning points, the various indicators that usually tell us which way the economic wind is blowing often point in different directions, so that both optimists and pessimists can find data to support their position.

The last time things were this confused was early in 2001, when most economists failed to realize that the United States was sliding into recession. If that sounds ominous, it should: the bond market, which has a pretty good record of forecasting recessions, is pointing toward a serious economic slowdown next year.

Before I explain what the bond market is telling us, let's talk about why the economy may be at a turning point.

Between mid-2003 and mid-2006, economic growth in the United States was fueled mainly by a huge housing boom, which created jobs directly and made it easy for consumers to spend freely by borrowing against their rising home equity.....

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When Votes Disappear: PAUL KRUGMAN

THE COMPLETE ARTICLE

The New York Times Company

OP-ED COLUMNIST
When Votes Disappear
By PAUL KRUGMAN

Published: November 24, 2006

Do we have to wait for a constitutional crisis to realize that we’re in danger of becoming a digital-age banana republic?

Excerpt

"The problem is that the official vote count isn’t credible."

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