Free Markets, Free People

Paul Krugman

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Krugman: was he lying then or is he lying now?

My bet would be on “then”, because in a moment of exquisite candidness, Paul Krugman – the man who has said “What? Me worry?” about the deficit and the debt, who claimed ObamaCare would do what Obama promised, – has apparently been drugged and finally told the truth:

Eventually we do have a problem. That the population is getting older, health care costs are rising…there is this question of how we’re going to pay for the programs. The year 2025, the year 2030, something is going to have to give…. …. We’re going to need more revenue…Surely it will require some sort of middle class taxes as well.. We won’t be able to pay for the kind of government the society will want without some increase in taxes… on the middle class, maybe a value added tax…And we’re also going to have to make decisions about health care, doc pay for health care that has no demonstrated medical benefits . So the snarky version…which I shouldn’t even say because it will get me in trouble is death panels and sales taxes is how we do this.

Gee … everything everyone who has paid attention has been saying all along.  Middle class taxes (you have to shake your head at his “oh well” approach to a middle class tax.  A sales tax.  Perhaps the most regressive tax going).  Death panels. Etc.

But it’s safe now … selling his credibility and being a hack has landed Obama another 4 years.

Apparently he’s on a “resurrect Paul Krugman’s professional reputation” tour.

Not that it’s working.

~McQ


Paul Krugman–climate alarmist

Not content to be a political hack, Krugman expands his field of hackery into climate alarmism. 

Commenting on the hot summer, corn and the drought, Krugman says:

But that’s not all: really extreme high temperatures, the kind of thing that used to happen very rarely in the past, have now become fairly common. Think of it as rolling two sixes, which happens less than 3 percent of the time with fair dice, but more often when the dice are loaded. And this rising incidence of extreme events, reflecting the same variability of weather that can obscure the reality of climate change, means that the costs of climate change aren’t a distant prospect, decades in the future. On the contrary, they’re already here, even though so far global temperatures are only about 1 degree Fahrenheit above their historical norms, a small fraction of their eventual rise if we don’t act.

The great Midwestern drought is a case in point. This drought has already sent corn prices to their highest level ever. If it continues, it could cause a global food crisis, because the U.S. heartland is still the world’s breadbasket. And yes, the drought is linked to climate change: such events have happened before, but they’re much more likely now than they used to be.

Sigh.

Facts are indeed an “inconvenient truth” when considering these alarmist screeds.

First, droughts in general, these findings from actual scientists:

Here is Andreadis and Lettenmaier (2006) in GRL (PDF):

[D]roughts have, for the most part, become shorter, less frequent, less severe, and cover a smaller portion of the country over the last century.

Oh.

Well never mind. 

But those corn prices!  Highest level ever!  And, and … people are going to starve!  We just aren’t going to have enough!

Economist Mark Perry disposes of that nonsense:

First, yields:

corn1

 

Then prices (inflation adjusted):

 

cornprice

 

You’d think a Nobel laureate economist could at least manage that, right?  Research inflation adjusted pricing on a commodity?

No?

Well it depends, I guess, on which hat you’re wearing that day.  Hack or economist.  Krugman continues to wear the first much more often than the second these days.

~McQ

Twitter: @McQandO


Krugman–and now for a little statistical cherry picking

Paul Krugman poops out  a little blog post along with accompanying chart to ostensibly prove his point that austerity is the wrong way to go in Europe (and elsewhere).  He uses Estonia as his example because Estonia committed early to austerity measures.

 

060612krugman2-blog480

 

Says Krugman:

Since Estonia has suddenly become the poster child for austerity defenders — they’re on the euro and they’re booming! — I thought it might be useful to have a picture of what we’re talking about.

So, a terrible — Depression-level — slump, followed by a significant but still incomplete recovery. Better than no recovery at all, obviously — but this is what passes for economic triumph?

CATO guts him with a single chart that makes the point about cherry picking data:

estonia-role-model

 

Note where they are headed and note too that this is after rather heavy austerity measures were placed into effect.

It’s called a “recovery”, unlike what is happening here where money we don’t have has been poured down a Krugmanesque rat hole.  Estonia hit a bump in their road of growth, took austerity measures to right themselves and is on the path to full recovery (they still have more to do, but essentially, they’ve weathered the problem).

But you wouldn’t know that from Krugman’s chart would you?

CNBC tells the Estonia story:

Estonia’s achievement is all the more remarkable when you consider that it was one of the countries hardest hit by the global financial crisis. …How did they bounce back? “I can answer in one word: austerity. Austerity, austerity, austerity,” says Peeter Koppel, investment strategist at the SEB Bank. …that’s not exactly the message that Europeans further south want to hear. …Estonia has also paid close attention to the fundamentals of establishing a favorable business environment: reducing and simplifying taxes, and making it easy and cheap to build companies.

How much austerity?  A lot:

… Estonians have endured some of the harshest austerity measures with barely a murmur. They even re-elected the politicians that imposed them. “It was very difficult, but we managed it,” explains Economy Minister Juhan Parts. “Everybody had to give a little bit. Salaries paid out of the budget were all cut, but we cut ministers’ salaries by 20 percent and the average civil servants’ by 10 percent,” Parts told Global Post. …As well as slashing public sector wages, the government responded to the 2008 crisis by raising the pension age, making it harder to claim health benefits and reducing job protection — all measures that have been met with anger when proposed in Western Europe.

But, you know, austerity doesn’t work (and so it is very important, to the point of giving half the story, that spending freaks like Krugman present Estonia as a failure).

Daniel Mitchell points out:

Estonia reacted to the overspending and the downturn in a very responsible fashion. Instead of using the weak economy as an excuse to further expand the burden of government spending in hopes that Keynesian economics would magically work (after failing for Hoover and Roosevelt in the 1930s, Japan in the 1990s, Bush in 2008, and Obama in 2009), the Estonians realized that they needed to cut spending.

Look at Estonia’s chart (not Krugman’s version).  Look at ours.  Tell me again why deficit spending is the answer and the only answer, Mr. Krugman?

~McQ

Twitter: @McQandO


Krugman: Half-truths and logical fallacies litter his denouncement of drilling for oil

But that shouldn’t come as a particular surprise for anyone who has watched this economist turn into a political hack over the years.

He starts with this:

To be a modern Republican in good standing, you have to believe — or pretend to believe — in two miracle cures for whatever ails the economy: more tax cuts for the rich and more drilling for oil. And with prices at the pump on the rise, so is the chant of “Drill, baby, drill.” More and more, Republicans are telling us that gasoline would be cheap and jobs plentiful if only we would stop protecting the environment and let energy companies do whatever they want.

You’ll not see such a broad field of strawmen erected in such a short paragraph for quite some time.

Anyone know any Republicans who are calling for “more tax cuts for the rich” (as I recall, Republicans are saying no tax increases for anyone)?  That’s the first strawman.

Second? Not a single “Republican” I know is claiming that we should “stop protecting the environment” and “let energy companies do whatever they want”.  I defy Krugman to produce them.  Instead what I see are those that want more drilling point out that the technology exists to do it safely and in an environmentally friendly way and thus there’s no real reason to stop it other than ideology.  Nor do I know of any who oppose the pursuit of alternative fuels.  They just are realistic about the fact that none of those being pursued are anywhere yet ready for prime time, unlike our President.  So they naturally look to what we have as the main staple of our economy’s energy demand now and in the near future. 

It’s called “common sense” for the Krugman’s of the world who seem to have not been blessed with much of it.

As for jobs and cheaper gas, you should be able to ask an economist if increased supply of a commodity would have the effect of downward pressure on cost and expect to get an honest answer – unless it’s this guy.

Oh, and you’d also expect an economist to understand that if you expand production of any such commodity which is labor intensive, you’re going to create a lot of jobs.  You may expect that, but you too can read this so-called economist’s words.  When the choice is between political hackery and economic integrity, guess which he chooses?

Charles Krauthammer lays out a little ground truth about why “drill, baby, drill” hasn’t been able to have the effect it might have had if allowed.  Yes, “allowed”:

President Obama incessantly claims energy open-mindedness, insisting that his policy is “all of the above.” Except, of course, for drilling:

●off the Mid-Atlantic coast (as Virginia, for example, wants);

●off the Florida Gulf Coast (instead, the Castro brothers will drill near there);

●in the broader Gulf of Mexico (where drilling in 2012 is expected to drop 30 percent below pre-moratorium forecasts);

●in the Arctic National Wildlife Refuge (more than half the size of England, the drilling footprint being the size of Dulles International Airport);

●on federal lands in the Rockies (where leases are down 70 percent since Obama took office).

But the event that drove home the extent of Obama’s antipathy to nearby, abundant, available oil was his veto of the Keystone pipeline, after the most extensive environmental vetting of any pipeline in U.S. history. It gave the game away because the case for Keystone is so obvious and overwhelming. Vetoing it gratuitously prolongs our dependence on outside powers, kills thousands of shovel-ready jobs, forfeits a major strategic resource to China, damages relations with our closest ally, and sends billions of oil dollars to Hugo Chavez, Vladimir Putin and already obscenely wealthy sheiks.

The opportunity to see gas at a lower price, plentiful jobs created and supply increased have been squandered by this administration and Krugman, as if channeling our President, is trying to pass this failure off on the GOP. He’s essentially trying too claim the laws of supply and demand have been suspended.

The irony here is that these claims come just as events are confirming what everyone who did the math already knew, namely, that U.S. energy policy has very little effect either on oil prices or on overall U.S. employment. For the truth is that we’re already having a hydrocarbon boom, with U.S. oil and gas production rising and U.S. fuel imports dropping. If there were any truth to drill-here-drill-now, this boom should have yielded substantially lower gasoline prices and lots of new jobs. Predictably, however, it has done neither.

Again, a half-truth.  The boom is a boomlet compared to what it might have been had Obama and his merry permit slow-walkers gotten out of the way.  The only thing that has saved Obama is the boom on state and private land.  What Krugman won’t say is it is most likely true that had that boom not materialized on non-Federal land, gas prices would be even higher.  And so would unemployment.  Don’t forget the tens of thousands of jobs lost due to the Obama administration’s Gulf “permatorium”.

Krauthammer points out what should have been obvious to an economist but are inconvenient truths to a political hack:

“The American people aren’t stupid,” Obama said (Feb. 23), mocking “Drill, baby, drill.” The “only solution,” he averred in yet another major energy speech last week, is that “we start using less — that lowers the demand, prices come down.” Yet five paragraphs later he claimed that regardless of “how much oil we produce at home . . .that’s not going to set the price of gas worldwide.”

So: Decreasing U.S. demand will lower oil prices, but increasing U.S. supply will not? This is ridiculous. Either both do or neither does. Does Obama read his own speeches?

Obama says of drilling: “That’s not a plan.” Of course it’s a plan. We import nearly half of our oil, thereby exporting enormous amounts of U.S. wealth. Almost 60 percent of our trade deficit — $332 billion out of $560 billion — is shipped overseas to buy crude.

Drill here and you stanch the hemorrhage. You keep those dollars within the U.S. economy, repatriating not just wealth but jobs and denying them to foreign unfriendlies. Drilling is the single most important thing we can do to spur growth at home while strengthening our hand abroad.

It is truly wondrous to me how poorly Krugman comes off in these sorts of debates.  He concludes his hack job with:

And intellectual bankruptcy, I’m sorry to say, is a problem that no amount of drilling and fracking can solve.

The irony is so thick you could cut it with a knife.

~McQ

Twitter: @McQandO


Krugman: Redefining “Equal Opportunity”

For the left, Paul Krugman has become a reliable flack, constantly pushing ideological themes with a veneer of “critical thinking” that simply crumbles upon examination.

His latest bit of nonsense, and I’m really at a loss at what else to call it, is his riff about “equal opportunity” and how disadvantaged Americans are in that regard.  In fact, per Krugman, we’re a much more economically stratified and “class-bound” society  than Europe and Canada:

And if you ask why America is more class-bound in practice than the rest of the Western world, a large part of the reason is that our government falls down on the job of creating equal opportunity.

The failure starts early: in America, the holes in the social safety net mean that both low-income mothers and their children are all too likely to suffer from poor nutrition and receive inadequate health care. It continues once children reach school age, where they encounter a system in which the affluent send their kids to good, well-financed public schools or, if they choose, to private schools, while less-advantaged children get a far worse education.

Once they reach college age, those who come from disadvantaged backgrounds are far less likely to go to college — and vastly less likely to go to a top-tier school — than those luckier in their parentage. At the most selective, “Tier 1” schools, 74 percent of the entering class comes from the quarter of households that have the highest “socioeconomic status”; only 3 percent comes from the bottom quarter.

And if children from our society’s lower rungs do manage to make it into a good college, the lack of financial support makes them far more likely to drop out than the children of the affluent, even if they have as much or more native ability. One long-term study by the Department of Education found that students with high test scores but low-income parents were less likely to complete college than students with low scores but affluent parents — loosely speaking, that smart poor kids are less likely than dumb rich kids to get a degree.

Let’s start with his premise.  HIs premise is it is the job of government to pick up those who’ve made bad choices, in the name of “equal opportunity”, and do what is necessary to “level the playing field”.  As you might imagine, government is Krugman’s answer for all perceived wrongs.

Unlike the real world, in Krugman’s world there apparently should be no consequences for bad choices.  There should, however, be consequences for good choices – those who have done what is necessary to have advantages in life should see their priorities for their money shifted, by government, to digging those who’ve made poor choices out of the holes they’ve put themselves in.  Make no mistake about it – anything government does it has to do with money it takes from someone.  Obviously we’re not talking about those who are the subject of Krugman’s lament – the “poor”.  They shall receive.

You see, in the universe from which Paul Krugman comes, “equal opportunity” has to do with outcome.  It is a total redefinition of the word “opportunity”, something for which the left is famous.  Take a common term and redefine it by turning it on its head.  Who isn’t for equal opportunity or fairness?  But the left never means those terms as commonly accepted.  In almost every case, it means government intrusion and penalizing those who are successful in the name of their redefined word or phrase.

In my world, government’s role in providing equal opportunity means that everyone is equal under the law, treated that way and thus has the same chance as any other person to get ahead through their own effort.  While Krugman attempts to sell his ideas as “equal opportunity” ideas, they’re simply the usual leftist whine about unfairness and an appeal to have government do something about it at the expense of others.  For Krugman it is unfair that those who make poor choices have to live with the consequences of those choices while those who make good choices, work hard and attempt to provide the best for the families they form should have an advantage.  And he’s equally upset with businesses that cater too them, such as “Tier 1 schools”.

Never mentioned is the fact that the schools they are fleeing are public schools where, if anywhere, Krugman should be focusing his “equal opportunity” whine.  It is there his underclass are poorly served by the very institution he claims can change their condition if only we’d take more from the advantaged.

Government.

Krugman attempts to sell the idea of permanent underclass in this country, but in reality income mobility remains high [pdf]:

• There is considerable income mobility of individuals in the U.S. economy over the 1996 through 2005 period. More than half of taxpayers (56 percent by one measure and 55 percent by another measure) moved to a different income quintile between 1996 and 2005. About half (58 percent by one measure and 45 percent by another measure) of those in the bottom income quintile in 1996 moved to a higher income group by 2005.

•      Median incomes of taxpayers in the sample increased by 24 percent after adjusting for inflation.  The real incomes of two-thirds of all taxpayers increased over this period. Further, the median incomes of those initially in the lowest income groups increased more in percentage terms than the median incomes of those in the higher income groups.  The median inflation-adjusted incomes of the taxpayers who were in the very highest income groups in 1996 declined by 2005.

•      The composition of the very top income groups changes dramatically over time.  Less than half (40 percent or 43 percent depending on the measure) of those in the top 1 percent in 1996 were still in the top 1 percent in 2005.  Only about 25 percent of the individuals in the top 1/100th percent in 1996 remained in the top 1/100 th  percent in 2005.

•      The degree of relative income mobility among income groups over the 1996 to 2005 period is very similar to that over the prior decade (1987 to 1996).  To the extent that increasing income inequality widened income gaps, this was offset by increased absolute income mobility so that relative income mobility has neither increased nor decreased over the past 20 years.

Or, in other words, we’re doing fine.  Equal opportunity exists and those who make good choices seem to be taking advantage of it.

The fact that there is income mobility in all quintiles seems to speak of opportunities for all, and it is certainly evident that those in the bottom quintile have indeed had the opportunity to move up and have done so.  And note the third bullet – even the top income groups show that sort of change.

There’s plenty of opportunity in this country – just listen to recent immigrants (legal ones) who make this country their home and are amazed by the opportunities they’ve been able to take advantage of to better their lives.  

The entire Krugman piece, of course, is aimed at Mitt Romney specifically and the GOP in general.  It all works toward this basic claim:

Think about it: someone who really wanted equal opportunity would be very concerned about the inequality of our current system. He would support more nutritional aid for low-income mothers-to-be and young children. He would try to improve the quality of public schools. He would support aid to low-income college students. And he would support what every other advanced country has, a universal health care system, so that nobody need worry about untreated illness or crushing medical bills.

Obviously you have to buy into his false premise to then buy into this litany of nonsense.  What Krugman doesn’t realize is much of what he laments are problems caused by government or government intrusion as well as pure old falsehoods.

What would you rather have, Tier 1 schools for everyone, or the status quo in which government runs the majority of the schools and the results continue to get worse?  Krugman’s answer: take more money from the advantaged and spend  it trying to fix something we’ve been spending more money trying to fix for decades.  Perhaps, instead of more government, equal opportunity requires less government and more private sector?

Not in Krugman’s world.

In that world government is always the answer, the disadvantaged are always disadvantaged because of those richer than them and equal opportunity simply means a different government run scheme for income redistribution.

Yeah, that’s worked out incredibly well to this point, hasn’t it Mr. Krugman?

~McQ

Twitter: @McQandO


Krugman admits WWII turned economy around, not “New Deal”

H

e may not have meant too (because doing so undermines the liberal shibboleth that government intervention via the New Deal is what turned the economy around), but Paul Krugman did indeed admits that WWII saved our economy after the Depression, not the policies of the "New Deal":

All around, right now, there are people declaring that our best days are behind us, that the economy has suffered a general loss of dynamism, that it’s unrealistic to expect a quick return to anything like full employment. There were people saying the same thing in the 1930s! Then came the approach of World War II, which finally induced an adequate-sized fiscal stimulus — and suddenly there were enough jobs, and all those unneeded and useless workers turned out to be quite productive, thank you.

All true, but then the US wasn’t carrying a $15 trillion dollar debt load (think huge financial drag) or its equivalent then either. That single fact makes a world of difference. But again, as you can tell, it’s Mr. One Trick Pony again pushing for an “adequate-sized fiscal stimulus”. In the absence of a world war I think it should be clear by now what he’s asking for … again. I mean what’s $16 trillion among friends, right?

He gets a bit cryptic about it, but it’s the same old demand:

There is nothing — nothing — in what we see suggesting that this current depression is more than a problem of inadequate demand. This could be turned around in months with the right policies. Our problem isn’t, ultimately, economic; it’s political, brought on by an elite that would rather cling to its prejudices than turn the nation around.

See … government can fix this, if it just would. So says Paul Krugman. Interesting …”the right policies” were admittedly not the reason for the recovery of the US after the Depression but they are what can save us now. Because, you know, the two situations are just alike, right? WWII and the “right government policies”? Or did I miss something?

And this guy likes to think of himself as an “economist”?

Go figure.

 

~McQ

Twitter: @McQandO


Krugman has it all figured out: Tax the Rich

Yes, Paul Krugman has a novel idea that no one has previously thought of … we can get out of this mess we’ve spent ourselves into by taxing the rich.

And by the way, income inequality now makes that both feasible and acceptable:

About those high incomes: In my last column I suggested that the very rich, who have had huge income gains over the last 30 years, should pay more in taxes. I got many responses from readers, with a common theme being that this was silly, that even confiscatory taxes on the wealthy couldn’t possibly raise enough money to matter.

Folks, you’re living in the past. Once upon a time America was a middle-class nation, in which the super-elite’s income was no big deal. But that was another country.

The I.R.S. reports that in 2007, that is, before the economic crisis, the top 0.1 percent of taxpayers — roughly speaking, people with annual incomes over $2 million — had a combined income of more than a trillion dollars. That’s a lot of money, and it wouldn’t be hard to devise taxes that would raise a significant amount of revenue from those super-high-income individuals.

Because you know, “super-high-income individuals” don’t deserve to keep the money they earned, because, well, we’ve gotten ourselves in this awful mess and we need someone to bail us out.

And they have a lot of money, by gosh.  A lot of money.  So “it wouldn’t be hard to devise taxes” that would take most of it on the marginal side.  Because again, we should have first claim when we get ourselves in trouble.  Besides, they have more than enough money and they should pay their “fair share”.

A couple of reminders.  Despite what Krugman says, taxing the top 0.1% isn’t going to make a significant difference.  And even if it did, it would only make that sort of difference once.  The next year, that money would be much less available.  Which would probably mean what?

Well “rich” would have to be redefined, wouldn’t it?   Maybe then it would be the top 1%, because we all know they have more money than they need and they should pay their fair share, right?

As a reminder, the Adjusted Gross Income necessary to be considered a one-percenter is a ‘rich’ $343,927.  And this particular percentage of tax payers are indeed shirking their fair share.  After all, they only pay 36.73% of all income tax collected now.   Surely we can kick that up to, oh I don’t know, at least 50%.  And, of course “we” can, certainly.   For a short time, that will indeed bring in more revenue.  But, again, once the marginal rate goes up those being stuck with the tax bill will go to work finding ways to minimize that hit.   And, they will.

Which means those top 5% suddenly become vulnerable, etc.

A short version of the Krugman solution can be found working so well in Europe right now.  And E21 does a good job of reminding us of Krugman’s unadulterated enthusiasm for the social welfare states to be found there.  E21 also does a great job of eviscerating Krugman’s arguments concerning Europe’s problems:

Paul Krugman insists that the European debt crisis has nothing to do with excessive government spending.  The problem, to him, is a failed monetary experiment that deprives nations like Greece and Italy of the ability to print money to inflate away excessive debts.  The need to create an alternative understanding for the origins of the debt crisis is only natural given the extent to which the current crisis has tarnished the statist ideology that Krugman generally follows.  But his basic claims are nonsensical, as is Krugman’s citation of Sweden and Germany as economic role models.  While these economies have performed relatively well through the crisis, it was because they abandoned Krugman’s preferred economics and moved in a more market-oriented direction long-ago.

He was wrong about Europe and he’s wrong about taxes.  He’s become an economic joke but just doesn’t know it yet.  He’s a one-trick pony who, much like the global warming alarmists, ignores the fact that what he continues to claim is viable and necessary is constantly and consistently being trashed by reality.

The only good news is he remains a source of entertainment.   It’s sort of like a game.  You wonder how long he can go before reality actually grabs him by the scruff of the neck and makes him recognize the error of his ways (my bet?  Never happens).   And, as a bit of side fun, you wonder how long the NY Times will continue to let Krugman push his reality challenged agenda forward before they finally (and, of course “reluctantly”) can him (see first bet – they haven’t a clue).

~McQ

Twitter: @McQandO


Social Security–Krugman accuses WaPo of spreading disinformation while he spreads disinformation

A pair of very interesting articles.

First come the Washington Post’s article on Sunday which discusses the problems with the Social Security program in very honest and stark terms. 

For most of its 75-year history, the program had paid its own way through a dedicated stream of payroll taxes, even generating huge surpluses for the past two decades. But in 2010, under the strain of a recession that caused tax revenue to plummet, the cost of benefits outstripped tax collections for the first time since the early 1980s.

Now, Social Security is sucking money out of the Treasury. This year, it will add a projected $46 billion to the nation’s budget problems, according to projections by system trustees. Replacing cash lost to a one-year payroll tax holiday will require an additional $105 billion. If the payroll tax break is expanded next year, as President Obama has proposed, Social Security will need an extra $267 billion to pay promised benefits.

Then comes Paul Krugman’s attempt to dismiss it.  For his part, Krugman talks about a myth and presents it as fact:

You see, the WaPo makes a big deal of the fact that Social Security is currently taking in less in payroll taxes than it’s paying out in benefits. Yet this means nothing, except as a favorite point used to create confusion by those who want to kill the program.

I’ve written about this repeatedly in the past, but here it is again: Social Security is a program that is part of the federal budget, but is by law supported by a dedicated source of revenue. This means that there are two ways to look at the program’s finances: in legal terms, or as part of the broader budget picture.

In legal terms, the program is funded not just by today’s payroll taxes, but by accumulated past surpluses — the trust fund. If there’s a year when payroll receipts fall short of benefits, but there are still trillions of dollars in the trust fund, what happens is, precisely, nothing — the program has the funds it needs to operate, without need for any Congressional action.

Alternatively, you can think about Social Security as just part of the federal budget. But in that case, it’s just part of the federal budget; it doesn’t have either surpluses or deficits, no more than the defense budget.

It is the latter that is correct.  There is no “dedicated source of revenue” per se.  Hasn’t been for years.   What exists instead is a pile of Treasury bonds … IOUs the government wrote itself.   Congress, years ago, spent the money supposedly to be set aside for Social Security.

Krugman then tries to wave away the fact that even if the “dedicated source of revenue” doesn’t exist, heck, it’s a legal and untouchable (entitlement – must be paid, at least under the law as it exists now) part of the budget and the government will fund it.

That means that regardless of revenue, the government must pay.  

So tell me again how, given the unfunded future obligations of Social Security, it matters if the money comes from the mythical “lockbox” that has never existed or the general fund?  In either case, unless taxes are drastically increased, the money will have to be borrowed.  In either case, Social Security is in the negative – paying out more than it is taking in.  Nothing changes that.

Krugman’s last sentence is absolute hogwash.  Of course it would have a “deficit” if it was a part of the federal budget.  It has a set requirement to pay a certain amount out in benefits.  It is a mandatory entitlement by law.

The defense budget is discretionary.  There his postulation is correct.  That budget is whatever Congress says it is each year. 

For Social Security, the deficits would come from unmet and underfunded obligations – note the word: obligations- and it would require the federal government to either raise more revenue or borrow to meet those obligations.   That is not true of the defense budget.  Playing word games and false analogies to try and wave the truth away doesn’t change that.

But it does cement forever the fact that Paul Krugman has become much less of an economist and much more of a hack than I thought possible.

~McQ

Twitter: @McQandO


Krugman attempts to redefine the “social contract”

That Paul Krugman can be relied on to carry the Democrats water is no longer a point of argument.  He is in the tank with them up to his neck.

So it should come as no surprise to anyone that he’s decided the “social contract” now requires that the rich pay more in taxes than they are presently.  It is this redefinition of the social contract that allows him, one supposes, to claim that it isn’t class warfare that’s being proposed but simply the fulfilling of that contract.

And, of course, not days after the “Warren Buffet Tax” premise was completely and thoroughly destroyed, it is that upon which he begins to base his premise:

This week President Obama said the obvious: that wealthy Americans, many of whom pay remarkably little in taxes, should bear part of the cost of reducing the long-run budget deficit.

That is such a loaded line one could spend the day just unpacking it.

A) In Krugman’s world what does “remarkably little” mean?  Compared to what, the bottom 50%?  I mean it is a ludicrous statement to anyone who knows the amount of taxes and the percentage of taxes the so-called rich pay.  Never mind the fact that the premise that they pay less than middle class secretaries is nonsense.  But that’s the scary part – leaving it up to people like Krugman to make policy that effects your life with contextless terms like “remarkably little” and wave away your right to what you earned.

B) Are the rich not bearing “part of the cost of reducing the long-run budget deficit” now with the taxes they pay? Of course they are.   In fact, they’re bearing more than anyone else.  But to read that sentence you’d think they weren’t bearing any of it.  Again, pure nonsense.

C) Did they get us in this mess financially?  No.  It was government spending above and beyond the revenue coming in.  Actually it was government borrowing and spending above and beyond the revenue coming in.  Was that done at the behest of the rich?  If not why is it up to them to bear the burden?  Why isn’t it up to the institution that made this mess to change its ways and live within its means?  Doesn’t that mean reduction in the size of government and cuts in spending?  Of course it does.  But that is never mentioned in Krugman’s piece.

Krugman goes through a convoluted rationalization process involving income redistribution and comparisons that are, frankly, irrelevant to the point, all to finally end up with this as the basis of his argument (such that it is) for taxing the rich more:

Elizabeth Warren, the financial reformer who is now running for the United States Senate in Massachusetts, recently made some eloquent remarks to this effect that are, rightly, getting a lot of attention. “There is nobody in this country who got rich on his own. Nobody,” she declared, pointing out that the rich can only get rich thanks to the “social contract” that provides a decent, functioning society in which they can prosper.

That’s right, this is owed because if it wasn’t for government  – Krugman and apparently Warren’s new definition for a “decent, functioning society – none of the rich would be rich.

Seriously – do you actually believe that?  And since when is an institution that has managed to bury itself up to its neck in 14 trillion in debt define itself as a “decent, functioning” anything?  This government is dysfunctional and it is time that apologists like Warren and Krugman own up to that fact.  Instead they commit themselves to this twisted line of argument that claims that the rich are the rich because of a debt ridden government and because of that they owe it to the rest of us to pay that debt down.  The inference is the debt was partly (if not completely) the reason for their success.

There is nothing “eloquent” about that argument.  It is irrational and frankly, stupid.  The social contract as described by Rousseau, had nothing to do with paying down the debt of a profligate government.  It is about the voluntary association of people to their mutual benefit and the voluntary assumption of some social obligations in order to foster that society of mutual benefit.

How that became twisted into this morass of nonsense where those that have become “rich” owe their good fortune to government is just beyond me.  Obviously the society has much to do with it, but that doesn’t necessarily mean government for heaven sake.  Sure, it may have been part of it, but that part was paid for and has been paid for centuries without going into 14 trillion dollars of debt.

And it also must ignore the fact that those who are rich must have done something right to get to that state beside being in a particular society.  If it were just the society, i.e. government, we’d all be rich according to this line of reasoning.  So why is it that they only can find 1% who fit that particular bill?

This is all nonsense on a stick using the usual liberal trick of redefining words.  They attempt to create new axioms by changing the words or concepts over time.  The social contract as a concept was envisioned as a voluntary association in which free people took on voluntary obligations in an effort to indeed set up a “decent, functioning society”.  Note the key word: “voluntary”.  What they didn’t conceive is any sort of involuntary servitude which required certain of them to be treated differently based on their success (or lack thereof if appropriate) within that society they’ve formed.

But that is precisely what Warren and Krugman are trying to sell.  And it is never more obvious than in Krugman’s closing paragraph.  There he speaks of the GOP trying to stop the attempt to raise taxes on only one part of society and, of course, condemns it as something it just isn’t:

Well, that amounts to a demand that a small number of very lucky people be exempted from the social contract that applies to everyone else. And that, in case you’re wondering, is what real class warfare looks like.

A portion of the populace that pays 38% of the freight but comprises only 1% of it is “exempted for the social contract that applies to everyone else?”  In what world, Mr. Krugman?  Certainly not in the one where sane people are able to apply critical thinking to the sloppy nonsense you seem to delight in dishing out.

And note the dismissal of their status with “very lucky people” used to describe them as if what they’ve earned was undeserved. 

Makes you just want to throw up, doesn’t it?   And before I get the usual “Krugman is a putz and I don’t know why you read him”, the answer is two-fold: A) so you don’t have too and B) it is important to highlight his arguments because they are the arguments of the left and the ones they will continue to push unopposed if we don’t point them out.

I refuse to let them go unanswered.

~McQ

Twitter: @McQandO


Classless and gutless

Who has decided to politicize the day of remembrance that 9/11 has become?  Why none other than the crass and classless Paul Krugman, of course:

What happened after 9/11 — and I think even people on the right know this, whether they admit it or not — was deeply shameful. Te [sic] atrocity should have been a unifying event, but instead it became a wedge issue. Fake heroes like Bernie Kerik, Rudy Giuliani, and, yes, George W. Bush raced to cash in on the horror. And then the attack was used to justify an unrelated war the neocons wanted to fight, for all the wrong reasons.

Rewriting history so he can attack political strawmen on a day the rest of America has put aside its politics to remember the victims of that day. 

What a piece of garbage.

Oh, and gutless too:

I’m not going to allow comments on this post, for obvious reasons.

Yup, pretty obvious.

~McQ

Twitter: @McQandO

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