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Monday, July 27, 2009

The Confusion of Paul Krugman

The only reason that I write about Paul Krugman as often as I do is because I am stunned and amazed that this individual is not only a New York Times columnist but an economics professor at Princeton, not to mention a Nobel Prize winner. It appears tha multiple institutions are willing to pay this man hundreds of thousands of dollars yearly to speak in gibberish. About a month ago, Krugman blamed some obscure law created in the Reagan administration for the current financial crisis. In fact, Krugman is determined to do everything he can to try and muddy Reagan's record for years.

It's also important to understand that universal health care, in its current House form, is a pillar in Krugman's big government liberal vision. This is, after all, the same Paul Krugman that screamed and yelled that the stimulus wasn't big enough. He suggested a stimulus as large as $5 trillion to turn the economy around. Krugman is a true believer Keynesian. Krugman is also a classic liberal that believes the U.S. should become an exact replica of most of Western Europe.

So, Obama's health care reform would be a major pillar in Krugman's dreams of seeing the U.S. turn into a socialist Democracy like France. The problem is that the Blue Dogs have stopped it in its tracks just as it was on the verge of passing. Krugman simply can't imagine that someone, especially a Democrat, could possibly be against his vision of health care reform, and so, naturally, he thinks the Blue Dogs are confused. Of course, what's really confusing is his attack on the Blue Dogs. First, Krugman starts with the four pillars of health care reform: regulation, mandates, subsidies, and competition. Now, if these are the four pillars, everyone must have been keeping them under wraps because this is the first that these four have been referenced together.

Obama has said the pillars are everyone is covered, costs get curbed, and no increase to the deficit. Obama's pillars are statements of purpose. Krugman's pillars are statements of policy. So, the first question is why are the four pillars Krugman references the key to successful health care reform. On top of this, Krugman has a peculiar view of these policies. \Krugman's idea of "competition", for instance, is the inclusion of the public option into the health insurance market. Our country already has over 1300 health insurance companies and yet Krugman never explains how one more will suddenly be the key to competition.Krugman doesn't even address that because he just assumes that his vision is right.

Krugman then acknowledges that health care reform will cost a trillion dollars over the next ten years, raise taxes, and then mentions there will be savings elsewhere to cover some of the shortfall. Then, he chastises the Blue Dogs for being concerned not only with the massive bill but with some of the ways that this bill will be paid. What Krugman never squares is how the same bill can increase costs by one trillion dollars over the next ten years and still be cost effective. Krugman doesn't seem to realize that if a bill costs a trillion dollars over the next ten years it isn't cost effective.

First, Krugman calls the Blue Dogs hypocrites for not speaking out on run away spending back in 2001 when the Republicans were in charge. This is turning into a worn out and boring attack. No matter who proclaims that we have too much government spending is immediately taken to the woodshed because they weren't this vocal eight years ago. As Bill O'Reilly likes to say, that is excusing bad behavior by pointing to worse bad behavior. If no one is allowed to question runaway spending now unless they also questioned it in 2001, then no one will question it and our government will spend with absolutely no limits. He also proclaims that these deficit hawks signed onto a $1.35 trillion tax cut which he claims added $1.35 trillion to the deficit. Of course, that's nonsense. Governmnet revenue increased by 20% in Bush's term. What added to the deficit was runaway spending. Though, Krugman's disgust for allowing people to keep more of their money is evident in that statement.

Then, Krugman can't seem to understand why the Blue Dogs are worried that the House bill forces almost all businesses to provide health insurance for their employees.

But Blue Dogs have also been complaining about the employer mandate, which is even more at odds with their supposed concern about spending. The Congressional Budget Office has already weighed in on this issue: without an employer mandate, health care reform would be undermined as many companies dropped their existing insurance plans, forcing workers to seek federal aid — and causing the cost of subsidies to balloon. It makes no sense at all to complain about the cost of subsidies and at the same time oppose an employer mandate.

So what do the Blue Dogs want?

Maybe they’re just being complete hypocrites. It’s worth remembering the history of one of the Blue Dog Coalition’s founders: former Representative Billy Tauzin of Louisiana. Mr. Tauzin switched to the Republicans soon after the group’s creation; eight years later he pushed through the 2003 Medicare Modernization Act, a deeply irresponsible bill that included huge giveaways to drug and insurance companies. And then he left Congress to become, yes, the lavishly paid president of PhRMA, the pharmaceutical industry lobby.

So, of course, Krugman thinks that anyone that takes a position opposite of his must be a tool of corporate interests. I don't know the CBO study he references but there are other reasons besides government revenue to oppose mandating that all employers have to provide health insurance for their employees. For one, this is a massive burden for small business owners and will likely cost millions of jobs. For another, this is a massive intrusion on freedom. Neither of those reasons necessarily have anything to do with being a tool of corporate interests. Krugman finishes the piece with this point.

Now, however, they face their moment of truth. For they can’t extract major concessions on the shape of health care reform without dooming the whole project: knock away any of the four main pillars of reform, and the whole thing will collapse — and probably take the Obama presidency down with it.

Is that what the Blue Dogs really want to see happen? We’ll soon find out.

Of course, that's both correct and misleading. The Blue Dogs have a fundamental problem with the vision of health care reform that President Obama has. They don't believe it limits costs, encourages competition, and won't add hundreds of billions to the deficit. If the only health care reform is Obama's health care reform, then, yes, they do want to kill it. They have a totally different vision for health care reform. It would focus on moving away from employer sponsored health care, tort reform, and attacking corruption and waste. That, apparently, is something that Krugman can't imagine because, apparently, the only vision for health care reform is Krugman's vision for health care reform.


frog said...

He is an ideologue.

Stan said...

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