August 24, 2009

"$9 trillion... it’s being treated as an inconceivable sum, far beyond anything that could possibly be handled. And it isn’t."

K. Thx.

114 comments:

David said...

Reminds me of another swindle.

Yahoo reports that Madoff is telling fellow inmates that he is dying of cancer.

Let's take him at his word and send him to Libya.

Alex said...

Krugman has been peddling massive spending increases since forever. That man is insane.

Alex said...

One of the comments on the NY Times was to the effect the biggest problem facing deficit reduction is "the conservative minority hell bent on spending cuts".

Really? How the hell can the conservative minority possibly stop anything the Democrats want to do? This is nonsensical on its face!

kathleen said...

One billion seconds equals 32 years. One trillion seconds equals 32,000 years.

Krugman, you're a joke.

Methadras said...

Conscience of a Liberal, huh? When it comes to his leftist policies foreign and domestic, with regards to the his proposals for massive spending and taxation, he is unconscionable.

Scott M said...

Ah, wonderful. Yet another example of Washington (or the DC-lamprey crowd) exempting itself from the reality we all deal with every day.

Try running your household finances like the government runs our country's finances and you would end up in jail.

From this piece, by the by, it seems Krug is tacitly accepting Bush's Iraq War tally as just fine an' okey-dokey.

Bissage said...

I assume Mr. Krugman is laughing all the way to the bank.

He probably gets invited to all the best parties, too.

Pogo said...

Paul Krugman is Annie Leibovitz in drag.

"Budget is not something that enters into her consciousness...
Yet behind a facade of unlimited financial means, Leibovitz was spending her way into nightmare."

Hoosier Daddy said...

Right now GDP is around $14 trillion. If economic growth averages 2.5% a year, which has been the norm, and inflation is 2% a year, which is the target (and which the bond market seems to believe), GDP will be around $22 trillion a decade from now. So we’re talking about adding debt that’s equal to around 40% of GDP.

Wait a minute. Isn't the current Federal debt (not counting the unfunded liabilities of SS and Medicare) somewhere south of $11 trillion?

Or did Obama pay off the current Federal debt before going on vacation?

Florida said...

$30,000 per person for every man, woman and child who resides in the United States.

Democrats believe that spending this amount (over and above the Federal Budget) is OK.

Krugman, to his credit, says this "is bad."

That's the best endorsement an Obama butt boy can make of this rape of our children's future.

John Lynch said...

Well, sure, but...

I'd be a lot more comfortable if Dr. Krugman didn't take economic growth for granted. It's not set. Government policies can discourage growth.

Now, if we DON'T have 2.5% growth, but instead 1% or less, then the debt picture is totally different, isn't it?

AJ Lynch said...

Yeah Hoosier, Obama is increasing the deferal financial bogey by about $9 Trillion.

It appears Krugman is using that $9Trillion as his "ho-hum" number.

To do that, Krugman has to forget to addthe current debt of $10-11 Trilion as you pointed out.

AJ Lynch said...

With college professors like Paul Krugman, you should be very ashamed Althouse.

elHombre said...

Is this what Hilton Kramer meant when he said leftists (he said "Stalinists," but never mind) are:

"Impervious alike to documentary evidence and moral discrimination."

Pogo said...

Krugman is beginning to sound like the 1990s TV pitchmen for Real Estate MILLION$ With No Money Down!!1!

Pogo said...

Hey, elHombre,

I just finished reading that in 'The Twilight of the Intellectuals: Culture and Politics in the Era of the Cold War"!

Larry J said...

Right now GDP is around $14 trillion. If economic growth averages 2.5% a year, which has been the norm, and inflation is 2% a year, which is the target (and which the bond market seems to believe), GDP will be around $22 trillion a decade from now. So we’re talking about adding debt that’s equal to around 40% of GDP.

The phrase, "Past performance doesn't predict future results" comes to mind. What happens if the massive spending causes severe inflation? What happens if the growth is less than predicted?

Krugman is suggesting (and Obama is following) the same economic strategy that made Zimbawae the international economic powerhouse it is today. That hardly seems wise.

AllenS said...

11/03/2004

Krugman calls on Bush to reign in the red

Reporter: TONY JONES: Well, the US is not just labouring under a record trade deficit, there are warnings tonight that its budget deficit could precipitate a Latin American style financial crisis.

Influential economist Paul Krugman says the US will face a severe downturn before the end of the decade unless the $500 billion fiscal debt is rectified.

Daniel said...

Pre stimulus package, pre omnibus spending bill, pre any Obama action at all, the deficit for this year was $1.2 trillion. Can all of you go back in time and tell your 2002 selves that you should start teabagging when Dick Cheney announces that deficits don't matter? No need to stop now, just start then.

Thanks.

Hoosier Daddy said...

Yeah Hoosier, Obama is increasing the deferal financial bogey by about $9 Trillion.

It appears Krugman is using that $9Trillion as his "ho-hum" number.

To do that, Krugman has to forget to addthe current debt of $10-11 Trilion as you pointed out.


I don't pretend that I'm a Nobel Award Winning economist or anything but I certainly can count and just amazed this guy can say this kind of stuff with a straight face.

I'm also at a loss as to the CBO projections showing the current debt ratio at 50% of GDP. How does that math work? $11 trillion debt vs a $14 trillion economy is more like 78%.

Old Dad said...

I want what Krugman is smoking. We'll be lucky to see any real GDP growth in 18 months, let alone 2.5%. And inflation, ah yes. At the rate we're printing money, that 2% looks like a pipe dream. And banks still have their hands tied. Ask anyone--anyone--who depends on commercial credit how fast the money is flowing. Then ask anyone who hires, what the hiring forecast looks like. Oh, and did I mention that the dollar is being trashed and that oil is already inflating as a result? Krugman is a whore for the administration, but then he was also a whore for Enron. That's why he's always got that shitty little grin in his pictures. He knows he's getting schtupped, and he knows he's schtupping us, but he's laughing all the way to the bank.

mbabin said...

Deficit spending when the other party is in power: Terrible! Unconscionable! Ruinous!

Deficit spending when your party is in power: Why is everyone getting so hysterical? Chill.

Substitute politicians and pundits of both parties, depending on year.

Hoosier Daddy said...

Pre stimulus package, pre omnibus spending bill, pre any Obama action at all, the deficit for this year was $1.2 trillion. Can all of you go back in time and tell your 2002 selves that you should start teabagging when Dick Cheney announces that deficits don't matter? No need to stop now, just start then.

So we're back to its Bush's fault.
Thank you for the 3rd grade response.

Professor, I think its time for another Just Like Bush tag.

I'm digging all this change ain't you?

AJ Lynch said...

Hoosier- I went to the NYT comments and was surprised no one there noticed what you did.

To summarize, Krugman, in effect, per Hoosier's keen eye, is claiming there is no reason to panic even when federal debt is 100% of GDP in ten years.

MSM's new motto: "We are just propagandists now."

John said...

This is too easy. Let's see what Krugman was saying about the Bush Deficits. In November of 2004, he said

PROFESSOR PAUL KRUGMAN, PRINCETON ECONOMIST: Well, basically we have a world-class budget deficit not just as in absolute terms of course - it's the biggest budget deficit in the history of the world - but it's a budget deficit that as a share of GDP is right up there.

It's comparable to the worst we've ever seen in this country.

It's biggest than Argentina in 2001.

Which is not cyclical, there's only a little bit that's because the economy is depressed.

Mostly it's because, fundamentally, the Government isn't taking in enough money to pay for the programs and we have no strategy of dealing with it.

So, if you take a look, the only thing that sustains the US right now is the fact that people say, "Well America's a mature, advanced country and mature, advanced countries always, you know, get their financial house in order," but there's not a hint that that's on the political horizon, so I think we're looking for a collapse of confidence some time in the not-too-distant future.

TONY JONES: Your detractors - and there are quite a few of them on the Republican side of the equation - they're accusing you of scare mongering?

PROFESSOR PAUL KRUGMAN: The first thing to say is to look at what some of those same people were saying in the middle of the Clinton years when the deficit was substantially smaller as a proportion of GDP and they were carrying on about what a bad thing it was.

The other thing is the comparison.

The only time post war that the United States has had anything like these deficits is the middle Reagan years and that was with unemployment close to 10 per cent.

A lot of that was a cyclical thing which would go away when the economy recovered.

Also the baby boomers were 20 years younger than they are today.

If you look at the actual fiscal situation, it's much, much worse than it was even at its worst during the Reagan years. One way to say this is we have social security which is a retirement program which viewed on its own is running a surplus.

If you take that out of the budget then we're running at a deficit of more than 6 per cent of GDP and that is unprecedented.

http://www.abc.net.au/lateline/content/2004/s1064193.htm

But now a 9 trillion dollar debt is nothing to worry about.

AJ Lynch said...

Hoosier;

Maybe the CBO assumes our creditors will be happy to get less than 100%? HEH.

John said...

The Budget deficit in 2004 that Krugman was talking about was about 400 billion.

Original Mike said...

amazed this guy can say this kind of stuff with a straight face.

I've often wondered how Krugman can look at himself in the mirror. The man must have no conscience.

Daniel said...

So we're back to its Bush's fault.

Well, no -- not all, just a lot. Obama has increased the deficit substantially. Notice I said "no need to stop now" and I meant it. Why is it 3rd grade to point out that Bush left a $1.2 trillion deficit?

Deficit spending when the other party is in power: Terrible! Unconscionable! Ruinous!

Deficit spending when your party is in power: Why is everyone getting so hysterical? Chill.


This is sort of true. Except Clinton did balance the budget, and Bush did explode it for tax cuts. It is absolutely true, though, that Obama has not been at all serious about any attempts at long term budget balancing, and there hasn't been any real kickback on the left about that. Part of the reason is that you don't cut spending in a recession. But part is blind party allegiance (e.g., and I feel some of this myself: I think Obama does want to balance the budget, and will when he can, which I admit is totally naive of me), and it sucks.

John said...

. Except Clinton did balance the budget, and Bush did explode it for tax cuts.

No. Bush exploded it for spending on the war and for pork. And Bush was not a dictator. Congress was repsonsible for those budgets.

More importantly, stop equating tax cuts, taking less of what rightfully belongs to people, to spending increases. They are not morally the same.

hdhouse said...

so Krugman tells you the truth and it is something you don't want to hear but it is the reality of the moment and now debt and spending are soley Democratic party issues.

When are you going to face the reality that the last administration kept the interest rates at <2% for years thinking that "nothing will come of it" and that the bailout package...well i guess you don't remember Paulson and all that.

You've had 8 years of insanity and the democrats are supposed to undo all that in less than a year. that position is so hypocrital and morally bankrupt...you should be ashamed.

The clowns on here want all the goodies but, as ever, don't want to pay for any of it. that is so the republican montra....give me give me give... and then there is:

Hoosier Daddy said...
"Pre stimulus package, pre omnibus spending bill, pre any Obama action at all, the deficit for this year was $1.2 trillion. Can all of you go back in time and tell your 2002 selves that you should start teabagging when Dick Cheney announces that deficits don't matter? No need to stop now, just start then.

So we're back to its Bush's fault."

Yup we are. We are definitely back there laying blame for a lot of this on the decider and turdblossom and death vader...damn right. much of this is their doing and like the morons who supported him, they have no clue as to what they did, why they did it, or the probles it would cause later.

You can't cut taxes because the previous idiot already did that. you an only cut services so far and then they just don't work..but hey, as long as it is someone else's kid starving and not your own, you don't give a shit.

So people look Hoosier are what I call sucker-selfish. Go figure it out

The Drill SGT said...

Krugman could be correct, If and Only If a couple of things happen that aren't going to happen:

1. The economy isn't going to recover in the rosy scenario he postulates (BTW: when do the mid year budget numbers come out?. In July the answer was August. Until we see those, dont trust any scenario.)

2. Inflation has got to increase.

3. The 800 lb Gorilla in the corner? The SS and Medicare deficits are going to mushroom and eat the budget.

4. Krugman fails to mention that, those deficits "Might" be manageable IF they were declining at the end of those 10 years, but the Obama agenda is inserting long term increases across the board in domestic spending and new programs. Those deficits may new decrease if Obamacare, Crap and Trade, etc are passed.

John said...

"so Krugman tells you the truth and it is something you don't want to hear"

So he was lying in 2004 in the quotes I give above? Which is it? It can't be both. Either he was lying then or he is lying now.

John said...

"You can't cut taxes because the previous idiot already did that. you an only cut services so far and then they just don't work..but hey, as long as it is someone else's kid starving and not your own, you don't give a shit."

Yes because if we cut spending to say 2004 or even 1999 levels kids would be starving. Clearly it was a Dickens nightmare out there under Clinton spending levels.

My God you are a moron.

dick said...

Actually it was the Congress that balanced the budget for Clinton.

Scott M said...

@hdhouse

"The clowns on here want all the goodies but, as ever, don't want to pay for any of it. that is so the republican montra....give me give me give... and then there is:"

Thanks for the pejorative. Try caps-lock next time if you really want to hurt my feelings.

I don't want goodies from anyone. I want bought-and-paid-for politicians, on BOTH sides, to stop giving goodies to zero-sum citizens while taking from producers.

And ditto on John's call to stop equating tax cuts to spending increases. Are you one of those that believe nobody really owns their own wealth at any time in the cycle?

The Drill SGT said...

may "Never" decrease, not "new"

Clinton's last budgets were balanced on dotcom capital gains.

they vanished

Hoosier Daddy said...

You can't cut taxes because the previous idiot already did that. you an only cut services so far and then they just don't work..but hey, as long as it is someone else's kid starving and not your own, you don't give a shit.

Coming from you who admits you don't pay your 'fair share of taxes' cause you know the loopholes, this is really really rich.

Yeah all those services that the government is providing is keeping all those malnourished waifs from starving in the streets. Pull this leg and it plays jingle bells.

As for the truth, Krugman should simply try basic math and that would show him he's as full of shit as your diaper.

Hoosier Daddy said...

lot. Obama has increased the deficit substantially. Notice I said "no need to stop now" and I meant it. Why is it 3rd grade to point out that Bush left a $1.2 trillion deficit?

Because we can't go back to 2002 and hold a tea party. Woulda coulda shoulda and all that. Then again maybe the reason the GOP was trounced out of power was, lets see, just a wild guess here, cause they exploded the debt? Because they tossed out the core conservative principle of fiscal responsibility?

I suppose the reason you're seeing tea parties and an outraged electorate is the Hope and Change President Shortpants is bringing is a whole lot of the same old thing.

Daniel said...

More importantly, stop equating tax cuts, taking less of what rightfully belongs to people, to spending increases. They are not morally the same.

Translation: "Hi, I'm conservative."

Well hello! I'm liberal. Nice to meet you.

Daniel said...

Because we can't go back to 2002 and hold a tea party. Woulda coulda shoulda and all that.

Ok -- honestly ask yourself why you didn't. Is it because they were your losers? Or because you didn't care about deficits then?

Then again maybe the reason the GOP was trounced out of power was, lets see, just a wild guess here, cause they exploded the debt? Because they tossed out the core conservative principle of fiscal responsibility?

This might be why the conservative base turnout was depressed. But it's not why you lost the election in every way. People who are pissed that "core conservative principles" were violated don't vote in Democrats.

Paul Zrimsek said...

If you take into account — as the C.B.O. cannot — the effects of likely changes in the alternative minimum tax, include realistic estimates of future spending and allow for the cost of war and reconstruction, it's clear that the 10-year deficit will be at least $3 trillion.

So what? Two years ago the administration promised to run large surpluses. A year ago it said the deficit was only temporary. Now it says deficits don't matter. But we're looking at a fiscal crisis that will drive interest rates sky-high.

-- Paul Krugman, 3/11/03

Daniel said...

Clinton's last budgets were balanced on dotcom capital gains.

they vanished


Maybe, but Clinton didn't use temporary increases in tax receipts to spend us into oblivion; instead, he balanced the budget.

daubiere said...

"Well hello! I'm liberal. Nice to meet you."

you're not a liberal, you're a butt-boy for the government. there's a difference. real liberals are very hard to find anymore.

Scott M said...

@Daniel

People who are pissed that "core conservative principles" were violated don't vote in Democrats.

You are correct, sir. They don't. They acknowledge that the GOP has gone to hell, leave the party, and vote libertarian. I voted for President Obama in the Missouri Democratic primary, but that's only because I have a visceral, nearly irrational dislike of Hillary.

As far as your 2002 analogy is concerned, I have to ask what you were predominantly thinking about in 2002. I don't know about it, but at the time, I was far more interested in the aftershocks of 9/11 and all that meant. I was not concerned with a deficit under those circumstances.

AF said...

Althouse, if the projected national debt were $1 trillion, would your response be any different? How about $500 billion? $100 billion? $1 billion?

I mean, $1 billion is a really large number, k?

rocketeer67 said...

Maybe, but Clinton didn't use temporary increases in tax receipts to spend us into oblivion; instead, he balanced the budget.

If I type it very s-l-o-w-l-y. maybe you'll understand it this time: c-o-n-g-r-e-s-s b-a-l-a-n-c-e-d t-h-e b-u-d-g-e-t.

elHombre said...

Pogo wrote: Hey, elHombre,
I just finished reading that in 'The Twilight of the Intellectuals: Culture and Politics in the Era of the Cold War'!

Depressing, isn't it? I hope I remembered the quote correctly. If you follow 'Twilight' up with this, it will really make your day.

I'm about ready to join your army.

AJ Lynch said...

This issue is fast becoming null and void. Because the American people have awakened from a long slumber.

Now they want to know how small can govt get? Ginormous deficits like Krugman is excusing will make voters nuts when they go to the polls.

John said...

"Translation: "Hi, I'm conservative."

Well hello! I'm liberal. Nice to meet you."

As a liberal, you think the state owns and has proper claim on 100% of everything. And anything that they allow you to keep, even though you rightfully earned it, is no different than giving you welfare.

Yes you are a liberal and have a sick view of the social contract. I am sorry but neither you nor the government own me. I am not a slave to the common good, which is what you would like me to be.

Scott M said...

@Al Lynch

Ginormous deficits like Krugman is excusing will make voters nuts when they go to the polls.

Perhaps now it's time (well, after 2010), to start pushing for tax day to be moved to October 14...30 days before election day. Or, much better, simply end withholding and have Americans pay their taxes like they do their bills...monthly.

The alertness factor on all sides of the isle (there's aren't just two) would skyrocket.

Hoosier Daddy said...

Ok -- honestly ask yourself why you didn't. Is it because they were your losers? Or because you didn't care about deficits then?

Actually I did, in the form of writing my congresscritter. But in perspective, growing deficits in a boom economy weren't a major issue. Kind of what Krugman is saying now. The only difference is the economy was in better shape in 2002 than it is now. Personally I'd insist on a balanced budget amendment but that's me. I think the outrage now is that people are seeing the Democrats trying to douse a fire with gasoline.

This might be why the conservative base turnout was depressed. But it's not why you lost the election in every way. People who are pissed that "core conservative principles" were violated don't vote in Democrats.

Who said they did and how do you know a depressed conservative turnout didn't result in a GOP loss? They either didn't go to the polls or voted Democrat. You seem to think it was neither.

Hoosier Daddy said...

And actually if the Bush administration taught us anything its that divided government is the way to go.

Then again considering President Shortpants is having a hard time getting his own party on board with Obamacare, we may have one anyway.

Old Dad said...

Can't we all just get along? Surely we can agree on the following.

1. George W. Bush was fiscally irresponsible.
2. Paul Krugman is not an idiot, but he plays one at the NYT in order to attempt to cover the stench arising from the current President's soiled diaper.
3. Our current projected deficits are unsustainable. Seems like even Timmy the tax cheat agrees with that.
4. Throw in Crap and Tax, Health Insurance Payola, and Medicare, Medicaid and SSec. deficits, and we are well and truly screwed.

The CBO gets that. Why can't we? Sung to the tune of Ebony and Ivory.

Daniel said...

This is deteriorating, so I'm headed out. Scott, Hoosier, maybe another time. I'm personally interested in figuring out how we all tied ourselves into knots on spending and deficits, which I think we did on all sides of the spectrum. I'm certainly not giving myself a pass on hypocrisy.

To the others -- I'm sure there's a town hall meeting somewhere that you can go scream at. Have fun.

Butt boy out.

Daniel said...

One more, then I swear I have to get back to work:

Old Dad, yes, much of that is true, but Krugman's no Obama apologist. Read his column before this one -- not to mention his last two years' worth.

Hoosier Daddy said...

Our current projected deficits are unsustainable. Seems like even Timmy the tax cheat agrees with that.

So do the Chinese. Remember when Obama sent Timmy G. to China to beg them to 'please buy our product'? If there was to be a wake up call to this administration it was when Timmy was telling the Chinese university childrens that the US dollar was strong and we would meet our obligations and they laughed at him.

But a wake up call such as that requires having a President with a rudimentary understanding of economics. Based upon the reckless spending he is continuing from the previous administration as well as proposing even more federal spending, he obviously thinks it comes from pixe dust. Or unicorn turds.

elHombre said...

Daniel wrote: Translation: 'Hi, I'm conservative.' Well hello! I'm liberal. Nice to meet you.

Translation: Daniel can recognize John as a conservative because John understands the negative moral implications of excessive taxation.

We can recognize Daniel as a leftist because Daniel does not.

Scott M said...

@Daniel

One more, then I swear I have to get back to work:

You can do this at work. You just have to perfect the art of hovering over ALT-TAB.

Hoosier Daddy said...

I'm personally interested in figuring out how we all tied ourselves into knots on spending and deficits, which I think we did on all sides of the spectrum.

Honestly? I think its because people finally took a look at what our debt is and shat themselves. Its made all the more worse when during a economic crisis, the administration insists on spending more money we don't have.

Look at it from the point of view of the average guy. Savings rates are at an all time high. People are tightening the belt and watching spending. Thats what you do when times are tough. Obama on the other hand is spending money hand over fist and applying for more credit from First National of Bejing. Yes during boom times, credit is loose and fancy free and deficits don't matter so much. I'm not saying that's right, just the way it is.

Daniel said...

Ok, can't leave. Alt-tabbing (though that doesn't help me actually WORK).

Hoosier, really? Then why did Michael Steele just announce that Republicans will never, EVER touch precious precious Medicare. We're all screwed up on this.

This post makes the point pretty well -- particularly about Republicans as defenders of Big Government, which should royally piss Scott off:

http://corner.nationalreview.com/post/?q=YWEyMTlmYmVhYzhlZGZkMmQ0YTM0ZTVmYTBkNmYwZGI=

Daniel said...

And maybe I'm overly Keynsian, but I think that when times are good, people should spend and the government should balance the budget, and when times are bad, people should save and the government should deficit spend. Clinton balanced the budget when times were good.

elHombre said...

John wrote: I am not a slave to the common good, which is what you would like me to be.

I think you give too much credit here. The left has no concept of the common good except as an extrapolation from leftist ideology.

Everything begins and ends with the ideology. Politics just don't get any more mindless than that.


WV immeas: The size of the defic under this admin.

Old Dad said...

Daniel,

Krugman is a slave to many masters--primarily the progressive establishment. He's got to play his chits carefully. How best to pander to Princeton, the Times, the progressive base, Obama?

He's got his finger in the wind. He's cleary unprincipled. He's a survivor. He'll kiss whatever butt keeps the paychecks coming.

Daniel said...

Old Dad, there has been no more prominent liberal who has bashed Obama as consistently as Krugman. For two years, Krugman has used the op-ed page of the Times to push Obama from the left. He was a huge Clinton supporter. He's the number 1 columnist in America, just won something like $2 million for the Nobel Prize, and is a tenured professor. He's not pandering for paychecks.

How about this (mildly related point) -- let's just take people at face value here, and criticize what they say. Some people here seem to need to tell me what they KNOW I believe, despite the fact that they don't know me and have read 14 lines of my writing.

Scott M said...

@Daniel

You've now said that Clinton balanced the budget three times (if my patented Clinton Budget Balance counter is correct). The most conservative Congress we've had in a LONG time (before certainly, since...definitely) forced his hand on that front.

I will read the Steele article asap, but if they're announcing some senior caveat, it's a pretty thinly-veiled shot that Dems that are loosing seniors via AARP.

I forget who the liberal host is on Sirius Left in the morning drive, but he was actually raising his voice (trumpeting Social Security and the VA as programs that the government excels at) yelling for people to stand up for the government.

???

Joe said...

Germany is recovering from the recession. The US isn't. Germany didn't create a Keynesian "stimulus" package. The US did. Keynes was wrong, Hayek was right. Time to move on.

rhhardin said...

If you take a 48 X 3 array of 1's, 2's, 3's and 4's, with all 1's connected, all 2's connected, all 3's connected and all 4's connected, and a 1 in the NW corner, a 2 in the NE corner, a 3 in the SW corner, and a 4 in the SE corner, there are

13360350507058964638

ways exactly to construct such arrangements.

(Hot off the screen just now.)

9 trillion is a drop in the bucket. I'm surprised Krugman didn't use it.

Old Dad said...

Daniel,

You made my point. Krugman supported the Clintons--the King and Queen of the progresive elite until unseated by the the usurper.

Now, like the good progressive courtier, he flatters both the pretender and the king.

And I know that Krugman has a lot of jack, but greed is only tangentially related to money.

Ask yourself, is Krugman intellectually honest or a political whore? Compare and contrast WFB, Daniel Patrick Moynihan, Tip O'Neill, Ronald Reagan, George Will. The world is not devoid of honest mostly honest players, but Krugman isn't one.

PatCA said...

I get a picture in my head of Krugman frantically "dealing with" the waves off the Maine rocks...and losing.

And then he will shuffle off his mortal coil and join other heroes in Vighala (WV).

Revenant said...

Krugman's numbers depend on the economic growth averaging 2.5% over the next ten years. Economic growth is currently negative 3.9% -- i.e., 6.4% below where it needs to be for Krugman's math to work.

His rosy scenario (which isn't even all that rosy) requires not only that we recover immediately from the recession, but that the economy go immediately into a 90s-style boom from 2011 onwards. If THAT happens the debt will "only" be 90% of GDP (vs 120% of GDP at the end of WW2).

Daniel said...

Scott, Clinton was a third wave Democrat who ran on a platform of pay-go fiscal responsibility. He had help from the Republicans, yes, but he was very much for balanced budgets.

Yes, Steele's op-ed (in the WaPo) is a not-at-all veiled shot at poaching older voters. But if you think Repubs lost because of their big government ways, please explain to me how this, from Steele's op-ed, will help in the future:

"First, we need to protect Medicare and not cut it in the name of "health-insurance reform." As the president frequently, and correctly, points out, Medicare will go deep into the red in less than a decade. But he and congressional Democrats are planning to raid, not aid, Medicare by cutting $500 billion from the program to fund his health-care experiment. The president also plans to cut hospital payments and Medicare Advantage, all of which will mean fewer treatment options for seniors. These types of "reforms" don't make sense for the future of an already troubled federal program or for the services it provides that millions of Americans count on."

Twisted up in knots...

How does the government not excel at Social Security? It's the most beloved thing the government does -- that and Medicare.

Steven said...

Ok -- honestly ask yourself why you didn't. Is it because they were your losers? Or because you didn't care about deficits then?

It was only going to be about $500 billion. That was high enough to concern me, but not a panic level, since much of it was war expenditures that was eventually going to wrap up.

Then came TARP. I figured a one-time expenditure of $700 billion to prevent a general banking collapse was, if not ideal, at least endurable. The money was, we were told, going to be spent buying up Troubled Assets that were undervalued because of the vicious circle caused by the Sarbanes-Oxley mark-to-market rules. Based on the past performance of the Resolution Trust Corporation, it seemed likely that this $700 billion was not merely going to stop a banking collapse, but actually going to return a positive sum to the Treasury over time, reducing the net debt. Even if it didn't return a net positive sum, it was almost certain to return several hundred billion dollars; we were going to buy the mortgages on real property, after all.

Then, of course, instead of doing that, we started shoveling the money out to GM and Chrysler and banks for no-intrinsic-value stock, and I started complaining. But this transformation happened after the elections. Protesting Bush was rather pointless, since he was a lame duck being replaced by the other party, and protesting Obama when he hadn't done anything yet would be unfair. I'm angry, but there's no good target for it. Maybe when Obama comes in he'll soothe me.

And, of course, instead Obama expanded the deficit almost the amount of the pre-TARP deficit, without any of the fig leaves TARP was originally sold to me with. I'm already angry over the TARP bait-and-switch, and now Obama is pouring away money for no better reason than to spend money?

Guess what? I'm angry, and I've got a good target for that anger—the President who as a candidate promised me a net spending cut.

Larry J said...

Maybe, but Clinton didn't use temporary increases in tax receipts to spend us into oblivion; instead, he balanced the budget.

Given the government's smoke & mirrors approach to accounting, can anyone claim with any certainty that the budget was ever balanced. For example, the national debt increased every single year during the Clinton administration, even the ones where there was an alleged surplus. How does the debt increase in years where there is no defecit? Quite likely, they borrowed some of the Social Security surplus in order to falsely balance the books. It's an accounting trick on the order of using one credit card to pay off another.

Daniel said...

The SECOND President who as a candidate promised us a net spending cut.

I'm quoting Old Dad:

"1. George Bush was financially irresponsible."

Though he didn't when the collapse hit. It was McCain who wanted a suicidal spending freeze. Obama said there would be a stimulus before the election. And tax increases.

Many people, including me, though that the collapse of GM and Chrysler would finish the job Wall Street started and bring the whole economy down.

As for the toxic assets reducing the debt in the long run, I never understood that. Read Krugman's archives -- he was arguing that too. But we were buying total crap, so how was there going to be a market for that?

That said, I understand the shock and anger at the deficit, and your whole story makes a lot of sense. I'm shocked and upset as well, and frankly a little confused as to how it got so big. And how Krugman is saying it's ok. And how Steele is saying don't touch Medicare. Etc., etc., etc.

Knots...

Dylan said...

Can't help but notice that in the truncation you left out the part where Krugman says, "Don't get me wrong, this is bad."

Puts the quote in a bit if a different light.

blake said...

Daniel,

You don't seem to get that Krugman bashing Obama doesn't really increase his street-cred here. He's dishonest; I mean, this is a really good example of his dishonesty.

Maybe he's not doing it in the service of Obama, but it doesn't really matter why, does it? Whatever his motives are, they aren't honest. It doesn't really matter what else he's written.

wv: dialatha

One of Marx's less known ideas: Dialatha Soapism.

Revenant said...

Ok -- honestly ask yourself why you didn't. Is it because they were your losers? Or because you didn't care about deficits then?

Bush and the 2000-2006 Republican Congress were awful on deficits. I said as much at the time. But I didn't campaign against them, because I thought it would be far worse if Democrats were in power instead.

And I was right.

Scott M said...

@Daniel

How does the government not excel at Social Security? It's the most beloved thing the government does -- that and Medicare.

Larry J said..."they borrowed some of the Social Security surplus in order to falsely balance the books"

He beat me to it.

Put simply, I want the federal government to stop abusing the hell out of the interstate commerce clause.

Daniel said...

Blake, my point is that everyone seems to be somewhat dishonest in this conversation (well, except for me). Steele, the chair of the RNC, saying cuts to Medicare are off limits??!! Is he insane? It's not about street-cred (and anyway, I said Krugman was bashing Obama from the left, which would hardly endear him to you).

Revenant said...

Obama said there would be a stimulus before the election. And tax increases.

Tax increases would defeat the supposed purpose of the stimulus.

The idea behind stimulus spending is that the government can borrow more cheaply than private citizens or businesses can. So it can do so, and then spend the money, thereby putting more money in circulation. Taxation takes money OUT of circulation, thereby negating whatever benefit stimulus spending is supposed to provide.

The only economic theories under which it makes sense to increase both spending AND taxation during a recession are the various early 20th century Socialist and Fascist theories which held that the government is better at determining how people should spend their money than the people themselves are.

blake said...

Blake, my point is that everyone seems to be somewhat dishonest in this conversation (well, except for me).

Diogenes stopped by earlier looking for you.

Steele, the chair of the RNC, saying cuts to Medicare are off limits??!! Is he insane?

No, he's political.

My only point about Krugman is that I get the idea that you think we should care about him for some reason. I got this from you mentioning his past two years of columns.

He has some sort of agenda that's more important than truth. What more does anyone need to know about him?

Daniel said...

Revenant, two things:

First, I question your 2000-2006 perspective. You had just come out of an 8 year Democratic presidency and mostly Republican Congress that was way, way, way more fiscally responsible than the Republicans were during this period.

Second, Obama said he was going to let the Bush tax cuts expire for the richest, which happens at the end of next year, when we'll be long out of the recession.

Daniel said...

Look, I read Krugman. He's smart, good at what he does, and an opinion writer -- which means that by definition, he has an agenda. I'm not trying to convince you that you should somehow respect him. I'm saying (to borrow a phrase from up-thread), don't call him Obama's butt boy -- that's one thing he truly isn't.

John said...

"Look, I read Krugman. He's smart, good at what he does, and an opinion writer -- which means that by definition, he has an agenda. I'm not trying to convince you that you should somehow respect him. I'm saying (to borrow a phrase from up-thread), don't call him Obama's butt boy -- that's one thing he truly isn't."

If that is true, why was Krugman running around in 2004 claiming that Bush's 400 billion dollar deficit was going to destroy the economy but is now claiming that Obama running the debt to $9 Trillion is no big deal?

He is most certainly Obama's butt boy. He makes whatever argument is convienent to defend Obama.

Revenant said...

First, I question your 2000-2006 perspective. You had just come out of an 8 year Democratic presidency and mostly Republican Congress that was way, way, way more fiscally responsible than the Republicans were during this period.

There was nothing "fiscally responsible" about the first two years of the Clinton Presidency, unless you count the fact that that Clinton failed to pass his multi-trillion-dollar health care boondoggle. The period of fiscal responsibility lasted from around January of 1995 (when the "Contract with America" Republicans took Congress) through around January of 1999 (when big-government Republicans took control).

Second, Obama said he was going to let the Bush tax cuts expire for the richest, which happens at the end of next year, when we'll be long out of the recession.

Two points:

(1): Even if Bush's tax cuts were repealed *right now*, the current and projected deficits for each year of the Obama presidency would still EACH be larger than ANY year of ANY previous Presidency.

(2): We're already nearing the end of 2009 and we're still deep in a recession. We will not be "long out of it" by the end of next year.

Steven said...

Because the assets weren't total crap.

Really. They weren't AAA, but a significant majority of the constituent loans were performing, and even the ones that weren't were backed by the residual value from foreclosure of the property.

The trick is, many of the securities were owned by, for example, pension funds that, by their charters, had to own assets of a specific grade. So when the ratings dropped below AAA (or wherever their individual floor was), the pension funds were required to sell the mortgage-backed securities, at whatever price they could get. Since lots of people were selling, the market price dropped dramatically.

That dramatic drop in market price invoked the mark-to-market accounting rule, which meant that firms that owned the mortgage-backed securities suddenly had to mark down the assets on their books at the collapsed market price, not the actual value that the securities would return. That put these firms' balance sheets into huge deficits . . . and meant investments in those firms were now no longer AAA grade, either.

So then the pension funds had to unload their investments in those firms. So the market price for the securities of those firms plummeted. So companies that owned the securities of the firm had to mark down their holdings in that firm as only being worth what the current market value was, which then brought the assets-to-liabilities ratio of those companies low enough they were no longer AAA.

So the pension funds had to sell the securities of those companies, which depressed the market price of the securities, and . . . and so on.

Mortgaged-backed securities that only return 70% of their original expected value aren't worthless; they're worth 70% of their original expected value. But rigid risk rules and emergency sell-offs meant that they were trading for, say, 20% of their original expected value. If the government could step in and buy those up at, say, 60% of the original expected value, the government would both pump a lot of cash on to the books of the institutions and return a profit to the government.

(In principle, of course, any private investor could do the same. Unfortunately, in a general financial panic, there are no individual private investors wealthy enough to do so on a large enough scale, and all the little investors that could be aggregated are going, "What? Those assets are total crap!" Over enough time, the prices will bounce back . . . but not quickly, and bankrupting lots of financial firms in the meantime. A pure Austrian School economist would favor letting the trouble burn itself out, but even if occasional panics are more efficient in the long run, they're not comfortable to live through.)

Paul Zrimsek said...

Is it OK if we call Krugman liberalism's butt-boy?

That he's a hack cannot be credibly denied. All that's left for reasonable people to differ over is what sort of hack he is.

Daniel said...

Clinton was a third wave, balance the budget Democrat. If he wasn't, Congress couldn't have done squat. Let's call it bipartisanship and move on, since we can't re-litigate the entire 90s (plus, I'm about to bring up my resentment about blow-job impeachments, and I don't want to do that).

The US economy shrank at an early estimate of only 1% in the second quarter. Many people think we're already out of the recession, at least in formal GDP terms. If we're not by the end of next year, I bet Obama temporarily extends the cuts in some fashion. He knows you don't increase taxes during a recession.

John said...

"He knows you don't increase taxes during a recession."

No he doesn't. If he did, he wouldn't be pushing cap and theft, which is effectively a huge tax on the use of energy. He is also pushing a surtax to pay for his healthplan.

I used to think that even Obama isn't dumb enough to raise taxes during a recession. But, the last six months have proven me wrong. Also there is a real danger of a double dip recession.

blake said...

Daniel,

Obama has increased taxes already. Why would repealing Bush's "tax cuts for the rich" be any different?

What makes you think he knows anything of the sort? What he knows is that FDR spent barrels of money and socialized the country and thus ended the Great Depression. Settled science.

Bruce Hayden said...

If you ever thought that Krugman wasn't a prostitute:

In 1999 Paul Krugman was paid $50,000 by Enron as a consultant on its “advisory board,” and that same year he wrote a glowing article about Enron for Fortune magazine. But he would change his tune. After Enron collapsed in 2001, Krugman wrote several columns excoriating the company. (One featured what may be the most absurd howler in the history of op-ed journalism: “I predict that in the years ahead Enron, not Sept. 11, will come to be seen as the greater turning point in U.S. society.”) In most of these columns Krugman worked hard to link Enron to the Bush administration, and in one he actually blamed Enron’s consultants for the company’s collapse — while neglecting to mention that he, too, had been an Enron consultant.

WV: Crano - past tense of canium?

Daniel said...

Yes, I should have written that hopefully Obama knows not to raise taxes during a recession.

Ok, going home now. It's been fun. Later y'all.

dick said...

Daniel,

Because Medicare is essentially a contract, a promise to pay for certain things that the taxpayer had put money in for years. As an example I have paid into Medicare since it started and paid max to SS since I was 18 years old. I regard that as a contract that the government is obligated to pay since they took the money for it from my paycheck all those years (45 years of max withholding and 15 of them where I had to pay both sides of the two when I was a consultant). That is why I as a Republican insist that this contract be fulfilled. I would much rather not have put my money here but like the rest of the country I had no choice in the matter.

AJ Lynch said...

Dick:

Very well said description of the Medicare contract.

knox said...

Absurd. Now it's not a "Let's agree to disagree" issue. Krugman is officially either 1. stupid 2. crazy 3. purely politically motivated, cares about nothing else.

wv = douts

elHombre said...

I'm about to bring up my resentment about blow-job impeachments, and I don't want to do that.

"Blow job impeachments?" Is that like code for perjury and obstructing justice impeachments? You know the kind that get you suspended from the SCOTUS Bar.

Revenant said...

Clinton was a third wave, balance the budget Democrat. If he wasn't, Congress couldn't have done squat.

That's a dippy thing to say. All Congress has to do in order to balance the budget is NOT spend money. It doesn't need Presidential approval to not spend money. Spending bills need Presidential signatures; spending bills that never get passed do not.

Also, if Clinton was a "balance the budget" Democrat, why did he never submit a balanced budget to Congress? The few surpluses we had were due to higher-than-predicted revenues, not to fiscal responsibility.

Let's call it bipartisanship and move on

You can do what you like. It is a fact that the Gingrich Congress were spending hawks (they bragged about shutting down the government, for pity's sake). It is a fact that Clinton was not; he wanted Congress to approve a lot more spending than it did. If you want to call that "bipartisan fiscal responsibility", well, far be it from me to separate you from your delusions.

(plus, I'm about to bring up my resentment about blow-job impeachments, and I don't want to do that).

You just did. Find a new topic to whine about.

Many people think we're already out of the recession,

"Many people" is just weasel words. What percentage of economists are you willing to say think we're out of the recession?

Revenant said...

That is why I as a Republican insist that this contract be fulfilled.

Oh, they don't have to fulfill it. They can just return all the money I've paid in Social Security and Medicare taxes to date. I won't even charge 'em interest.

Paddy O. said...

Just want to add how nice Althouse threads can be when there are people on different sides arguing strongly but intelligently.

Contrats to all involved.

Hoosier Daddy said...

Hoosier, really? Then why did Michael Steele just announce that Republicans will never, EVER touch precious precious Medicare. We're all screwed up on this.

Of course we are which is the inherent problem with massive government entitlements, to paraphrase Maggie Thatcher, you eventually run out of other people's money.

I'm sorry but the GOP isn't in charge anymore, and haven't been in Congress since 2006. It's Obama's show now and he controls the whole shebang and all he's shown for it is putting the reckless spending of the Bush administration to shame.

Perhaps if the media was actually paying more attention to the reckless spending of Bush than whether or not some Islamofascist thug had panties draped on his face, people might have been more vocal. Then again it was Abu Grahib every day and twice on Sundays for 5 of the last 8 years and maybe, just maybe there was something about the massive spending somewhere on page B9.

This isn't a GOP vs Dem issue Daniel, it's an out of control government that is spending us into oblivian.

Paul said...

Ha ha! Daniel in the lions den. Unfortunately he was armed only with his farts.....

Dogwood said...

Who said they did and how do you know a depressed conservative turnout didn't result in a GOP loss? They either didn't go to the polls or voted Democrat. You seem to think it was neither.

I was working the phones on election day 2006 making sure registered Republicans got to the polls. And they did.

However, many of them voted Democrat. You could see it in the vote totals for the national, state and county offices.

The GOP candidates for my county received 65 to 70 percent of the votes, while state and national GOP candidates only received 50 to 52 percent of the votes.

There were thousands of split-ticket voters in my very strong GOP county in 2006, as well as across the State of Indiana.

This voting pattern was repeated across the country and is why the Democrats control Congress today.

avwh said...

"What he knows is that FDR spent barrels of money and socialized the country and thus ended the Great Depression. Settled science."

It's worse than that; he sees FDR deified for creating Social Security, so Obama wants healthcare, any healthcare, to do the same for him.

Scott M said...

@Paul

Congrats. Thanks for keeping the level of discourse up around the high-brow mark.

With friends like these....

Paul said...

Wow Scott, you must represent a whole new level of prudish sensitivity if the image of a man "entering a lions' den armed only with his farts" offends you.

Sad proof that the right has a few vagina men too.

And I'm not, nor do I wish to be, your friend.

Jack Wayne said...

Can we leave behind the canard, the LIE, that the budget has been balanced at any time in the last 75 years? Actual debt has GONE UP every year. Every time I think the American public can't get any stupider, along comes a thread like this one.

Scott M said...

@Paul

"Wow Scott, you must represent a whole new level of prudish sensitivity if the image of a man "entering a lions' den armed only with his farts" offends you.

Sad proof that the right has a few vagina men too.

And I'm not, nor do I wish to be, your friend.


That's a pretty bold statement considering you know nothing about me or my past. For the record, it didn't offend me in the least. It distracted from the conversation. The fact that you took it as a personal attack seems to point more toward the size of your gash than mine. The debate up to that point had become fairly well-written and argued. You dropped a fart joke into it. That's all I was alluding to.

In the interest of full disclosure, it would take mountains more than you're probably capable of to offend me. I made a healthy living offending people live on the air for the better part a decade. In fact, I have it on pretty good authority that I was personally decried in more than one sermon against indecency on the airwaves.

I didn't end my career because I got canned or canceled. I got out because I grew up.

Now...back to the topic at hand...GO JOE LIEBERMAN!!!

El Presidente said...

That's like, what, $28.50 after the coming currency devaluation?

Don't worry, Obama has a plan to take care of everyone.

Hoosier Daddy said...

Can we leave behind the canard, the LIE, that the budget has been balanced at any time in the last 75 years? Actual debt has GONE UP every year. Every time I think the American public can't get any stupider, along comes a thread like this one.

You're confusing the budget with overall debt. Two entirely different animals. You can have a balanced budget but still have debt. Debt and the interest thereof is simply one of many expenses that are itemized and compared to total income. When income exceeds expenses you have a surplus.

The real canard is that the 'surpluses' that Clinton gets credit for we're projected surpluses, not actual. In other words, its like saying that I expect to have a surplus income once I get promoted to Grand Poohbah and that 10% pay raise. Then the company is bought by a firm in Dehli and I'm downsized and now my 'surplus' is now a deficit.

Larry said...

No - Hoosier Daddy. Clinton had real surpluses. And Bush blew them with one huge tax cut and a trillion dollar war.

Also note that the entire Bush economy was built on a housing bubble, so in reality, Bush's deficits would have been much much larger had the bubble not taken place.

The deficit we say today is almost entirely due to Bush. At most, 15% is attributable to Obama - and that was a wise investment (stimulus plan) as it prevented another Great Depression.

That is why the stock market has rebounded so strongly - nobody was expecting the recovery to happen so soon. Also, 10 year interest rates are near historic lows (except the brief dip under 3% we saw after the bubble burst). So the market is expecting hardly any inflation going forward. Which makes sense - we are actually undergoing deflation right now - the CPI is about 1.7% below last year, Social Security payments will stay flat next year, etc.

A lot of economic ignorance on this thread. Threats about inflation, etc. No - I don't believe the inflation threats as I described above, but even if there WERE inflation - it actually makes the debt as a percentage of GDP SMALLER.

But that would assume that people on this thread could actually do a simple mathematical calculation - which they obviously can't.

Also Obama's deficits include everything, money for the war, etc. - while Bush used fake accounting and never accounted for that in future projections. Kudos to Obama for having an honest budget.

Paul said...

Scott

"That's a pretty bold statement considering you know nothing about me or my past. For the record, it didn't offend me in the least."

Who cares about you or what you are?

If you didn't like my joke, which wasn't a fart joke btw but a joke about an ill prepared fool naively entering an arena that was way over his level of competence, that's fine. Your knee jerk reaction to the word "fart" and "keeping to the high road" screams uptight prude. If it's a distraction to you just scroll on by, like we all do.

"In the interest of full disclosure, it would take mountains more than you're probably capable of to offend me. I made a healthy living offending people live on the air for the better part a decade. In fact, I have it on pretty good authority that I was personally decried in more than one sermon against indecency on the airwaves.

I didn't end my career because I got canned or canceled. I got out because I grew up.

Now...back to the topic at hand...GO JOE LIEBERMAN!!!"

Well we know this much about you now...you're a pompous asshole who thinks a lot of himself but comes of as a bore.

Hoosier Daddy said...

No - Hoosier Daddy. Clinton had real surpluses.

Ah, no he didn't.

And Bush blew them with one huge tax cut and a trillion dollar war.

And a little thing called 9/11, you know that minor incident that wiped out about a trillion bucks in wealth.

Also note that the entire Bush economy was built on a housing bubble, so in reality, Bush's deficits would have been much much larger had the bubble not taken place.

You ever hear of the dot com bubble?

The deficit we say today is almost entirely due to Bush.

No argument there.

At most, 15% is attributable to Obama - and that was a wise investment (stimulus plan) as it prevented another Great Depression.

Um...exactly how much of the stimulus plan has been wisely spent? How about checking out those numbers and get back to us.

That is why the stock market has rebounded so strongly - nobody was expecting the recovery to happen so soon.

Recovery? Exactly what parallel dimension are you posting from?

A lot of economic ignorance on this thread.

And I think you just pulled out in the lead for it.

Scott M said...

@Paul

...in a nutshell, you got it.