Tuesday, November 13, 2012

Hawks and Hypocrites

Hawks and Hypocrites

Paul Krugman: NY Times Op-Ed: 11/12/2012


Back in 2010, self-styled deficit hawks -- better

described as deficit scolds -- took over much of our

political discourse. At a time of mass unemployment and

record-low borrowing costs, a time when economic theory

said we needed more, not less, deficit spending, the

scolds convinced most of our political class that

deficits rather than jobs should be our top economic

priority. And now that the election is over, they're

trying to pick up where they left off.

They should be told to go away.

It's not just the fact that the deficit scolds have

been wrong about everything so far. Recent events have

also demonstrated clearly what was already apparent to

careful observers: the deficit-scold movement was never

really about the deficit. Instead, it was about using

deficit fears to shred the social safety net. And

letting that happen wouldn't just be bad policy; it

would be a betrayal of the Americans who just

re-elected a health-reformer president and voted in

some of the most progressive senators ever.

About the hypocrisy of the hawks: as I said, it has

been evident for years. Consider the early-2011 award

for "fiscal responsibility" that three of the leading

deficit-scold organizations gave to none other than

Paul Ryan. Then as now, Mr. Ryan's alleged plans to

reduce the deficit were obvious flimflam, since he was

proposing huge tax cuts for the wealthy and

corporations while refusing to specify how these cuts

would be offset. But in the eyes of the deficit scolds,

his plan to dismantle Medicare and his savage cuts to

Medicaid apparently qualified him as a fiscal icon.

And how did the deficit scolds react when Mitt Romney

served up similar flimflam, with Mr. Ryan as his

running mate? Well, the Peter G. Peterson Foundation is

deficit-scold central; Peterson funding lies behind

much of the movement. Sure enough, David Walker, the

foundation's former C.E.O. and arguably the most

visible deficit scold in America, endorsed the

Romney/Ryan ticket.

And then there's the matter of the "fiscal cliff."

Contrary to the way it's often portrayed, the looming

prospect of spending cuts and tax increases isn't a

fiscal crisis. It is, instead, a political crisis

brought on by the G.O.P.'s attempt to take the economy

hostage. And just to be clear, the danger for next year

is not that the deficit will be too large but that it

will be too small, and hence plunge America back into recession.

Deficit scolds are having a hard time with this issue.

How can they warn us not to go over the fiscal cliff

without seeming to contradict their own rhetoric about

the evils of deficits?

This wouldn't be hard if they had been making a more

honest case on the budget: the truth is that deficits

are actually a good thing when the economy is deeply

depressed, so deficit reduction should wait until the

economy is stronger. As John Maynard Keynes said

three-quarters of a century ago, "The boom, not the

slump, is the right time for austerity." But since the

deficit scolds have in fact been demanding that we make

deficits the priority even when the economy is

depressed, they can't go there.

So what we get instead, for example in a white paper on

the fiscal cliff from the Committee for a Responsible

Federal Budget, is a garbled set of complaints: The

adjustment is too fast (why?), or it's the wrong kind

of deficit reduction, for reasons not made clear. Or

maybe they are made clear, after all. For even as it

rails against deficits, the white paper argues against

raising tax rates and even suggests cutting them.

So the deficit scolds, while posing as the nation's

noble fiscal defenders, have in practice shown

themselves both hypocritical and incoherent. They don't

deserve to have a central role in policy discussion;

they really don't even deserve a seat at the table. And

they certainly don't deserve to have one of their own

appointed as Treasury secretary.

I don't know how seriously to take the buzz about

appointing Erskine Bowles to replace Timothy Geithner.

But in case there's any reality to it, let's recall his

record. Mr. Bowles, like others in the deficit-scold

community, has indulged in scare tactics, warning of an

imminent fiscal crisis that keeps not coming.

Meanwhile, the report he co-wrote was supposed to be

focused on deficit reduction -- yet, true to form, it

called for lower rather than higher tax rates, and as a

"guiding principle" no less. Appointing him, or anyone

like him, would be both a bad idea and a slap in the

face to the people who returned President Obama to office.

Look, we should be having a serious discussion about

America's fiscal future. But a serious discussion is

exactly what we haven't been having these past couple

years -- because the discourse was hijacked by the wrong

people, with the wrong agenda. Let's show them the door.

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