Krugman's timeline

Matthew Hoy
By Matthew Hoy on August 30, 2002

I won't write too much about Krugman's latest New York Times column. Suffice it to say that Bush is evil (or stupid) and wants to make sure that poor people get poorer.

Krugman's column claims or implies the following:

1. Bush knew the tax cut would put the budget into deficit.
2. The tax cut is the primary factor in the budget deficits the government is facing.

Those claims are dubious. You can debate whether or not the tax cut is poor public policy. (Krugman comes from the economic school which prefers government spending to spur the economy. Bush, and most conservatives, think that giving the American people more money to spend on products will help spur the economy.) But Krugman is faced with a dilemma. He and his ilk like to portray Bush as a blithering idiot who needs a "to-do" list to tie his shoes. Yet, the kind of sinister manipulation that Krugman claims has taken place would take a genius to pull off.

It looks like Krugman thinks that the president is really smart. Evil, but really smart.

All of that aside, Krugman makes the following statement that is just incredible.

In fact, it's clear that we would be facing large deficits outside Social Security, and probably significant deficits in the budget as a whole, even if neither the recession nor Sept. 11 had happened.

Clear? Debatable, certainly. But clear?

It sounds good, but it's empty rhetoric.

Let's try this: In fact, it's clear that we would have huge surpluses outside Social Security, and probably significant surpluses as a whole, if the recession nor Sept. 11 had happened.

Let's flip back earlier this month when Krugman made the following statement in a roundly-criticized column entitled "The Memory Hole." the administration's own estimates, 40 percent of the $4 trillion deterioration in the 10-year outlook is due to tax cuts.

OK, so let's do the math. 40 percent of $4 trillion is $1.6 trillion. That's over 10 years. Now, this isn't the case, but let's assume that this descent into deficits is linear. That would make the first year's share of the deficit $160 billion. Is Krugman seriously suggesting that the bailout of the airlines, the government funds for victims of Sept. 11 (in lieu of suing the airlines into bankruptcy) and the trickle down effect this has had on all sectors of the economy. (i.e. Planes on the ground mean ticket agents, flight attendants, mechanics, parts-suppliers etc. out of work and all sorts of tourism in New York etc.) Add in the recession -- the biggest reason that government receipts have declined -- and it's clear that there's no way that could add up to $160 billion.

Sorry, but the math just doesn't add up.

(And it totally ignores the increased spending on homeland security, the military and the evil farm bill.)

I wasn't going to write a lot -- but as you can see, I couldn't help myself. *sigh*

*UPDATE* This link, courtesy of the Drudge Report estimates the government's total payout to the 9/11 victims families to be between $4 billion and $6 billlion.


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August 2002



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