Paul Krugman et al: A Look at my Blogrollers

Paul Krugman - Caricature

Paul Krugman – Caricature (Photo credit: DonkeyHotey)

I don’t expect to see a lot happening in Congress this summer other than investigations, mostly by Republican led committees, and party charges and counter charges and gridlock and more gridlock, all mostly political theater.

Little of the serious business of the nation will get done, so I will likely post once a week instead of the usual twice and save us all some frustration.  Meanwhile some of you might wish to pay more attention to my Blogroll (to the left), so let me say a little about that.

I chose the six blog sites with the idea of providing a balance of liberal and conservative views on politics and economics.   Today I will concentrate on economist Paul Krugman, who gets star billing because he is brilliant and a powerful liberal voice through his blog, his column in the New York Times, his numerous layman-friendly books and his frequent appearances on TV political talk shows.  While there are highly respective right leaning economists as well, they are not as ubiquitous in making their points known.  Also, unlike Krugman, they don’t tend to suggest those with whom they disagree are either idiots or villains.

Of course, many on the far right easily match or exceed Krugman in that regard, but their credentials in economics are about as weak as mine.  They are ideologues not economists.   In contrast, the most respected right-leaning economists are usually academics who shy away from politics, are accustomed to more genial disagreements and not as quick to accuse as Krugman.   Rightly or wrongly, he blames them for bolstering the far right and he thinks his disagreements with them are often too important to play nice.

A good example of Krugman in action is the fairly recent controversy over  an older, influential economic study by Harvard economists Ken  Rogoff and Carmen Reinhart.  The  study has given support to those who believe in the need for government austerity (cutting spending to reduce debt) as a cure to our overall economic problems.   However, a recent review of that study has revealed an important statistical error as well as some questionable assumptions which undermine the support it has given to those who stress the need for government austerity immediately.

Since Krugman  has led the charge for more government stimulus (spending incurring more debt) as our immediate response to a  still weak economy (and putting off tackling the debt problem until it is stronger), he has had much to say about that Harvard study and its weaknesses.

This split in economic theory is important because it underlies the political polarization in which the left wants more government money applied to expanding our economy and reducing joblessness, while the right wants to reduce government spending, claiming this spending doesn’t really solve our economic problems but just deepens and defers them to later generations.   That this urgency about national debt was not often stressed by the right during the G. W. Bush years is another story.

I’m not trying argue those points here, but merely noting that Krugman argues his position regularly with his blog and other forms of communication.   And at times he has as many as five posts a day with links to  friends and foes alike.    Whether you agree with Krugman or not, reading his posts is an ongoing education in economics.

To get a better sense of Krugman’s thinking and his way of expressing himself, I suggest clicking the Krugman blog link and scrolling down to one of his June 2 posts titled:  The Spat.   There he defends himself from what Ken Rogoff has called “very personal” attacks, even noting that Rogoff “is a magnificent economist”…. just not in this instance.

While liberal to the core, he seems to be dealing with facts more than ideology most of the time.   Of course, many would disagree,  so I  provide  some balance to Krugman’s crusading ways with three sites on my Blogroll from conservative perspectives.

You can figure out which three those are if you investigate all of the six linked blogs, or you can wait for me to return to the topic this Friday.

Just exploring Krugman’s prolific postings seems plenty for now.

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Lose Ends: Austerity vs. Stimulus, Fiscal Follies, Guns, Immigration

Mandatory Vs. Discretionary Spending

Mandatory Vs. Discretionary Spending (Photo credit: Public Agenda)

Austerity vs. Stimulus:  If you read my previous post, you might be sick of this topic, or still in the process of reading some of the linked articles.   Had I known that day the Stephen Colbert was going to cover the Rogoff-Weinhard controversy that night, I would have saved what I wrote until after you watched his show.   With his usual well informed wit, he did a great job of  summing up the issue in an enjoyable way.   Check it out at Colbert Report.

Also, if you want ongoing updates, keep checking the Paul Krugman link in my Blogroll, as he has his teeth into it like a dog with a bone.

Fiscal Follies:  While economists debate the big issues of macroeconomics, congress mucks along keeping the government going with one patch work deal after another.   To recap:  Congress got over one hurdle awhile back by passing a continuing resolution to fund the government until the end of the fiscal year in September.  That’s one step to keeping it financed and functioning.

Actually helping the budget is the sequester, which made more-or-less across the board cuts in non-discretionary spending.  However, while helping the budget it hurts some and irritates others in the process.  With the reduction of air controllers, for example, there has been the expansion of airport lines and waits on tarmacs.  Ah, but today I heard about some bill making its way through congress to alleviate that situation by moving funds from somewhere else.   Ever hear of that old expression “borrowing from Peter to pay Paul?”  Ad hoc government is becoming our specialty.

The next big ad hock decision will be raising the debt ceiling again.  I have been saying that would come around late May, because the legislative deal in January indicated May 19.  But it turns out it also allowed Treasury  “extraordinary accounting measures to help delay hitting the ceiling”… so early August seems the time for the next shoot out at the OK Corral.   The Republicans have been developing a bill in the House this week aimed to shore up their position for the upcoming battle.

Gun Control:   I realize the issue is often talked about as “gun safety” these days,  so as not to rankle gun owners, but I’ll stick with “control” for now.   Everyone knows the Senate failed to pass a background checks bill despite numerous polls indicating nearly 90% of public approval.   President Obama has been blamed by some for not twisting enough arms to get the bill to the House, but as I argued in an April 12 post, that’s not who he is.

Perhaps he could stretch his norm, but why do it just to get the bill to the House where it will go nowhere?  I believe that as congress is now constructed (both in terms of people and procedures), very little of consequence will get passed before 2014.  But a “paper trail” will be developed for the 2014 mid-terms and Republican general recalcitrance might, just might alienate enough voters to tip the House back into Democrat hands and in turn the possibility of a functioning congress again.    With that in mind, this gun control setback might actually aid a later election win, if we can believe the overwhelming support for background checks in the polls.

Immigration:  Some sort of integration deal might come to pass because elements in both parties see it as advantageous to themselves.   The question is, assuming a bill gets out of the Senate, whether the Tea Party types in the House will be strong enough to stick a monkey wrench into any deal.  Will Speaker Boehner be willing and able to garner enough Republican support to combine with the Democrats to get something passed?  A column by Dana Milbank yesterday provides some insight as to how hard it is for House leadership to marshal the Republican troops.

So ends this thumbnail report on our creaky ship of state.

Krugman, Ryan, Peterson, Stockman and the Debt

In my April 5 post I told of an upcoming panel discussion including economist and columnist Paul Krugman and David Stockman, a former budget director for Ronald Reagan, on Week End with Stephanopoulos.  While I had planned to return to a discussion of this encounter, it struck me after watching it twice that it was not worth it.   Had it just been those two it might have been, but there were three other panelists as well which fractured the nature of the discussion to the point where no points were really developed, just differences emphasized in a scattered fashion.

This is a common problem with such so-called discussions on TV.  They seldom lead anywhere due to the complexity of the issues and the short amount of time that the programming allots.   I thought Chris Hayes did the best of anyone with that kind of format, but he had two two-hour programs on weekend mornings to do it.  Now MSNBC has moved him to a one hour show late week day afternoons and, while no doubt  a promotion, I believe his program suffers as a result.

I’m not here just to gripe, though  (I already did that in a couple of posts last May when Krugman also happened to be on  Stephanopolis).  Instead I think it worthwhile to develop some background information on these issues, so  that I can refer readers to it when writing related posts, as I am about to do right now.

The Governomics page, linked near the top of this home page, gives a thumb nail sketch of my present take on the nature of the huge fiscal problems that appear in store for us over the next 10 to 25 years, let’s say.  Tied to that is a sub-page where I describe three different assessments/approaches to these fiscal problems, one of them with liberal Paul Krugman as the poster boy, another with Paul Ryan and a third with fellow conservative Pete Peterson, probably the least known of the three but by far the richest and spends his money to be influential.  I also include David Stockman, who seems to fit well in the Peterson camp.  This seems a more fruitful way to broach these issues  than a return to the Stephanopoulos verbal merry-go-round.

Krugman vs. Stockman this Sunday on This Week

While I was going to wait until Tuesday to do my next post, I wanted to alert everyone  that Paul Krugman, NY Times columnist and Nobel Prize winner in economics, and David Stockman, a budget director for the Reagan administration (who quit because he took federal deficits more seriously than Reagan did), are slated to be on This Week with George Stephanopoulos this Sunday (9:oo a.m. on ABC in San Diego;  check your local listings.)

English: Paul Krugman at the 2010 Brooklyn Boo...

English: Paul Krugman at the 2010 Brooklyn Book Festival. (Photo credit: Wikipedia)

It is a verbal prize fight in the offing as each sees our fundamental fiscal problems very differently and have exchanged written barbs resulting from Stockman’s publication of The Great Deformation:  The Corruption of Capitalism in America.

They figure to deal with the large fiscal issues that face us in contrast to the congressional pie fights over just keeping the government running.

David Stockman

David Stockman (Photo credit: New America Foundation)

There figures to be a lot of heat and perhaps some light shed through what should be an interesting verbal battle. Actually I wouldn’t mind if a punch or two is thrown, just to break the tension with some laughs.  Old men fighting is always funny.

Those interested in some background information can click the link to the Krugman blog in my Blogroll to the left and scan down his posts.   And/or  check out the article below.

Can’t wait for the opening bell!

The Big Picture of our Federal Fiscal Problems

Rubik's Cube Français : Rubik's Cube Bahasa Me...

Rubik’s Cube Français (Photo credit: Wikipedia)

Typing the above title made me laugh.  The idea of me saying anything useful about the “big picture” in the space of an itty bitty post makes no sense at all.  On the other hand, it doesn’t feel worthwhile to keep tracking a congress which struggles to just keep the government funded on an almost month by month basis.

Common sense would suggest the issues of the sequester and whether to continue funding the federal government past March 27 shouldn’t be issues at all.  Solving those are the bare minimum while the real issues, the REALLY BIG fiscal  issues are not being touched upon.  It’s as if we are busy trying to agree on shoring up some levees while a tsunami is coming at us a few miles away, or in years, 10 or so.

Doug Elmendorf is the Director of the Congressional Budget (CBO) which acts as a kind of referee examining budget proposals developed by congress and the president and “scoring” them as to their actual cost.   I have come to realize this is a sophisticated guestimate at best since there are so many variables involved, but a good faith guestimate is better than nothing, I guess.

According to Elmendorf we are headed towards very rough waters in our fiscal future.  Last year the CBO chief said that even if congress could come together on various tax hikes and spending cuts offered by both sides – A REALLY BIG IF since they barely can agree to keep the government operating for a few months – they might cut around $250 billion annually from our growing yearly deficit (not touch the overall debt, mind you, but just stanch our full speed towards the iceberg field of insolvency dead ahead).

While that would be a plus, Elmendorf  envisions the need for $750 billion annually in tax hikes and/or spending cuts by 2022 to prevent out national debt from climbing to the point of being equal to about 90% of our GDP, a level which scares most economists.   To reiterate:  Under what seems a best case scenario, we still fall  $500 billion short annually of swinging this big ship of state away from a treacherous ice flow in the 2020s. (*1)

Of course, Elmendorf’s vision would be challenged by some on the left and the right, with economist Paul Krugman the poster boy on the left and, let’s say, Congressman Paul Ryan on the right. (*2)   However, if Elmendorf is close to being right, certainly those on the right who see a solution shaped by only cutting taxes and spending are particularly delusional.

Our ship of state seems to be heading directly towards a huge iceberg in 10 years, or so.  And both parties have their hands on the wheel trying to pull it left or right, which keeps us going straight forward towards, if not disaster, to an America that is no fun to imagine.

Considering the complexity of all this reminds me of Rubik’s Cube, a puzzle I tried unsuccessfully to solve as a young man.  This seems infinitely harder to solve, and so complex it is hard to know even where to begin.  But I’m willing to put in much more time.

There is something about the impossible that has always attracted me.

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(*1)   I drew the Elmendorf material from Red Ink, a book by WSJ economics editor David Wessel.   Short (162 pages) and easy to read, it provides a good ball park sense of our fiscal Rubik’s Cube.

(*2)  In case you haven’t bumped into him, Paul Krugman is a liberal, Noble laureate economist who probably has more influence than most in his trade because in addition to knowing his stuff he’s everywhere, through his column at the New York Times, frequent political chat show appearances, several books and a blog which he updates sometimes three times a day, which can be found in my Blogroll to the upper left.   He’s sharped tongued to say the least and argues that while the debt is important, we should forget about it right now and deal with unemployment and strengthening the economy first.    A stronger economy would generate more federal income and begin to reduce our yearly deficits.  Then we could work on cutting down spending.

Everyone knows Paul Ryan, who generally speaking, is the polar opposite of Paul Krugman.   He is all about reducing our annual deficits and later our debt.  He has just unveiled a 10 year plan to balance our budget which seems like a Tea Party fantasy.  For one thing, it assumes Obamacare will be abolished, which is definitely not going to happen over the next four years and quite likely never (though I do think it will be altered over time).   Krugman, though rough tongued to make an impression, seems to be arguing what he believes.   I don’t know what Ryan is up to.

Dealing with Our Debt Dilemma: Austerity vs. Stimulus

Those paying attention cannot help but feel frustrated by the inability of our Congress and President to come up with a long term debt solution.   According to the Congressional Budgeting Office (CBO), “by 2023,…. the publicly held federal debt will reach almost $20 trillion, nearly double 2012’s $11.3 trillion.” That figures to  stifle our economy and leave a huge financial burden to our descendents.   The trend is not our friend  (*1).

Wipe our Debt

Wipe our Debt (Photo credit: Images_of_Money)

Of course, much of the political wrangling has to do with gaining or losing advantage for either party, but often lost in that are real differences in points of view.  The two parties can’t make a deal because they see the problem differently.  On the right are those who believe the debt is our biggest problem and must be tackled right now (*2), while on the left, the belief is we must first develop a more robust economy and then later tackle the debt using the increased federal income stemming from that economy.   Cutting now would cut too deeply into social programs.

It boils down to those who favor austerity now and those who favor more government stimulus now, even though it adds to the debt.   The latter do not deny the debt issue, but believe it is not our top priority, while boosting the economy and creating more jobs is.   The former, especially the Tea Party, would argue that the promise of tackling the debt down the line is a fairy tale.   Our federal government has grown under both parties, an addiction it can’t break, like a life long smoker.  It needs to stop cold turkey…..or cool turkey.

Of course, there are some who advocate a combination of raised taxes and cuts in spending, a middle ground as represented by the Simpson/Bowles plan which adds revenue and makes budget cuts.  But there are two big flies in that ointment.  The Democrats don’t want to talk about reducing entitlements and the Republicans don’t want to talk about raising taxes, even more so now that the Bush tax cuts have been erased for those making $400,000 or more.   Those cuts were supposed to be temporary, so Democrats think of them as tax restoration, not hikes, but to Republicans, they are tax hikes.

Months back when Simpson/Bowles was introduced into the House hardly anyone on either side voted for it (*3).   That would have meant in upcoming elections, they would have had to defend both raising taxes and cutting spending.   Better to leave sleeping dogs lie, not for the country, but better for individual congressmen and their parties.

The one thing most on both sides can agree upon is that too much austerity too quickly would throw us back into recession.  That’s why Congress keeps working out last minute stop-gap measures, the proverbial kicking the can down the road.  Can we cut deficits without killing the recovery? is the question, and happens to be the title of an editorial by economic journalist Robert Samuelson.    He gives  a good overview of this dilemma in the Washington Post linked here: 

Samuelson sums up the potential problems of not reducing our deficits.   According to the CBO, increased federal debt “poses three dangers. The first is the financial crisis: Lenders might flee from buying Treasury debt. Second, large government borrowing could crowd out private investment and jeopardize future gains in living standards. Finally, the high debt might limit government’s ability to borrow heavily if a new need arises — from war, an economic crisis or natural disaster.

The exit from this dilemma…. is to time deficit reduction with a strengthening private-sector recovery. As private spending improves, cuts in government spending or tax increases would threaten the economy less.”

Nice trick if we can pull it off.   But it is hard to imagine our present Congress pulling off anything that tricky, isn’t it?   If they could, we wouldn’t be facing another “sequester” deadline next month.   The idea of the “sequester” back in August, 2011 was that the threat of across the board cuts in our federal budget would force both parties to come to a more sensible compromise.  But, many months later, all it has forced them to do so far is to extend the deadline for those cuts to March 2.

I imagine the President will address this in his State of the Union speech this Tuesday, but it is guesswork as to what will actually happen between now and the March deadline.   Given recent history, I can’t imagine a real step forward taking place, unless “cutting the budget with an ax rather than a scalpel” (an oft used comparison) winds up being a step forward some how.    I don’t know where it would be a step to.   Perhaps after the cuts were made, Congress could agree on selectively restoring some funding.

On the other hand, putting off the deadline once again would make me recall the fairy tale of the boy who called wolf.   A deadline is supposed to mean something.  If this keeps up “deadline” will become a laugh line.

Whatever Congress winds up doing or not seems likely to add new meaning to the term March Madness.

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(*1)   Debt as a share of the economy would rise from 2012’s 73 percent of gross domestic product (GDP) to 77 percent in 2o23.  Though a bad trend, it may not seem as frightening as the other stat, unless one adds that debt/GDP ratio was 36 percent in 2007.  The hay day before the mortgage meltdown.

(*2)  The liberal economist Paul Krugman (note link on my Blogroll above) has argued that Republicans do not really care about the debt, that it has been a political ploy.  Certainly the last  Bush administration wasn’t concerned about the debt.   But other highly respected economists and business leaders think Krugman underestimates the dangers of our deepening debt.

(*3)  Paul Krugman has also argued Simpson/Bowles is a bad plan anyway, but perhaps even a “bad” plan is better than no plan at all, which is where we are.  Also, as I will elaborate upon later, whatever plan Krugman might like would not have a shot of getting through Congress, even though he is a brilliant economist who may be right.  I will return to this in a later post.

Welcome to Centerville…. Be Prepared to Camp Out

In my previous post, I welcomed those Republicans  to Centerville 

Official seal of Centerville, Iowa

Borrowed from Centerville, Iowa (Photo credit: Wikipedia)

who no longer seem conservative enough to suit the prevailing sentiments of their party.   Now it occurs to me I’m inviting them to basically an empty lot.   When I developed my list of topics in pages strung across the top, my Bridges page was where I planned to develop information on centrist efforts of various sorts, writers, web sites, organizations and the like.   Soon I will change that page name to Centerville.

If you go to Bridges now, you’ll see not much, just something about Americans Elect, defunct for the time being, and No Labels, an organization I haven’t gotten around to exploring.  Both are at least aimed at developing what has been called a new “vital center”.    There is much out there with a centrist bent, I’m guessing much more than I know about, while I added to the potential overcrowding by inviting  RINO’s to my imaginary community in my last post.

One of my goals is to eventually make Centerville a depository of  information on centrist efforts, but I’m a staff of one, so the going will be slow until some foundation comes to my aid (Hey! Miracles happen).  I do have some time, according to economic analyst Steve Rattner  (*1).   If we do nothing to change the course of our American Titanic, he projects we have until 2032 before  becoming totally like Greece, except for the language and the Acropolis.  Of course, by then it will be too late, so …..

In any case, soon I will replace the Chasms and Bridges pages listed above with  Poles Apart and Centerville , words that seem to better convey my goal of providing information on polarization in one page area and attempts to bridge it in the other.

All of this aims at nurturing dialogue and common action among some sort of centrist coalition which, at the moment seems like pie in the sky.   Since the alternative is more rearranging of deck chairs, I say:  “Let them eat pie,”  as fantastic as it might seem.  To promote a dialogue, there needs to be some common principles as indicated in my last post which merit repetition.

  • A community of people who realize the nature of politics, short of dictatorships and the like,  is a matter of compromise.
  • Who honor honest expression of opinions and the legitimate use of facts as opposed to deliberate spin for political effect.  (to this I would now add the sub-title of Andrew Sullivan’s blog: ” Biased and Balanced.”  We cannot help but be biased, but can admit it and try to balance it.)
  • And who believe  that presidential candidates (in particular) must have a discernible degree of intellectual development to begin to handle the vastly complicated issues with which they are constantly faced, a quality that David Brooks has called “prudence”  (*2).

Over the next few days, while I do some work on my soon to be Centerville pages you might find it interesting to check out blogs in my Blogroll to the left (if you haven’t before).  Sullivan and Brooks are two of the Republican moderates mentioned in my previous post and I have a link to Sullivan’s  blog, while I suggest you check out a recent column by Brooks in the NY Times titled:  What Republicans Think.

David Frum, is another Republican moderate also listed in my Blogroll, along with liberals Ezra Klein and Paul Krugman.   The last-named is arguably the most influential of economists partially because, in addition to being very bright, he is dogged enough to be everywhere at almost the same time – on panels, in print,  in Europe.   At some point I will have a post on him, because he constantly campaigns for more government spending right now, not less.

Again, welcome to Centerville!  You can pitch your tent anywhere.

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(*1)  If you want to know more about Rattner go to his web site.  Of particular note, he offers what seems to be a good thumb nail sketch of  the European economic crisis.

(*2)  Brooks wrote a piece in 2008 about the importance of “prudence” in a president which I would call intellect.   Curiously, he titled the piece:  “Why Experience Matters”, though actual job experience is not what he focuses upon.  I wonder whether he might have chosen the word “prudence” because “intellectual” carries connotations of pointy headed know-it-alls to many Americans.   .