Just a few short months ago, New York Times' liberal economics columnist Paul Krugman had high hopes for new President Obama and urged him to act like "Franklin Delano" Roosevelt.
But even the billions of dollars in government spending to fix the financial crisis, efforts to limit executive compensation and the recent ouster of General Motors CEO haven't pacified Krugman.
According to Newsweek's cover story for April 6, "Paul Krugman has emerged as Obama's toughest liberal critic." Evan Thomas' story glorified Krugman and asked "why the establishment worries that he may be right."
Thomas kindly described Krugman as "an unusual mix, at once nervous, shy, sweet and fiercely sure of himself." He also pinpointed Krugman's ideology as that of a "European Social Democrat."
Recently, Krugman told readers of his "Conscience of a Liberal" blog that Obama's plan left him with "despair." Why? Because Obama "has apparently settled on a financial plan that, in essence, assumes that banks are fundamentally sound and that bankers know what they're doing," Krugman wrote in his March 22 column.
Thomas devoted his 2,825 word story to the possibility that Krugman was right, but didn't consider whether Krugman AND Obama might both be promoting the wrong policies, just in varying degrees.
"But what if he's right, or part right? What if President Obama is squandering his only chance to step in and nationalize-well, maybe not nationalize, that loaded word-but restructure the banks before they collapse altogether?" Thomas asked.
Krugman as well as Obama have many free-market critics who argue that government intervention, regulation and spending is not the answer to the recession. Thomas buried criticism of Krugman on the third page (in the online copy), where he admitted that the Nobel Prize winner "has made enemies in the economics community," following that statement with a quote from one economist, Daniel Klein of George Mason University. "He's become more and more outspoken," Klein said of Krugman. "A lot of what he says is wrong and not considered."
Two paragraphs later Thomas referenced a statement from Times ombudsman Daniel Okrent from 2005 that said "Op-Ed columnist Paul Krugman has the disturbing habit of shaping, slicing and selectively citing numbers in a fashion that pleases his acolytes but leaves him open to substantive assaults."
But Thomas' article left out a host of critics, from Don Luskin, chief investment officer for Trend Macrolytics LLC who has called Krugman "America's most dangerous liberal pundit," to Depression historian Robert Higgs who has argued that New Deal-style programs will probably "make matters worse."
Obama's policies have faced plenty of opposition. His tax plan was opposed by hundreds of economists who signed a letter back in October 2008. His $800 billion stimulus plan (which Krugman complained about because it included "tax cuts") also upset hundreds of economists, including Nobel laureates. Those names were featured on an advertisement the Cato Institute ran in major U.S. newspapers.
