There was an error in this gadget

Monday, January 14, 2008

Paul Krugman's Liberal Conscience and His Reaction to the Candidates

You know, if there weren't plagarism or fair use laws, I'd just copy and paste Paul Krugman's whole op-ed piece from today's New York Times right here to make sure everybody sees it.

Krugman argues that you can tell more about a presidential candidate by his or her response to the looming recession than by the timbre of his voice or her hairstyle. Geeze, a journalist with some substance, d'yuh think?

Here's a sample of some of Krugman's sharp observations, starting with his take on John McCain:
Take, for example, John McCain’s admission that economics isn’t his thing. “The issue of economics is not something I’ve understood as well as I should,” he says. “I’ve got Greenspan’s book.”

His self-deprecating humor is attractive, as always. But shouldn’t we worry about a candidate who’s so out of touch that he regards Mr. Bubble, the man who refused to regulate subprime lending and assured us that there was at most some “froth” in the housing market, as a source of sage advice?
Then there's thes two statements, summing up Rudy Giuliani and Mike Huckabee:
Meanwhile, Rudy Giuliani wants us to go for broke, literally: his answer to the economy’s short-run problems is a huge permanent tax cut, which he claims would pay for itself. It wouldn’t.

About Mike Huckabee — well, what can you say about a candidate who talks populist while proposing to raise taxes on the middle class and cut them for the rich?
And on Romney:
And then there’s the curious case of Mitt Romney. I’m told that he actually does know a fair bit about economics, and he has some big-name Republican economists supporting his campaign. Fears of recession might have offered him a chance to distinguish himself from the G.O.P. field, by offering an economic proposal that actually responded to the gathering economic storm.

But Mr. Romney, who really needs to take chances at this point, apparently can’t break the habit of telling Republicans only what he thinks they want to hear. He’s still offering nothing but standard-issue G.O.P. pablum about low taxes and a pro-business environment.
He's a kinder to the Democrats, saying this about John Edwards:
On the Democratic side, John Edwards, although never the front-runner, has been driving his party’s policy agenda. He’s done it again on economic stimulus: last month, before the economic consensus turned as negative as it now has, he proposed a stimulus package including aid to unemployed workers, aid to cash-strapped state and local governments, public investment in alternative energy, and other measures.
And on Hillary Clinton:
Last week Hillary Clinton offered a broadly similar but somewhat larger proposal. (It also includes aid to families having trouble paying heating bills, which seems like a clever way to put cash in the hands of people likely to spend it.) The Edwards and Clinton proposals both contain provisions for bigger stimulus if the economy worsens.

And you have to say that Mrs. Clinton seems comfortable with and knowledgeable about economic policy. I’m sure the Hillary-haters will find some reason that’s a bad thing, but there’s something to be said for presidents who know what they’re talking about.
But he is less complimentary to Barack Obama. Here's his assessment:
The Obama campaign’s initial response to the latest wave of bad economic news was, I’m sorry to say, disreputable: Mr. Obama’s top economic adviser claimed that the long-term tax-cut plan the candidate announced months ago is just what we need to keep the slump from “morphing into a drastic decline in consumer spending.” Hmm: claiming that the candidate is all-seeing, and that a tax cut originally proposed for other reasons is also a recession-fighting measure — doesn’t that sound familiar?

Anyway, on Sunday Mr. Obama came out with a real stimulus plan. As was the case with his health care plan, which fell short of universal coverage, his stimulus proposal is similar to those of the other Democratic candidates, but tilted to the right.

For example, the Obama plan appears to contain none of the alternative energy initiatives that are in both the Edwards and Clinton proposals, and emphasizes across-the-board tax cuts over both aid to the hardest-hit families and help for state and local governments. I know that Mr. Obama’s supporters hate to hear this, but he really is less progressive than his rivals on matters of domestic policy.
Ordinarily, I don't do cut and paste jobs with minimum commentary. But when Paul Krugman, a Yale and MIT educated economist (he received his doctorate from MIT), who taught at Yale, Stanford, and MIT, where he was Ford International Professor of Economics, gives a run down on the economic policy or lack thereof of candidates, I tend to listen and want to pass it along.

Krugman is passionate about populist economics and is author of the book, The Conscience of a Liberal, which is also the name of his NYT blog.

That he dismisses the Republican candidates is no surprise to me or to anybody who has followed Krugman's writings. But I take seriously what he has to say about the Democratic contenders too. And some of it is none to flattering but important to consider as our economy lurches its way into a for real recession.

For more on that, the New York Times also gives this report and it's troubling. According to the article, for the first time since 1991, Americans are consuming less. This is not just the decline in growth that has been reported, but an emerging economic trend which suggests that Americans at all levels, not just the poor and middle class but the upper class too, are cutting back on their spending.
There are mounting anecdotal signs that beginning in December Americans cut back significantly on personal consumption, which accounts for 70 percent of the economy.

A raft of consumer companies — high-end stores like Nordstrom and Tiffany, and middle-of-the-road ones like Target and J. C. Penney — reported a pronounced slowdown in growth last month, and in several cases an outright drop in business.

American Express said that starting in early December the growth in the rate of spending by its 52 million cardholders, a generally affluent group of consumers, fell 3 percentage points, from 13 percent to 10 percent, the first slowdown since the 2001 recession.

And consumer confidence, an important barometer of economic health, has plunged. Andrew Kohut, president of the Pew Research Center, says consumer satisfaction with the economy has reached a 15-year low, according to the firm’s polling.

Even wealthier consumers, who were seen as invulnerable to rising gasoline prices and falling home values, are feeling the squeeze.
With this going on, is it any wonder that voters are telling pollsters that concern about the economy is supplanting Iraq as their most important election issue?

This recession looks like it could be deeper and more pervasive than the one of 2001, which was considered mild. I think that's going to have a large effect on the election. The Republican and Republican lite answer of throwing more tax breaks at it, especially with the record budget deficits and the foreign trade deficit, is not the answer. Just as in the 1990s, it's going to take a Democrat to get this country out of the mess the Republicans, with their supply side ideology, dug for it. This is round two of saving America from a Bush and his voodoo economics.

No comments: