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AmSpecBlog
Paul Krugman Clears Throat, New York Times Publishes Phlegm
Paul Krugman's bizarre screed attacking "Reaganism" is an embarrassingly shoddy partisan hatchet job. If Krugman wants to argue that most people would be better off if we returned the marginal tax rates, regulatory levels, and inflation rates that preceded Ronald Reagan, that would at least be interesting. But "Reaganism" just turns out to be the word he shouts repeatedly in a disjointed temper tantrum over the fact that some people disagree with the health care "public option."
Regarding income growth since Reagan, Krugman claims, "Moreover, most of whatever gains ordinary Americans achieved came during the Clinton years." Then he turns and argues that "politicians in the thrall of Reaganite ideology dismantled the New Deal regulations that had prevented banking crises for half a century, believing that financial markets could take care of themselves."
But the politician in "thrall of Reaganite ideology" who signed into law a partial repeal of the Glass-Steagall Act was Bill Clinton, through the bipartisan Gramm-Leach-Bliley Act. One of the Democratic senators who originally voted for it was Joe Biden. The previous major provision to be repealed was Regulation Q, in 1980 before Reagan was even elected. Personally, I think there are arguments on both sides of this issue. On the one hand, the legislation did create a moral hazard. On the other, the deregulated and more diversified banks weren't the biggest contributors to the financial crisis. Either way, however, it isn't the simple red team versus blue team morality tale Krugman makes it out to be.
Second, where was the "anti-government fundamentalism" of George W. Bush? He presided over an increase in defense spending, an increase in non-defense discretionary spending, created the biggest new entitlement since LBJ in the form of the Medicare prescription drug benefit, and signed the $700 billion TARP bailout Krugman tells us in the next few paragraphs "averted" a total financial "collapse." Bush increased
Even Reagan, God love him for his tax cuts, disinflation, and deregulation, wasn't exactly an anti-government fundamentalist. His reductions in the cost of the federal government as a percentage of GDP were minor, he ended up adding a new Cabinet-level department rather than abolishing two as he set out to do, and Reagan actually signed the Medicare Catastrophic Coverage Act into law in 1988 -- an expansion of a "public option" that proved such a disaster it was swiftly repealed in early 1989.
Finally, Krugman can't be bothered to accurately summarize the arguments of those who oppose the public option. Never mind whether it can truly be called fair competition when the referee decides to enter the game as a competitor -- for example, the public option will be able to force health care providers to accept much lower levels of reimbursement than the private insurers. The argument isn't that people will necessarily abandon their private coverage en masse for the public option -- it is that employers offering private insurance will have an incentive to dump their employees onto the public plan. Even a skeptic of the unfettered free market can see how that doesn't reflect competition and free choice.
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ncatty| 8.24.09 @ 4:50PM
The "Liberal Crack-Up" continues, eh RET?
JP| 8.24.09 @ 9:33PM
Krugman paid, in an indirect manner, the utlimate compliment to the Gipper. Yes, Clinton was no Reaganite, but the success Clinton enjoyed was AFTER the GOP caputed Congress (and most of the state governing bodies) in 1995. This "gridlock" produced balanced budgets, andlower taxes (the 1997 capital gains tax cuts), as well as reform in trade (NAFTA), and Welfare Reform. Also, what is under-reported is the so-called Peace Dividend. Unfotunately, we are still living with the after-effects of the Peace Dividend. The military has been underfunded for about 15 years now.
The downside of Reaganomics is the idea of living with borrowed money. Obama, as many argue, is just continuing the defecits of Bush/Reagan writ large. What is not said the comfort lawmakers as a whole operate with large defecits hanging over thier heads. Domestic spending is (or has been) out of control since 9/11. The GOP bears a large portion of the blame. But, in thier defense, many are now rediscovering the problems with borrowing huge sums of m0ney.
Eventually the world will weary of financing our spending, and at that point the dollar will crash. Obama is playing with fire. There is no way we can continue on this course.
Bill C| 8.24.09 @ 9:59PM
It should be noted that a "market fundamentalist" like Ron Paul opposed Gramm-Leach-Bliley citing selective deregulation and remarkable moral hazard it created. I even wonder if Krugman himself opposed it or penned anything as critical and prescient at the time. http://www.house.gov/paul/cong.....99-glb.htm
JonFraudCarry| 8.25.09 @ 6:25AM
Never mind the article, it is the best headline ever written!
Mike| 8.25.09 @ 9:20AM
W. James Antle III writes: "Then he (Krugman) turns and argues that 'politicians in the thrall of Reaganite ideology dismantled the New Deal regulations that had prevented banking crises for half a century, believing that financial markets could take care of themselves."
In the wake of the financial collapse, Alan Greenspan testified, “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief.”
Antle continues, "But the politician in "thrall of Reaganite ideology" who signed into law a partial repeal of the Glass-Steagall Act was Bill Clinton, through the bipartisan Gramm-Leach-Bliley Act."
Mr. Antle makes Dr. Krugman's argument with precision. Politicians of both parties fell into the thrall. The result was a disaster, a shocked former Fed Chairman of libertarian bent and a dazed public.
Hunter Baker| 8.25.09 @ 10:36AM
I am in awe of the mind that wrote that headline.
Mike| 8.25.09 @ 11:40AM
Liked this headline. Check out The Onion. They write clever headlines everyday.
W. James Antle III| 8.25.09 @ 1:12PM
Alan Greenspan had long ceased to be a of "libertarian bent" in any meaningful sense by the time he was pursuing a loose monetary policy at the Fed. He is merely trying to deflect blame. His opening of the money spigots helped undercut the "self-interest of lending institutions to protect shareholders’ equity" and was one of several bipartisan policies that enabled bad private sector decision-making on a massive scale.
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