Att: OMOLIVES - The Cowardice of the Deficit Scolds
"Market Crashes Happen. They Don’t Necessarily Mean Much."
Two points here: One, that Krugman makes it clear, as we have for years, that he does not believe it is valid to say the two parties are the same. Two, that he doesn't hold much truck with those who contribute little but whining about all politicians while at the same time claiming impartiality. We agree.
May 8, 2023
Senate Republicans hold a news conference outside the Capitol to urge passage of legislation to raise the debt limit and cut federal spending. Chip Somodevilla/Getty Images
Nor am I surprised that the Biden administration hasn’t yet adopted any of the possible strategies through which the debt ceiling might be circumvented. Many of the economic objections to such strategies are just wrong .. https://www.nytimes.com/2023/05/07/opinion/debt-ceiling-platinum-coin-premium-bonds.html . But there are legal and political risks to a debt end-run that could roil markets, and I understand the administration’s reluctance to show its hand until the last minute.
One thing that has come as a surprise, however, is the cowardice of the self-appointed guardians of fiscal responsibility.
I’m talking about the various groups — business organizations like the Chamber of Commerce and the Business Roundtable, supposedly nonpartisan think tanks like the Committee for a Responsible Federal Budget — that played a very prominent role in the Obama years, successfully convincing much of the media and political establishment that debt, rather than a sluggish recovery, was the biggest economic issue facing America. The debt obsession, in turn, helped keep unemployment much higher for much longer than necessary, in effect costing America millions of jobs.
Still, one might have expected even these groups to balk at the idea of fiscal policy through extortion, which, aside from violating any notion of an orderly budget process, could greatly worsen America’s fiscal situation by destroying our credibility and hence raising our borrowing costs.
Indeed, some reporting .. https://www.washingtonpost.com/business/2023/05/04/white-house-biden-debt-ceiling/ .. suggests that Biden administration officials expected these groups to put pressure on Republicans to avoid debt brinkmanship. But the actual response of the deficit scolds has if anything been to urge the administration to give in to blackmail.
Perhaps the most shocking behavior has come from the Committee for a Responsible Federal Budget, an organization that usually commands some respect, even from those who disagree with its priorities, for its technical expertise.
Given that reputation, C.R.F.B.’s response to the debt impasse was simply astonishing. It not only urged Biden to negotiate with hostage-takers but also declared .. https://www.crfb.org/press-releases/debt-ceiling-must-be-raised-soon-possible .. that “the House passed a reasonable bill” to reduce the deficit.
The committee, which knows its numbers, has to know better than that. No, the House didn’t pass a “reasonable” deficit reduction plan; it didn’t even really pass a plan at all, just scribbled down some numbers with no explanation of how to achieve them.
Another big item in the G.O.P. proposal is slashing funding for the Internal Revenue Service. The Congressional Budget Office, like most independent analysts, says that this would increase the deficit, by hampering the government’s ability to go after wealthy tax evaders.
There’s more, and it’s almost all bad. Nobody who knows anything about the federal budget could honestly call this proposal “reasonable.”
So what’s going on here? There are two, not mutually exclusive possibilities.
One is cowardice. Organizations like the C.R.F.B. have built their brand around posing as nonpartisan,which is hard when the parties are as asymmetric as they are today — when a flawed but sane Democratic Party confronts the party of Marjorie Taylor Greene. The easy way out is to pretend that Republicans are being reasonable, even when they manifestly aren’t.
The other possibility is that the pose of being nonpartisan was always a fraud. Consider the fact that in July 2019, when Donald Trump was president but Democrats controlled the House, the debt ceiling was suspended for two years .. https://bipartisanpolicy.org/debt-limit-through-the-years/ . Do you really think the C.R.F.B. would have described Nancy Pelosi’s position as “reasonable” if she had threatened to cause a financial crisis unless Trump reversed his 2017 tax cut?
[Insert: I think those who have been with Tornado Alley for years would agree that, thanks to our trolls who have visited over years, the evidence is that Krugman is spot on with his two possibilities. And that our evidence also suggests they are not mutually exclusive.]
In any case, one small benefit if we get through this mess — right now my guess is that Biden will end up invoking the argument that the debt ceiling is unconstitutional, but who knows? — may be to discredit deficit scolds who never deserved their past policy influence.
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Paul Krugman has been an Opinion columnist since 2000 and is also a distinguished professor at the City University of New York Graduate Center. He won the 2008 Nobel Memorial Prize in Economic Sciences for his work on international trade and economic geography. @PaulKrugman
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