CBS Gives Krugman Platform to Bash Austerity, Call For More Spending
On Monday, CBS This Morning gave leftist New York Times columnist Paul Krugman a platform to promote his new book and to spout his usual prescription of massive government spending. Krugman also bashed Mitt Romney: "He's going to make Herbert Hoover look good by comparison." Anchor Gayle King boosted her guest by twice citing President Obama's praise for the author as "one of the smartest economic reporters."
Krugman briefly acknowledged the "long-term budget problem," but quickly added that "now is not the time to be slashing....Now is the time to be doing public works, to be rehiring those school teachers, to get this economy moving again." He also ripped the austerity measures taken by several European countries: "You look at what's happening in Europe and...we just learned that austerity is not the answer...the big problem now is not to have a new stimulus, but simply to reverse those cuts at the state level."
King teased the segment with the columnist by gushing at his side, "I would like to introduce you to the man that President Barack Obama says is one of the smartest economic reporters in the country. That would be you, Paul Krugman." Co-anchor Charlie Rose continued in this vein at the beginning of the segment as he referenced the dedication in his guest's book: "He [Krugman] is holding nothing back in his latest book. The title of the book is called, 'End This Depression Now!' The dedication reads, 'To the unemployed who deserve better.'...First of all, speak to the dedication. I mean, you think that American policymakers have failed the unemployed and have failed the economy."
Krugman almost immediately launched into his call for spending in his reply:
KRUGMAN: We have. This is- there's enormous human damage being done to this economy and it's all unnecessary. We have the knowledge. We have the tools. If we could get our politicians to move and do the right thing, we could be out of this very fast.
ROSE: Okay. The right thing is?
KRUGMAN: The right thing is, actually, to spend more. Right now, you know, we have a long-term budget problem, but now is not the time to be slashing. Now is not the time to be laying off school teachers. Now is the time to be doing public works, to be rehiring those school teachers, to get this economy moving again.
ROSE: And the alternative is austerity- is saying we have to attack the debt first- the debt and deficit- and you are now arguing that if you look at what's happened in Europe, they have tried that and it has failed and made things worse.
KRUGMAN: Yes. You look at European countries that have done the austerity; they have mass unemployment- you know, 25 percent now in Spain- and they're not even making much progress on the deficit because the economy shrinks, revenues shrink, the long-term growth prospects fall off. So, no- austerity later; austerity when the economy has recovered....
The morning show did put up graphics showing the massive rise in the debt, as well as the 8.2 percent unemployment rate, but the anchor didn't bring up these details during the segment.
Later in the interview, the writer called for even more "quantitative easing" from the Federal Reserve. King soon followed with her second reference to Obama's label from "Rolling Stone":
ROSE: What would you want the Fed to do now?
KRUGMAN: First of all, more of the stuff that it's done some of, but not enough of- of the quantitative easing. But it also needs to say, look, we're not that concerned about inflation. If- tell us, you know, five percent, six percent is a problem; but three percent, four percent is not, and we're willing- in fact, would like to see a little bit of inflation to get this economy moving- change the expectations, help us along in getting out of this slump.
KING: But you say that it could take seven years if we keep going the way we're going....And if we follow your advice, it would take-
KRUGMAN: Eighteen months, two years.
KING: So why aren't people listening to you, Paul Krugman? I love that President Obama, in 'Rolling Stone'- did you see that he called you one of the smartest economic reporters? Did you see that?
KRUGMAN: Yeah- I'm sorry to say, one of? (King laughs) No, but look, there's a lot of practices to overcome-
ROSE: Very good line, Paul.
KRUGMAN: And- no, Obama is a smart guy, and I think- I actually know that a lot of people around him actually share my views- not perhaps 100 percent- but they face political opposition. But also, they face a lack of boldness- a lack of audacity, you might say....And what really we need here is audacity.
Rose followed up by asking about the economic proposals of Obama's presumptive rival, Mitt Romney. The New York Times columnist answered with his Hoover citation:
ROSE: Do you believe Romney has a better idea?
KRUGMAN: No. I mean, what Romney is saying- let's do exactly what we did under the Bush administration, and this time, hope for different results. He's saying, let's do exactly what they're doing in Ireland, which has led to 15 percent unemployment and 30 percent youth unemployment, and that will lead to great results here. Now, Romney is- I mean, he's going to make Herbert Hoover look good by comparison.
Earlier in the interview, Krugman dropped a cultural reference, which sailed right over Charlie Rose's head:
ROSE: But here's the other point you make: Ben Bernanke is the man who understood the Depression; understood what happened to Japan; and he's now in charge of the Fed and he's a fellow former professor at Princeton. And you're now saying what? That he's wrong, wrong, wrong?
KRUGMAN: Well, funny thing is, I can quote Ben Bernanke as a professor about what the Japanese should have been doing when they did a dress rehearsal for our crisis and it applies perfectly to Ben Bernanke right now. Now, I think there's mixture. He's under political pressure from the right; he's probably been somewhat taken over-
ROSE: I thought the Fed was immune from political pressure.
KRUGMAN: Yeah, right, sure. (King laughs) But I'll say a little bit: he's been assimilated by the Borg; that is, you know, the Fed has an institute-
ROSE: The blog?
KRUGMAN: The Borg; the Borg, as on Star Trek. The Fed has an institutional culture that makes it reluctant to be adventurous....
The full transcript of Charlie Rose and Gayle King's interview of Paul Krugman, which aired at the bottom of the 8 am Eastern hour of Monday's CBS This Morning, can be found at MRC.org.
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Comments
Socialism is failing because
Submitted by tcm14 on Mon, 04/30/2012 - 5:18pm.
Socialism is failing because we don't have enough socialism! And even more socialism may not be enough socialism.
failing socialism?
Submitted by Agnostic on Tue, 05/01/2012 - 10:58pm.
Agree - but it is not Socialism that is killing the country. What is killing us is a corrupt political body, cronyism and waste (mostly due to the previous two factors and simple lack of wherewithal - per the definition established by Jimmy Stewart's character Macaulay Conner in Philadelphia Story).
Socialism is just making it impossible to do anything to counter the effects of the previously listed problems.
I do not recall
Submitted by fivestring_assassin on Mon, 04/30/2012 - 5:32pm.
a time in recent history when Krugman has been correct,,,on anything
For Krugman, historical facts are an inconvenient truth
Submitted by Galvanic on Tue, 05/01/2012 - 9:44am.
Contrary to popular myth, Hoover did take actions to fight the Depression, but they didn't work. They included:
- Federal funding of major public works projects such as the Hoover Dam
- Signing into law the infamous Smoot-Hawley Act, which triggered a tariff war with European countries, the result of which was a major blow to the US auto industry which had (until then) been the major seller of cars in Europe.
- Increasing the top tax bracket from 25% to 63%.
- Increasing corporate taxes.
They may have worsened the prospects for recovery' they certainly didn't help..
And don't they sound ominously familiar? "Shovel-ready?" "Fair share?" .
If Hoover were alive today, Democrats would be hailing him as a "reasonable, reach-across-the-aisle Republican" whom they could deal with.
dunce
Submitted by right of way on Mon, 04/30/2012 - 5:33pm.
so that's why greece is such bad shape, they didn't spend enough money!
classic example of the egghead intellectual who has no common sense.
And yet raising taxes, which
Submitted by inquiringmind on Mon, 04/30/2012 - 5:35pm.
And yet raising taxes, which is like putting your foot on the breaks of your car, is somehow is okay.
obviously not 'Bold'
Submitted by NoBlahBlah on Tue, 05/01/2012 - 11:04am.
obviously not 'Bold' enough,
we really need something more on the lines of the 3rd Reich or the Great Leap Forward!
now that was 'audacious hope'!
Before we give you more matches, Kruggie,
Submitted by HockeyKid on Mon, 04/30/2012 - 5:36pm.
please 'splain why the previous burns failed to have the predicted effect.
Your side has had its chance; now it's time to bring in somebody who actually knows about the REAL economy and business, not your BS economic models.
Kruggie, you are like an econ prof I had once, who said, "Just because an economic model doesn't match with the result seen in the real world, doesn't mean we throw out that model". And there goes the myth of "economic science".
"Beauty is only skin deep, but liberal's to the bone." - me
Krugman's government investment theories
Submitted by Agnostic on Tue, 05/01/2012 - 10:36pm.
answers to economic issues is rarely straight forward and never meets the ‘bumper sticker’/’sound bite’ mentality needed to make political comments or to be part of the ‘news’. I would like to address a few points about Krugman’s theories on government spending and other comments that have been put out about job creation but the post has run long so to summarize my most important point (if you want to skip the rest) - as capital circulates through the economy the value of money is not measured by the economy solely by the face value of currency because What, Where, Why and How matter in economic reference.
“Government spending means more jobs.”
No one single thing means anything let alone everything to the economy. Raising/lowering taxes or increased/decreased spending mean nothing when taken out of context with what is going on in the rest of the economy. The economy is a dynamic system of theoretically limitless variables and because of these factors such gimmicks as ‘stimulus bills’, ‘cutting corporate tax rates’ and ‘raising taxes on the rich’ are only temporary ploys that seek to create a short term effect in order to create long term influence with voters and investors. If a company is looking to expand due to conditions within the company and the total economic outlook then they will hire even if faced with increasing taxes. If companies are not looking to expand due to whatever reasons then incentives of any kind are a waste of tax payer money because the companies are at best going to pocket so ‘free’ cash and maintain their current level of staffing.
‘Government spending is the best way to increase the market and create more jobs.”
The BEST way to create jobs and increase the market is to increase demand for the products made in the economy. Which people like Krugman believe you accomplish by putting the money directly in the hands of the people wanting to spend. This is actually wrong because the economy, while it can react in mob like fashion, is not an unaware system. To the economy – ALL DOLLARS ARE NOT CREATED EQUAL. The impact of money in the economy varies upon its use, function, origin and impact – A dollar has an ‘Economic Value’, positive and negative, beyond its face or accepted value.
New markets are the number one way to increase job production. Second is market expansion. New products would be third. All stimulus packages are at best a ‘bluster’ moment for government in order to provide confidence to allow the market to get over a traumatic event that may cause financial damage without some type of distraction. This is not a bad thing because there is a very real emotional reaction in economics as I will try to explain below. The worst case scenario in stimulus packages is one that is created to pay off money that is already been spent or to be invested in high risk business ventures. This type of stimulus does not provide any confidence unless the high risk investments are successful but that takes time and is usually beyond the useful life of a stimulus.
…TARP program and the Fed Res easing program QE1, 2, and 3 has injected $ into the system to keep loans flowing for those companies that need the temporary loans to keep operating. I know of very few companies that can operate only on self generated cash. As mentioned above –the economy reacts to the Economic Value of capital and artificially pumping in money is a demonstration that the government lacks faith in the economy, business are willing to accept dollars of reduced value to hedge future losses and inflation is an acceptable exchange for current potential problems. The economy sees these things and reacts accordingly. Statistically, you can prop things up for a while with an influx of cash but eventually you will have to pay the price – just like we are paying the price now for not raising the interest rates.
The first TARP was one of the most embarrassing fiascos in American political history that did not concern a foreign nation. It was 60% political posturing, 15% stupid rhetoric, 25% purchasing of votes and 0% actual understanding. George Bush was one of the worst in the stupid rhetoric and understanding categories. But as bad as Bush was – remember this was a Democrat controlled Congress in both houses that pushed hard for this idiocy and the Republican’s also voted for it while a Republican President joined with the Democrat President elect to demand this action from Congress.
Paulsen and Bernanke have been part of the problem because their actions and words show their loyalties lie outside the American people and the overall health of the US economy.
“Debt is not a problem.”
Debt – You have probably heard people arguing over whether debt is bad or good for a long time and the answer is yes. Once again, depending upon other variables debt can be good or bad. The main things to consider are: Why was the debt created? Where did the money come from? How was the capital used?
During WWII we were primarily borrowing from ourselves so the debt was actually a positive event because it displayed confidence in America. There were a lot of economic mistakes made at the time out of ignorance but people still believed in the nation and that is a big difference between then and now. Politicians were no better back then but we lacked the media to tell us how bad they were and people still remembered how bad it was in other places around the world because their parents could tell them first hand and freedom meant a lot more to those people then we understand today.
The economy is a dynamic system and people have tried in vain for decades to come up with ways of making the economy conform to formulas and graphs but have failed miserably. The best that any can do is come up with representations of economic functions that can explain how the economy works but even that is in relative terms. The famous Supply and Demand curves that so many trot out as an example of how the economy works is still only general representation because there are no absolute figures involves. There are so many assumptions made and so many variables frozen to depict this graph that is would be useless except that it is a general representation of what happens within ‘normal’ ranges of economic activities when there is a change in supply or demand. Is the graph wrong? NO. But it is a simplification and that is important because if you realize that even the Supply and Demand curves that is the most basic and widely recognized economic tool available is only a simplistic generalization it will help you realize how little the economic rhetoric you hear on the news and from politicians is representative of reality.
Despite all the graphs, charts, formulas and economic theories the economy is a social system and not a scientific system. Just like society, the economy may follow trends and generally adhere to certain applied ‘laws’ but it is still at its base driven by human action and reaction. This is why you can’t just use government money to permanently fix economic problems. The government is part of the economy and the single largest entity in the economy but that doesn’t make it capable of controlling the economy. In fact, like most systems, when one variable (government) increases its value to the system – the other variables (people and businesses) become less responsive. There are also emotional responses you have to account for in economics that you don’t have to consider for scientific systems.
The ‘invisible hand’ in Capitalism that is ridiculed by so many is actually nothing more than the same social guide that came out in German philosophy and was studied and built upon by Hegel and Kant. It is merely the idea that at any given time there is a trend in society towards certain ideas or goals. It implies that these trends form a guiding factor in society that is representative of all of society but does not define the individual. People will react to serve their self interest (regardless of what that interest is Nationalism, Self-Preservation, Family, Religion - even if they believe in giving everything away that feeds into their own self interest because they believe that is best) and the economy will be effected by the overall effect of the people acting in their own self-interest and that effect is the ‘invisible hand’.
The economy can do one of three things – Expand, Contract or Stagnate. In contractions or stagnation the general population will suffer because at best their condition will not get worse until the population changes and then they will be in contraction (more people after the same assets in an economy leads to contraction). The economy must continually expand in order to provide the nation. In a socialistic point of view the economy must grow in order to provide the government the necessary assets to collect taxation to provide for the rest of the society. There are ways for the economy to expand such as new markets, expansion of markets or specialization. The reasons these things work is they either create capital that was not already in the economy or they provide a more efficient use for capital in the economy. The government takes capital from the economy which is a negative, it distributes money through payroll and various programs which is a positive but it does so by reducing the efficiency of the capital which is a negative. This is a general formula that has no exact values and actually changes depending on such simple factors as the economic condition and work ethics of the people who receive the money. Oddly enough business profit is affected by some of the same variables.
Well if you cant pare it down to a
Submitted by Boudin on Tue, 05/01/2012 - 10:38pm.
Bumper sticker, aint no way any lib will get it.
Very good,
Boudin,
Submitted by Agnostic on Tue, 05/01/2012 - 10:52pm.
How about -
Government Investments - Its my money and I want it back!!!
Thanks - surprised you were able to stay awake if you read all that.
Wide awake
Submitted by Boudin on Tue, 05/01/2012 - 11:13pm.
Question is, how are 87m going to pay 3.8 trillion, year after year after,,,, 80 trillion in unfunded mandates?
an unfortunate truth
Submitted by Agnostic on Wed, 05/02/2012 - 7:08am.
To obtain the necessary quantity of dollars they must destroy the value of the US Dollar.
Since 2009 we have printed or borrowed 12 Trillion. Tax collections are tied to actual economic conditions which are at best only slowly improving. Boomers are retiring. Allies no longer trust the dollar. Enemies are gathering power. China is holding the value of the Yuan low.
Obama and Bush before him were very accommodating to the Chinese in order to borrow money and now all of a sudden Obama is being demanding of China. And what is he demanding - an increase in the value of the Yuan due to trade inequalities. What is the byproduct of such actions - greatly decreased value of the dollar, a temporary increase in stock value and an ability to pay off debts with money as valuable as Confederate currency.
With this event Washington can get an artificial increase in economic activity that spurs the stock market and a reduction in debt that will be able to be played up by the media for a while and then inflation will set in even more in energy and food (Ever wonder why they were taken out of the equation for inflation?) before eventually transferring to all products. Eventually the wealth of America would be reduced by at least a quarter. I really hope that I am wrong that politicians would do this in order to hide their incompetency but I'm not encouraged.
Ugh
Submitted by Unsane on Wed, 05/02/2012 - 10:07pm.
Remember, as long as China holds no debt, we can run up as much as we want. We can have $999 nonillion in debt and it would be GREAT, so long as China holds NONE of it. If the debt consists of a $50 Series EE Bond held somewhere in Beijing or Shanghai, it is HORRIBLE!!!!!!!!!!!!!!!!!!!!!!!!!!!!
"CONSUMED DEMOCRACY RETURNS A SOCIALIST REGIME" - Slayer, "Fictional Reality", from Divine Intervention (1994)
Unsane,
Submitted by Agnostic on Thu, 05/03/2012 - 7:31am.
You misunderstand what I am saying about China. This is not about owing money to China specifically - it is about what the administration (and possibly the previous administration) are doing to the value of the dollar. China is only a fulcrum upon which they are trying leverage the value down in order to be able to pay off large amounts of debts (that is SS and Federal Pension Plans along with bonds and loans) with low value US Dollars. It could be Canada and the results would be the same.
The fact that current administrations have basically dealt with China as a larger economic superpower (technically they are if you factor in the true US debt) but now they are making a demand that would most likely drastically reduce the purchasing power of the dollar makes me more than curious.
One thing I'm increasingly unsure about is what happens if a large number of countries stop doing business in the US dollar. With all those dollars out there sitting idle the value would drop and I know China doesn't want that but as they strengthen the Yuan there may be no choice.
I believe....
Submitted by MidAmerica on Mon, 04/30/2012 - 5:45pm.
Socialists have been proven wrong since 'ol Karl Marx himself but it doesn't matter to the true believers.
Hoover did nothing and we
Submitted by Edhenry on Mon, 04/30/2012 - 6:49pm.
Hoover did nothing and we naturally sank into a continued recession, BUT FDR started to intervene, with his misguided keynsian policies (now long discredited) and setting gold arbitrarily. And we sank into a prolonged, deepening, persistent recession until the private market was unleashed after WWII. 15 lost years.
Now compare those 15 years to the first 3 years of Reagan's 1st term, dominated by tax cuts.
Which path should we chose? Tough call only for an academic (or an easy call for a socialist).
American conservatives do not
Submitted by redfish on Mon, 04/30/2012 - 8:02pm.
American conservatives do not support austerity. Krugman, who portrays himself as an intellectual, should know that. Cutting taxes, which is the favored conservative policy, is against the spirit of austerity and designed to stimulate the economy and create growth, similar to stimulus spending proposals by Democrats. Austerity in Europe has actually meant raising taxes.
Krugman needs to be exposed for the fool he is.
He doesn't get it
Submitted by Unsane on Mon, 04/30/2012 - 8:29pm.
Beyond that, does Mr. Krugman not know where the money government spends comes from?
The government cannot spend its way to prosperity because the government exists by taking from the private sector, the real engine behind economic growth.
"CONSUMED DEMOCRACY RETURNS A SOCIALIST REGIME" - Slayer, "Fictional Reality", from Divine Intervention (1994)
In Krygman's Marxist world, everything is state-owned.
Submitted by drsamherman on Mon, 04/30/2012 - 8:32pm.
To his Leninist mind, all money, capital of any kind and resources belong to the state and people are just allowed to use them every now and again.
Krugman is incapable of understanding anything else.
Krugman is proof that if you
Submitted by mattm on Mon, 04/30/2012 - 8:34pm.
Krugman is proof that if you know how to play the game you can be a success even if you're wrong on everything.
Users not producers
Submitted by LaVallette on Tue, 05/01/2012 - 4:08am.
Someone much smarter than me once said that those on the public service payroll, including teachers, are users of the nations wealth and not producers of it. So it is rather amazing that "the man that President Barack Obama says is one of the smartest economic reporters in the country" would start with recommended employment or re-employment of the "users" rather than the "producers" of the nation's wealth.
Krugman is a jackass.
Submitted by texastommy on Tue, 05/01/2012 - 8:11am.
Krugman is a jackass.
let's see, if we confiscate
Submitted by east tennessee john on Tue, 05/01/2012 - 2:50pm.
let's see, if we confiscate all wealth above 1 million dollars, asshole, we still couldn't payoff this year's deficit. So raising taxes to 100% over 1 million will not pay for the future deficits either. So shitforbrains how does increasing taxes alone accomplish anything positive, since we now have greater debt then GDP? Economic growth then is essential and maybe limiting spending, eh?