President Obama’s State of the Union address was a ho-hum affair. But the official Republican response, from Representative Paul Ryan, was really interesting. And I don’t mean that in a good way.So begin Krugman's column today, a piece in which he deconstructs - and destroys - a key part of Paul Ryan's argument, where the Wisconsin Republican uses what is happening in "Greece, Ireland, the United Kingdom and other nations in Europe." Ryan argues that they did not act quickly enough with the Republicans preferred (in any situation) course of cutting taxes and government spending.
Krugman demonstrates that on Ireland Republicans are hypocritical and on Britain they are dead wrong.
I will explore what Krugman says on those two nations, then offer some thoughts that go further. Of course, I will be more than satisfied if you simply read Krugman. I will be honored if you continue to read me.
Krugman acknowledges that what Ryan says is an accurate description of what heppened in Greece. We knew that already.
But what about Ireland?
On the eve of the financial crisis, conservatives had nothing but praise for Ireland, a low-tax, low-spending country by European standards. The Heritage Foundation’s Index of Economic Freedom ranked it above every other Western nation.Britain's Chancellor of the Exchequer praised the nation, which as Krugman notes in 2006-07 had "one of the lowest debt levels in the advanced world" as it run a budget surplus.
So why did it have such a huge crisis?
The answer is: out-of-control banks; Irish banks ran wild during the good years, creating a huge property bubble. When the bubble burst, revenue collapsed, causing the deficit to surge, while public debt exploded because the government ended up taking over bank debts. And harsh spending cuts, while they have led to huge job losses, have failed to restore confidence.As Krugman notes, that means Ryan and other Republicans have gotten Ireland the lesson of Ireland"exactly wrong." What is that lesson? One that is in accord with the report of the Financial Inquiry Commission about our own problems. That lesson, according to Krugman, deserves to be put in bold letters: it says that balanced budgets won’t protect you from crisis if you don’t effectively regulate your banks. He then reminds us that Republicans want to undermine regulation.
Then what about Britain, now run by a Conservative-led coalition government that is following what Ryan and others offer as the game plan for our nation? Well for starters, that nation did not suffer a debt crisis, even though Prime Minister Cameron made a serious turn to the financial right. What happened becomes instructive, because the Republicans continue to argue that the best response to a depressed economy is to massively cut government spending. As Krugman writes,
So how’s that theory looking? Not good. The British economy, which seemed to be recovering earlier in 2010, turned down again in the fourth quarter. Yes, weather was a factor, and, no, you shouldn’t read too much into one quarter’s numbers. But there’s certainly no sign of the surging private-sector confidence that was supposed to offset the direct effects of eliminating half-a-million government jobs. And, as a result, there’s no comfort in the British experience for Republican claims that the United States needs spending cuts in the face of mass unemployment.Let me leave Krugman for a moment. Government policy is best based on honest assessments and facts, not political or economic theology. Krugman rightly offers cautions about reading too much into one quarter's performance of the British economy, but the point he offers is readily visible in our own economic and political history - Franklin Roosevelt was persuaded to cut back on the stimulative actions he was taking and we suffered a double-dip as a result - the economy slid backwards.
The media has some responsibility for what is happening here. It does not honestly challenge assertions made by the Republicans - and by the Cat Food commission - that are patently wrong, and as a result distorts the resulting political dialog. As some here have noted regularly, including yesterday in response to an inaccurate framing in an AP story, Social Security does not contribute to the general budget deficit since it is financed separately through payroll taxes. As Senator Reid has noted, it is not in the near future in any kind of jeopardy. Using its supposed impact upon the deficit is a scare tactic that should be out of bound, with the President speaking directly against it (sadly, he did not even mention this - that it is not in jeopardy - in his State of the Union address, thereby missing a real opportunity to frame the ensuing discussions in a healthy way).
Politicians of all persuasions have a tendency to offer examples that support the course of action they wish to pursue. Sometimes it is because of the beliefs they follow. Sometimes it is because they seek to rile up voters as a means of damaging their opponents and/or gaining support for themselves. One would hope that the worst accusation we could make against such a politician is that the examples they use are selective. Unfortunately, we have increasingly seen Republicans use untrue examples, distorting facts in a way that the average person may not realize. I believe the media has a responsibility to call them to account. Krugman's column is a start, but of course he will be dismissed - after all, he is a self-described liberal, as the title of one book made clear.
He is, of course, also a recipient of the Nobel Memorial Prize for Economics, which means when he writes about economic matters as he does here his words carry sufficient weight that the responsibility of disproving his arguments fall entirely upon those who disagree. The rest of the media should challenge the Republicans, Ryan in particular, for his sloppy and inaccurate argumentation. So should leading Democrats.
The Republicans chose to offer Ryan as their face and voice in response to the State of the Union. Who is Paul Ryan, and what makes him someone upon whom the Congressional Republicans are relying? Perhaps his background is something the media also ought to bring to the American people. Prior to getting elected to Congress at age 28 in 1998 (where he took the seat of Mark Neumann, he had worked as an economic analyst for Empower America, founded in 1993 and led by Jack Kemp and William Bennett, the latter while he was drug czar and the former while he ran for Vice President. Over the years Ryan wrote speeches for both men. He also during the 90s worked for his family's business as a marketing consultant, served as an aide to Republican Senator Bob Kasten of Wisconsin, and as legislative director for Sam Brownback when that man was a Member of the House. In short, he is not an economist, although his BA is in economics and political science. He is one of the founding members of the House Republicans' Young Guns Program. As such, he presents himself and is accept by other House Republicans as an influential younger member of their caucus.
It is not clear, based on what Ryan has previously offered, that the Representative truly understands the federal budget for which he now has a major responsibility as chair of the House Committee with oversight of it. On more than one occasion the thoughts he has offered simply do not add up. Of course, that has been true for years about Republican financial concepts. Jack Kemp was a primary proponent of the tax scheme followed by Ronald Reagan that helped contribute to an explosion of our deficit, a lesson that does not seem to have registered with Ryan and other Republicans.
That is, if we are willing to accept that they believe what they espouse. It is of course possible that their public statements are solely for political purposes as a means of continuing to shift wealth away from the Middle Class into the hands of the already rich who fund much of the Republican agenda.
Here too I would not think it a violation of comity for Democrats to continue to remind the American people - and the media - of how wrong the Republicans have been on economics, how wrong they are on for example the impact of the stimulus.
Or perhaps we can help, by simply repeating the penetrating insights of Paul Krugman, whose final paragraph this morning is an example of what we should be repeating:
But Mr. Ryan is widely portrayed as an intellectual leader within the G.O.P., with special expertise on matters of debt and deficits. So the revelation that he literally doesn’t know the first thing about the debt crises currently in progress is, as I said, interesting — and not in a good way.interesting - and not in a good way
Here I cannot help but connect those words with the famous set of words commonly described as an ancient Chinese curse: may you live in interesting times.
Have a good day.