Krugman interview: holy moley

[Jason McCullough]

From one of the stalwart liberal bloggers:

http://www.calpundit.com/archives/002170.html#more

Paul's been working on these themes for a while, but it's kind of frightening to see it all in one place. We're going to be in serious trouble in 20 years.

[Lizard_King]

Man, that was great. You are really on a roll today. I had forgotten how much funnier Krugman's themes are when he assumes (correctly) that his audience will be predisposed to accept it.

[Jason McCullough]

The US isn't going to reach Argentian levels of public debt in the next twenty years?

[Lizard_King]

The US isn't going to reach Argentian levels of public debt in the next twenty years?

We've been here before, J. The great thing about Krugman is that he seizes on the obvious and then uses the opposite of Occam's razor to dissect it. It's as if economics were being described by the guys who came up with the scientific and continuity explanations on Star Trek.

[Jason McCullough]

Nope, not going to take that for an answer - how are the permanent structural deficits Bush has opened up going to be resolved, LK? They're not going to disappear on their own; as Krugman points out, there's only 3 outcomes - tax increases, the elimination of Social Security and Medicare, and Argentine-style financial crackup.

I think tax increases are possible, albeit unlikely, and consider the elimination of SS/Medicare virtually impossible, so that leaves the last.

Projecting forward with no policy changes, the US deficit will become catastrophic when the boomers near retirement.

[Lizard_King]

Nope, not going to take that for an answer - how are the permanent structural deficits Bush has opened up going to be resolved, LK? They're not going to disappear on their own; as Krugman points out, there's only 3 outcomes - tax increases, the elimination of Social Security and Medicare, and Argentine-style financial crackup.

I think tax increases are possible, albeit unlikely, and consider the elimination of SS/Medicare virtually impossible, so that leaves the last.

Projecting forward with no policy changes, the US deficit will become catastrophic when the boomers near retirement.

I think claiming Bush is not only the one that opened up that can of worms, but is representative of a new movement that will wholly undermine the Spirit Of America is the sort of high blown rhetoric that is unacceptable from an economist. Essentially, saying tax cuts are at fault because government spending is bankrupting the country is thinking only an idiot could admire if it fails to even take into account the possibility of spending cuts and what possible benefits they could have.

Now, I'm full of oodles of agreement that Bush cutting taxes while increasing the size of the budget is something that is plainly a bad idea. I don't think that is an insight on the order of magnitude that Mr. Krugman and his fan club make it seem. And when that is decorated by utterly ridiculous ramblings about vast right wing conspiracies and a refusal to even consider other factors as relevant issues (see: cutting spending), it ruins any value the foundational statement had.

Tax increases are not only possible, but likely. Eliminating SS/Medicare is only impossible for you to conceive ideologically, it is also politically unlikely, since democracies, even when restrained by the format of a republic, have a long tradition of only voting themselves more benefits once they get the hang of it.

The difference (well, one at least) is that you see the impending bankruptcy of this system as a direct result of Bush's failure to plan to accomodate the vision of a protowelfare state successfully. I see it as the inevitable consequence of the expansion of the role of government to things it cannot do efficiently or well, and definitely not cost-effectively. People like Krugman that colour the debate with bullshit like

In fact, there's ample evidence that key elements of the coalition that now runs the country believe that some long-established American political and social institutions should not, in principle, exist....Consider, for example....New Deal programs like Social Security and unemployment insurance, Great Society programs like Medicare

"OH MY (nondenomenational, potentially secular) GOD! THESE EVIL UNAMERICAN PEOPLE WANT TO CHANGE THINGS THAT HAVE BEEN THE SAME FOR A WHILE! DON'T THEY KNOW THAT MAKES THEM SACROSANCT?"

are no better than the fucking idiots on the "right" who brand any form of dissent with foreign policy treason.

Like I said, we've been down this road before, and I enjoy these discussions least when they are based around the interpretation of pundits rather than the issues themselves.

Argentina, while it is a convenient analogy for hyperbole (rather like the Hitler of economics) is not the same thing for a lot of reasons. I am even less interested in a tangential debate over Argentine history at the moment, but unless you're making very specific comparisons, it is something of an empty point to keep harping at.

[Midnight Son]

Let's not forget, in the Retardican world, money is just paper and numbers.

[Guido Jones]

Such insiteful commentary - please keep lavishing your razor wit upon us.

[Daniel Morris]

Projecting forward with no policy changes...

...is silly. You use the exact same reasoning to deduce that multi-level marketing will make you a millionaire in 30 days.

A combination of tax-cut rollbacks and entitlement trimming is in the cards over the next 10-20 years.

[Jason McCullough]

LK, as I pointed out in the other thread, it's not that the right favors eliminating SS & Medicare; it's that they don't level with the population about it. Do you think the average voter knows that conservatives actually want to eliminate Medicare?

Again, the issue isn't policy preference per-se, it's democracy. We're headed for a fiscal train wreck, and the Bush administration's reaction is to exacerbate that train wreck (by making even bigger deficits) and then hope they can use the crisis to shove through some stuff they want by bending the political system until it screams.

If they want to scale back the size of government, would it kill them to honestly admit it? God forbid they tell the public what they really want. They do it, of course, because they rightly suspect that no one would vote to get rid of Social Security or Medicare, so they think that maybe they can trick us out of them instead.

Argentina, whatever; "currency panic" will suffice. Unless taxes are increased or spending cut, the deficit will get so large that it becomes very easy for the US to suffer a third-world style run on the currency.

If conservatives want to keep the current welfare state (privitazed social security or not), they need to raise taxes a good deal. If not, they need to cut spending - us Democrats aren't going to do it.

[Lizard_King]

LK, as I pointed out in the other thread, it's not that the right favors eliminating SS & Medicare; it's that they don't level with the population about it. Do you think the average voter knows that conservatives actually want to eliminate Medicare?
Yes. I also think you confuse "Republican" with "conservative" a great deal. And I am not even sure what conservative means to you anymore, other than as a broad category to encompass things with which you disagree.


Again, the issue isn't policy preference per-se, it's democracy. We're headed for a fiscal train wreck, and the Bush administration's reaction is to exacerbate that train wreck (by making even bigger deficits) and then hope they can use the crisis to shove through some stuff they want by bending the political system until it screams.
Yes; I once heard someone describe it as akin to making an alcoholic bankrupt to cure him. And, again, I don't think it's the cause of the problem, I don't think it's worst that's been done to it, and I don't think it, in and of itself, is the number one reason for whatever crises may arise.


If they want to scale back the size of government, would it kill them to honestly admit it? God forbid they tell the public what they really want. They do it, of course, because they rightly suspect that no one would vote to get rid of Social Security or Medicare, so they think that maybe they can trick us out of them instead.
I think you overestimate the degree of top secret intel you are privy to; also, like I said in the other thread, the difference with their "trickery" is that I agree with the long term goals. Whereas the other side is selling lies AND bad ideas.


Argentina, whatever; "currency panic" will suffice. Unless taxes are increased or spending cut, the deficit will get so large that it becomes very easy for the US to suffer a third-world style run on the currency.
Just as I thought. The currency panic is a small part of the whole. In any case, we are destined for bankruptcy whether Bush is in charge or not; baby boomer retirement + welfare will take care of that. I don't think rushing the crisis to a point before that is necessarily the best means of dealing with it, but it beats the alternative, which is apparently more empty promises and taxes, followed by more entitlements, etc.


If conservatives want to keep the current welfare state (privitazed social security or not), they need to raise taxes a good deal. If not, they need to cut spending - us Democrats aren't going to do it.
I completely agree with the latter statement. But it does not follow from this to Krugman's deranged paranoia. It really doesn't.

[Jason McCullough]

You're right, both the conservatives and libertarians in the GOP are partly to blame for this.

So anyway: Krugman's right that the hardcore people running the GOP want to eliminate Medicare and SS. He's right that they're intentionally running up big deficits. He's right that unless taxes are raised or medicare & SS eliminated, we're going to see a currency panic.

.....but he's wrong and paranoid?


but it beats the alternative, which is apparently more empty promises and taxes, followed by more entitlements, etc.

I seem to remember us having a rather large budget surplus in 2000.

[Ben]

McCullough is turning into the liberal Cleve.

[JeffL]

So, Republicans want to eliminate SS and Medicare? Bullshit. Just plain bullshit. I'm so sick of this scare-tactic hyperbole. Does it make sense that the Republican president who wants to eliminate SS and medicare pushed a huge increased spending drug addition to the program?

As for the massive tax cuts driving us to a Brazilian tragedy - give me a friggen break. Take a look at the tax cuts as a percentage of the total federal budget over the next 10 years. sheesh.

Find an economist who doesn't have such an obvious political axe to grind.

[voltaic]

I'm burning my worthles ZOGBUX as we speak.

[Jason McCullough]

So, Republicans want to eliminate SS and Medicare? Bullshit. Just plain bullshit. I'm so sick of this scare-tactic hyperbole. Does it make sense that the Republican president who wants to eliminate SS and medicare pushed a huge increased spending drug addition to the program?

As for the massive tax cuts driving us to a Brazilian tragedy - give me a friggen break. Take a look at the tax cuts as a percentage of the total federal budget over the next 10 years. sheesh.

Find an economist who doesn't have such an obvious political axe to grind.

I didn't say Bush himself wants to get rid of them; god only knows what he thinks. The hardcore movers and shakers, however, do. Grover Norquist - probably the most powerful person in the party short of Rove - does. Lots of people like him do. Scaife, Olin, Cato, AEI, and Coors do.

The tax cuts don't fully phase in until 2010; they were designed that way to keep the ten year cost estimates down by phasing in the bulk of the cuts in year 10. Of course they aren't that big of a deal right now; only 40% of the budget deficit is due to tax cuts. It's out around 2015 where they really start to bite, dropping tax collections something like 2.5% of GDP.

[JeffL]

To say that Republicans want to kill SS and Medicare is about in the same category as saying Democrats want to turn the U.S. into a completely socialist state. Its just one of those fear-mongering broad brush pieces of rhetoric that I'm so tired of.

I've got to look the numbers up, but it seems that when I looked this up on the GAO website a year or so ago the tax cuts amounted to something like, projected out 10-20 years, less than a percent of the total federal budget.

[Midnight Son]

Such insiteful commentary - please keep lavishing your razor wit upon us.

You got it.

[XPav]

http://slate.msn.com/id/2088237/

[Jason McCullough]

To say that Republicans want to kill SS and Medicare is about in the same category as saying Democrats want to turn the U.S. into a completely socialist state. Its just one of those fear-mongering broad brush pieces of rhetoric that I'm so tired of.

I've got to look the numbers up, but it seems that when I looked this up on the GAO website a year or so ago the tax cuts amounted to something like, projected out 10-20 years, less than a percent of the total federal budget.

http://www.cbpp.org/4-19-01tax.htm

2% of GDP, which is about 6% of the federal budget. About the same size as Reagan's.

Jeff, it's not fear-mongering or crazy to say that some Republicans - namely, the hardcore, who decide the nominations and run everything - want to eliminate the welfare state. They do, and they've said so. What do you think Norquist is talking about when he says he wants to shrink the government enough that he can "drown it in the bathtub?"

I know there's Republicans, liberatarians and conservatives alike, who disagree. They're just not running things, and they're not stopping the people who are.

[JeffL]

OK - so the Republicans running the show want to get rid of SS and Medicare? So they have the presidency, the House, the Senate, and what are they doing to push through this agenda? All I have seen is Bush expanding medicare. I would like to see any evidence that key Republicans, with any power, are specifically wanting to eliminate SS and Medicare. That IS fear-mongering, and it is exactly the tact that the Democrats that I don't like (and I do like quite a few) use to try to scare people for votes.

I guess I'm just getting pretty disgusted with politics in general lately. There's rarely any intelligent discussions and debate, just name calling and rhetoric. Then I see the court in California with their incredibly partisan ruling (they lied in the first paragraph when they "quoted" the Attorney General, they made up all manner of crap with no regard for truth and data - I've seen 5 people show data that in California the error rates are higher on other equipment, plus this is the exact same equipment that Davis was elected with recently - arghhh) and I realize how partisan the courts are becoming, and I just begin to despair for the future of the country.

[Jason McCullough]

Jeff, that's entirely a part of it. They know that they'd lose if they just came out and said "hey, we want to get rid of medicare", so that's why some of them intentionally are trying to run huge deficits. The theory is that when they get big enough people will panic and agree to get rid of 'em - after all, they can't raise taxes, can they? This is what a certain kind of conservative (www.janegalt.net) means when they talk about "deficits holding down spending."

I think they're wrong, and we'll just raise taxes when it happens, but it'll do a lot of damage in the intervening time.

[Lizard_King]

You're right, both the conservatives and libertarians in the GOP are partly to blame for this.
If by "this" you mean Krugman's nervous breakdown, then yes.


So anyway: Krugman's right that the hardcore people running the GOP want to eliminate Medicare and SS.
He's wrong about them running the GOP and he's wrong about their influence.


He's right that they're intentionally running up big deficits. He's right that unless taxes are raised or medicare & SS eliminated, we're going to see a currency panic.
Right, but that's a false conditional. And there are numerous degrees of both options that will take place. But it's much more entertaining to run around screaming "FIRE".


I seem to remember us having a rather large budget surplus in 2000.
Isn't it fun when we read macroeconomics intro books and pretend that everything they say happens just like that in real life?

[Kyle Wilson]

Jeff, that's entirely a part of it. They know that they'd lose if they just came out and said "hey, we want to get rid of medicare", so that's why some of them intentionally are trying to run huge deficits.

This is remarkably conspiracy-theorist even for Qt3 Politics. Just to be clear, you think that the Republican "high command" wants to kill Social Security and Medicare, but to cover their agenda, they're intentionally expanding those programs? Golly. Next they'll be raising the minimum wage and pushing for gay marriage. The bastards.

[Jason McCullough]

Yeah, by adding a prescription drug benefit Bush obviously doesn't care about. The official position of the administration is they want a bill - any bill. They don't care what it looks like; it's strictly political damage control.

This is why the one currently under consideration covers only something like 6% of seniors. It's still possible we won't see a bill at all, too; the GOP hasn't been exactly very fired up to pass it.

Note that if it does pass, the plan is just to add the costs to the deficit, which only exacerbates that problem.

[bago]

I seem to remember circa '95 about all of these "cuts" to medicare that were really just smaller increases than what the democrats wanted. And either way the spending increases were both over the inflation rate.

It's easy to keep yourself elected if you keep bringing home the bacon. Why do you think the elderly vote so much?

[Jason McCullough]

http://www.dailyhowler.com/h081899_1.shtml

Background on the cuts/rate of spending increase thing.

[bmulligan]

. The official position of the administration is they want a bill - any bill. They don't care what it looks like; it's strictly political damage control.


Christ McCullough, you can't be so naive to think it's only Republicans or this administration that passes bills for political damage control. Only 1 in 100 bills are actually necessary, all the rest are just for re-election capital.

[Jason McCullough]

The point was that this bill (assuming it gets passed0 isn't incompatible with a long run conservative goal of eliminating medicare.

[JeffL]

Jason, you've gone over the edge. You are looking through such Republican/conservative hate-filtered glasses that you're actually believing these wild conspiracy theories. We could go back and forth, but you're in such an out-there state of mind it would be a waste of time.

[chet]

Jeff, where is Bush expanding Medicare? The drug discount thingy? That is not for seniors, that is to protect drug companies from what the seniors really want, to be able to import drugs from other countries.

For those of you refusing to see some of the out and out BS of this administration. Look at the Vets. Bush sends them to war, rallies the country to support them.

All the while, cutting educational benefits and health benefits. You want to talk to a pissed off conservative who votes republican but hates Bush? Talk to my dad who is now going to have to drive twice the distance for half the care because they are closing down Harvey Pekar's old VA hospital. They already cut his benefits and if he hadn't already been in the program, the program that had been promised him his entire life for fighting in two wars, would not have been available, Bush had to restrict the ability of vets to qualify, they had to make cuts somewhere...

Look at how they are treating the environment and education. Lip service while destroying programs and hurting both.

But medicare... oh no, that is where they draw the line, they would never do such things as they have in almost every other program there, not with medicare...

Chet

[Jason McCullough]

If it's a wild conspiracy theory, why does Milton Friedman explicitly favor massive deficits to force spending cuts?

[bmulligan]

The point was that this bill (assuming it gets passed0 isn't incompatible with a long run conservative goal of eliminating medicare.

Well, DUH! neither does signing a bill increasing the education budget, extending unemployment benefits, sending free money to Africa, troops to Lyberia, subsidies to farmers and dairy farmers or tariffs on steel.

(cough-cough) Sorry Chet, I was just choking on the air Bush has recently polluted and pardon for my poor spelling from the fucked up educational system that has been funded increases every year for 50 years but still sucks. But, hey, that's bush's fault too. Good thing you got a good public education, though!


Jason, you've gone over the edge. You are looking through such Republican/conservative hate-filtered glasses that you're actually believing these wild conspiracy theories.

Yeah, but his problem is that he keeps equating conservatives with Republicans. Unfortunately most Republicans keep describing themselves as conservatives too, but they aren't.

[Jason McCullough]

That must be why the right so carefully discriminates between liberals, leftists, communists, and the Democratic party, right? Man.

[Midnight Son]

Jason, why waste time arguing with these folks? Ok, sure, I do it too but the thrill is wearing off. :)

[bmulligan]

What are you talking about? Every one of those groups gets their invitation to join the Donkey Party every 2 years. There is no discriminating between them because they all stand under the same umbrella when it's raining. HE-HAW!

[bmulligan]

Let me tip the scale the other way since I've been accused of leaving my finger on it by Ydejin.

Just like the Republicans are made up of the abortion haters, fascists, liberatarians, christian fucks, and Nascar country bumpkins.

There! happy?

[Midnight Son]

It's just the lesser-of-2-evils principle. We need a more chaotic European system of govt! What fun that would be!

[antlers]

Not only are the Republicans trying to get rid of SS and Medicare, they are also trying to get rid of public education (what's going on in Alabama is just the first step). School vouchers are the equivalent of privatizing social security is the equivalent of privatizing aspects of Medicare health insurance. In the name of "saving" the system they are attacking, they set up the mechanism to reduce the popular support for the publically funded portion of it, so they can de-fund it. This way, the rich don't have to pay for the education, senior healthcare or retirement of the great unwashed; and the religious nuts and the crypto-racists don't have to pay for the secular or integrated education they don't want their children to have anyway.

If you can't see this as the end of the current Republican policies, you have a serious lack of imagination. If you think they'll stop short of this, you see signs of responsibility in them that I don't.

[bmulligan]

Yeah, some may say they believe it, some may hint at it, but none of them would ever do it. They want to keep their hold on power and our money just as much as Democrats do. The Republican executive and congressional control conspiracy to destroy the entitlement world as we know it has failed to materialize. If they wanted to do it, they could have , so why haven't they?

It's the same old scare tactic, democratic spooge that oozes from the liberal mouthpieces every time an election is around the corner: "Republicans want to steal what you deserve." Only this time they're starting a year early so everyone gets a chance to 'hear their message'.

And contrary to your theory, school vouchers are just as much a Democrat issue, they'l latch on to anything that would appear to gather them more votes. And they have nothing to do with privitization. The only thing the Dems have against it is when they are used for perochial schools, otherwise they're right on board. Just ask your buddy Al Gore.

[Mark Asher]

Voters are not going to vote for candidates who support removing SS and Medicare. Even wealthy, conservative voters won't, because a lot of them will be in line to receive those benefits soon and voters don't normally vote away their benefits.

My guess is we'd be much more likely to see cuts in other kinds of goverment spending, including the military.

It really is appalling how Bush is pushing revenue cuts and increased spending, though. It's almost unpatriotic because it seems to have so much potential for causing damage to the country.

[bmulligan]

Mark, there is a difference between revenue cuts and tax cuts.

[JessicaM]

Does anyone believe that the $6 trillion+ US federal debt is ever going to be repaid? Probably not, including Bush and company. At that point, they only worry abut the size of the interest payments, currently over $200 billion annually and rising.

That's still small potatoes to them, since they are collecting $1.4 to $1.8 trillion a year in taxes, tariffs, et al, which still leaves plenty to pay some bills, buy some tanks and bombers, run a $300-$500 billion deficit annually and keep everything from falling apart quickly. Twenty years from now, sure, things are in the toilet, but most people won't look that far ahead.

In other words, the whole thing doesn't blow up until today's pols are long gone, so carpe diem.


Nope, not going to take that for an answer - how are the permanent structural deficits Bush has opened up going to be resolved, LK? They're not going to disappear on their own; as Krugman points out, there's only 3 outcomes - tax increases, the elimination of Social Security and Medicare, and Argentine-style financial crackup.

I think tax increases are possible, albeit unlikely, and consider the elimination of SS/Medicare virtually impossible, so that leaves the last.

Projecting forward with no policy changes, the US deficit will become catastrophic when the boomers near retirement.