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
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.
* * *