Interesting juxtaposition between the NYTimes front page and the column by its star columnist today. First, the (web) front page:
...as Treasury officials are racing to lock in today’s low rates by exchanging short-term borrowings for long-term bonds, the government faces a payment shock similar to those that sent legions of overstretched homeowners into default on their mortgages.
With the national debt now topping $12 trillion, the White House estimates that the government’s tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink drastically. Other forecasters say the figure could be much higher.
In concrete terms, an additional $500 billion a year in interest expense would total more than the combined federal budgets this year for education, energy, homeland security and the wars in Iraq and Afghanistan.
In contrast, in the opinion pages and in his blog, Mr Krugman tells us this is bullshit, that we shouldn't worry about deficits, and that the US government can borrow for next to free as far as his eye can see. Furthermore, concerns about borrowing endless piles of cash, to be paid by taxpayers of the future, the Grandchildren of boomers in essence, are bullshit.
Current account deficits larger than any country's in the history of the world? No worries! Take another Woodstock hit! No way can the US be a very large Argentina.
Of course, Krugman has his ideas about reasonable economic discourse, and then Dominique Strauss-Kahn, head of the IMF, which eventually deals with profligate nations like the US, has his:
In economies that have run large current account deficits, national savings will need to increase. In many of these economies, including the United States, fiscal consolidation must take priority.
Yup, that means the US has to start paying for what it consumes.
Now, usually I think Paul Krugman has some excellent insights about where the US should be going, in terms of tax and fiscal policy. But lately, he's been the left-wing's version of those right wing tea-baggers who think lower taxes solve everything, people rightfully referred to as glibertarians. In essence, unlike glibertarians, who say "I got mine, fuck you," Mr Krugman rightfully defends those who don't have theirs...but his answer is still, in essence, fuck you.
How so? Because his solution, given America's regressive tax regime, makes the poor and the vulnerable he purports to defend pay, in the end, for what he proposes.
Let's take this as an economic given: The US cannot continue for the foreseeable future to run up deficits and never pay them off. Mr. Gross of Pimco, cited in today's front page NYTimes article is absolutely correct to say that
What a good country or a good squirrel should be doing is stashing away nuts for the winter...the United States is not only not saving nuts, it’s eating the ones left over from the last winter."
Now, Mr Krugman is correct that something must be done, today, to reduce unemployment. But, Mr Gross is also correct to assert that this needs to be paid for.
Surprisingly, the answer is quite simple, and oddly enough, one that neither Krugman nor anyone else on the supposed left in America are willing to point out - if you tax the rich properly, you can raise a lot of deficit-fighting cash. In fact, if you simply re-establish taxation at pre-JFK levels, the federal government raises $400bn a year more, and state deficits largely disappear.
Eliminate the funding for wars Obama promised to wind down but hasn't and you save another $100bn.
Pretty soon it starts adding up into real money.
So, next time Krugman starts belly-aching about how the Obama administration should piss away billions to re-start the American economy, I would like for him to say how he intends to pay for it. He says future economic growth. If we build it, they will buy it.
That sounds a lot like a supply-side Reaganite to me. The same Reagan who gave Krugman his first job in government.
Instead of that bullshit, I'd like to see that the people who've taken all the wealth from the US' last three decades of growth, the top 2% who took 90% of everything since Krugman first started in government, pay for the mess they, as well as the economic system to which he still subscribes, created.
By paying their fair share.
Until then, all of Krugman's belly-aching about printing more government paper to fund deficits seems hollow to me. Yes, get America working again. But first, take the fuckers who took America down the last dozen pegs pay for it. Get the fuckers who caused the deficit in the first place, and are sitting on more cash than you and I can imagine, to start paying back first.
And then we can talk about our kids taxes.