Friday, 24 October 2014 / TRUTH-OUT.ORG

Capitulation, Not Compromise, Led to a Debt Deal

By Paul Krugman, Truthout | Op-Ed
Capitulation Not Compromise Led to a Debt Deal

President Barack Obama signed an agreement on August 2 that raised the United States’ debt ceiling. (Photo: Philip Scott Andrews / The New York Times)

What would I have done?

That’s the question President Obama’s kinda-sorta defenders keep asking; it’s supposed to be a conversation-stopper.

But the answer is clear: I would have made a statement declaring that giving in to this kind of blackmail would constitute a violation of my oath of office, and that my lawyers, on careful reflection, have determined that there are several legal options that allow me to ignore this extortionate demand.

Now, the Obama people say that this wasn’t actually an option.

Well, I hate to say this, but I don’t believe them.

Think about the history here; think about all the misjudgments, all the reasons this administration has come up with not to act — not to act against the bankers, not to act on taxes, and down the line.

Think of the colossal misjudgment over Republican intentions on debt. Why, at this point, should anyone trust these people when they say that they did all they could?

It’s much, much too late for Mr. Obama and company to say, “Trust us, we know what we’re doing.”

My reservoir of trust is now completely drained. And I know I’m not alone.

Very Serious Suckers

Jonathan Chait at The New Republic wrote an excellent online article documenting the way in which what he calls the establishment, and I call Very Serious People, misjudged the way the debt ceiling thing would play out: “The failure to understand the crisis we were entering was widely shared among centrist types. When Republicans first proposed tying a debt ceiling hike to a measure to reduce the deficit, President Obama instead proposed a traditional, clean debt ceiling hike,” Mr. Chait wrote July 29. “He found this position politically untenable for many reasons, one of them being that deficit scolds insisted that using the debt ceiling to force a fiscal adjustment was a terrific idea, and that connecting the deficit debate to a potentially cataclysmic financial event was the mark of seriousness.”

Mr. Chait then goes on to show how the usual suspects — The Washington Post’s editorial page, the Committee for a Responsible Federal Budget, the Concord Coalition, etc. welcomed a crisis over the debt ceiling in the belief that it would lead to fiscal goodness.

This was terrible policy, even if it had worked: now is not the time for fiscal austerity, and the way the Very Serious People have shifted the whole conversation away from jobs and toward deficits is a major reason we’re stuck in the Lesser Depression.

But it also showed awesome political naïveté.

As Mr. Chait said in his article, the first thing you need to understand is that modern Republicans don’t care about deficits. They only pretend to care when they believe that deficit hawkery can be used to dismantle social programs; as soon as the conversation turns to taxes, or anything else that would require them and their friends to make even the smallest sacrifice, deficits don’t matter at all.

Truthout has licensed this content. It may not be reproduced by any other source and is not covered by our Creative Commons license.

Paul Krugman joined The New York Times in 1999 as a columnist on the Op-Ed page and continues as a professor of economics and international affairs at Princeton University. He was awarded the Nobel in economic science in 2008.

Mr Krugman is the author or editor of 20 books and more than 200 papers in professional journals and edited volumes, including "The Return of Depression Economics" (2008) and "The Conscience of a Liberal" (2007). Copyright 2011 The New York Times.


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Capitulation, Not Compromise, Led to a Debt Deal

By Paul Krugman, Truthout | Op-Ed
Capitulation Not Compromise Led to a Debt Deal

President Barack Obama signed an agreement on August 2 that raised the United States’ debt ceiling. (Photo: Philip Scott Andrews / The New York Times)

What would I have done?

That’s the question President Obama’s kinda-sorta defenders keep asking; it’s supposed to be a conversation-stopper.

But the answer is clear: I would have made a statement declaring that giving in to this kind of blackmail would constitute a violation of my oath of office, and that my lawyers, on careful reflection, have determined that there are several legal options that allow me to ignore this extortionate demand.

Now, the Obama people say that this wasn’t actually an option.

Well, I hate to say this, but I don’t believe them.

Think about the history here; think about all the misjudgments, all the reasons this administration has come up with not to act — not to act against the bankers, not to act on taxes, and down the line.

Think of the colossal misjudgment over Republican intentions on debt. Why, at this point, should anyone trust these people when they say that they did all they could?

It’s much, much too late for Mr. Obama and company to say, “Trust us, we know what we’re doing.”

My reservoir of trust is now completely drained. And I know I’m not alone.

Very Serious Suckers

Jonathan Chait at The New Republic wrote an excellent online article documenting the way in which what he calls the establishment, and I call Very Serious People, misjudged the way the debt ceiling thing would play out: “The failure to understand the crisis we were entering was widely shared among centrist types. When Republicans first proposed tying a debt ceiling hike to a measure to reduce the deficit, President Obama instead proposed a traditional, clean debt ceiling hike,” Mr. Chait wrote July 29. “He found this position politically untenable for many reasons, one of them being that deficit scolds insisted that using the debt ceiling to force a fiscal adjustment was a terrific idea, and that connecting the deficit debate to a potentially cataclysmic financial event was the mark of seriousness.”

Mr. Chait then goes on to show how the usual suspects — The Washington Post’s editorial page, the Committee for a Responsible Federal Budget, the Concord Coalition, etc. welcomed a crisis over the debt ceiling in the belief that it would lead to fiscal goodness.

This was terrible policy, even if it had worked: now is not the time for fiscal austerity, and the way the Very Serious People have shifted the whole conversation away from jobs and toward deficits is a major reason we’re stuck in the Lesser Depression.

But it also showed awesome political naïveté.

As Mr. Chait said in his article, the first thing you need to understand is that modern Republicans don’t care about deficits. They only pretend to care when they believe that deficit hawkery can be used to dismantle social programs; as soon as the conversation turns to taxes, or anything else that would require them and their friends to make even the smallest sacrifice, deficits don’t matter at all.

Truthout has licensed this content. It may not be reproduced by any other source and is not covered by our Creative Commons license.

Paul Krugman joined The New York Times in 1999 as a columnist on the Op-Ed page and continues as a professor of economics and international affairs at Princeton University. He was awarded the Nobel in economic science in 2008.

Mr Krugman is the author or editor of 20 books and more than 200 papers in professional journals and edited volumes, including "The Return of Depression Economics" (2008) and "The Conscience of a Liberal" (2007). Copyright 2011 The New York Times.


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