Paul Krugman vs. The World

I have to give it up for Paul Krugman today.

Revealing editorial from Joe Scarborough at POLITICO, based on an appearance by Paul Krugman on Scarborough's MSNBC show, excerpt:

Mr. Krugman's view is that Americans would be better off if its government ran deeper deficits and ignored its longterm debt. That, of course, runs counter to conventional wisdom across the Western world, which is exactly why the New York Times columnist believes Spain and Great Britain are suffering through endless recessions.

His argument also runs counter to what I have been saying in Congress and in the media since 1994. So it would be no surprise that the guy who wrote this, and this, and this and this over the past week would take exception to Mr. Krugman's words. But most of our viewers did not tune in to hear me talk over the Nobel Prize winner. They tuned in to hear Paul Krugman. So I did my best to give him space.

 But maintaining calm was not as easy for Council on Foreign Relations president Richard Haass, who agrees with former Joint Chief chairman Michael Mullen, that longterm debt poses the greatest threat to America 's national security. Richard took exception to the suggestion that deficits don't matter and that longterm debt can be pushed to the side for years to come . Mr. Haass, Admiral Mullen and former Clinton chief of staff Erskine Bowles all believe that entitlements and debt are the most pressing challenges we face as a country over the next few decades.

You can add my liberal co-host, Mika Brzezinski, to that group. Mika let out a gasp when Mr. Krugman suggested Medicare and Medicaid shortfalls should be ignored. She compared Krugman's "head-in-the-sand" approach to the one taken by climate change deniers. Krugman took exception, saying that no one could predict the future of entitlements so there was no need to worry until the programs became insolvent. That response drew a spirited email from former Treasury official and “Morning Joe” regular Steve Rattner in defense of Mika's analogy, who wrote the following: "We are putting millions of tons of carbon in the air every day; we are also adding billions of dollars to our future entitlement obligations every day. We are borrowing (stealing?) from our children to pay far more in benefits to seniors than we are paying into the system.

One thing I would say to Paul Krugman is "Paul, you are NOT alone. It is NOT you against the world".

There are many of us out here both within and outside the academe of economics, both from the political left
AND political right, that agree with your assessment on the nature of a federal budget deficit and government securities and understand the difference between REAL and FINANCIAL constraints; and we too do our best to combat this fiscal ignorance that has been foisted upon the western world and take our own hits in the process.

Hang in there Paul Krugman!