Another excellent column from
Paul Krugman in today's
New York Times. Once again Krugman tackles the Bush budget deficit, comparing the current situation to that of Argentina's in the 1990's:
"Argentina retained the confidence of international investors almost to the end of the 1990's. Analysts shrugged off its large budget and trade deficits; business-friendly, free-market policies would, they insisted, allow the country to grow out of all that. But when confidence collapsed, that optimism proved foolish. Argentina, once a showpiece for the new world order, quickly became a byword for economic catastrophe."
As Krugman points out, those who suggest that the fiscal mess created by President Bush will lead to a similar disaster are often dismissed as shrill, hysterical, and (of course) unpatriotic.
Enter Robert Rubin. No one has ever called the legendary Treasury chief "shrill" or "hysterical." In this morning's column Krugman points to a policy paper, presented over the weekend by Rubin and three co-authors, that highlights the coming economic catastrophe should the Bush deficits continue to spiral out of control. The Rubin paper stated:
"Substantial ongoing deficits may severely and adversely affect expectations and confidence, which in turn can generate a self-reinforcing negative cycle among the underlying fiscal deficit, financial markets, and the real economy. . . . The potential costs and fallout from such fiscal and financial disarray provide perhaps the strongest motivation for avoiding substantial, ongoing budget deficits."
As Krugman puts it, "In other words,
do cry for us, Argentina: we may be heading down the same road."
In late December of 2000, when it was certain that Mr. Bush would become president with a 540,000 vote deficit in the popular count and the slimmest Electoral College margin in over 100 years, I suggested he retain Robert Rubin's successor at Treasury, Lawrence Summers. It would have been a signal to domestic and world markets that he understood the election numbers; that his policy proposals needed to be revised. Instead, the President has steered us on a course with financial ruin. Even with record deficits, ol' Dubya thinks tax cuts are the way to balanced budgets. As Mr. Krugman points out, even Reagan increased taxes when the deficit ballooned.
I don't think the United States would be better off with another four years of George ("I won't pass problems on to future presidents and future generations") Bush. His policies may cause a brief up-tick in the economy, but just as surely as things went sour for his father, any economic recovery will be short lived - and a second Bush term would see the chickens coming home to roost. The result will most certainly be disasterous for the United States of America.
Note to Howard Dean, Wesley Clark, or whoever the 2004 Democratic nominee turns out to be: Might I suggest a solid nominee for vice-president? His name is Bob Rubin.
Cross-posted at Points West