Douthat Misrepresents Krugman on Deficits

Last night on Real Time, Bill Maher pointed out the fact that Republicans talk big about the deficit when they don't control the White House, but run up huge deficits when they do - that Republican deficit hawkery is not sincere, but is a tool they used to attack a Democratic President's agenda. Of Maher's three guests, two attempted to defend the Republican Party. Gretchen Hamel took the "who are you going to believe, me or your lying eyes approach and argued, in essence, "this time is different" - that the Republicans have learned their lesson and now sincerely want to balance the budget. Ross Douthat argued that G.W. Bush had been attacked for his deficits at the start of his Presidency, I guess to suggest that the Republican antics represent "politics as usual" and thus should be excused despite their harm to the nation?

Had Douthat stopped there, it might be appropriate to point out to him that an accusation of hypocrisy in general, let alone when you're pointing to actions taken a decade apart, does nothing to tell us which approach is correct. Even if you assume all else is equal, it could be that the Democrats learned from experience that the threat from the out-of-control deficits ushered in by Bush were overstated. That assumption, of course, would require you to be ignorant of the fact that at the time G.W. took office there was a budget surplus and an opportunity to pay down the national debt, and when he left office he had run up a gargantuan deficit and that we were in the midst of a serious financial crisis. Surely Douthat is not that ignorant.

But then, what to make of his reference to his New York Times colleague, Paul Krugman, as the sole example of left-wing hypocrisy on the issue. He alleged that at the start of the G.W. Bush presidency Krugman argued that deficits were bad, and that now that a Democrat was in office he was arguing that deficits were good. That leaves us with one of several possibilities, none of which are flattering to Douthat:

1. He has not read Krugman's columns and other writings, and is accusing Krugman of hypocrisy based upon his own ignorance of and suppositions about what Krugman has written;

2. He has read Krugman's columns and other writings, but doesn't have the intellectual capacity to understand those writings; or

3. He's lying in order to score a political point at the expense of his colleague.

It's also fair to observe that Douthat's implicit suggestion that the nation's economic situation is analogous then and now, such that the issues involved in the determination of whether the nation should have a deficit were essentially the same, is false - similarly suggesting ignorance by Douthat or his deliberate intent to deceive his audience. To assume that Douthat is both informed and sincere would require that you regard him as seeing the following two scenarios as equivalent:

1. A family spends more than it earns for a decade, such that it has six figures of debt. Due to some lucky windfalls, a small lottery win, an inheritance, a modest raise at work, the family is finally able to balance its budget - $2,000 left at the end of the year. Given the choice of applying that amount to its debt, or of spending the money, the family chooses the a third path, taking a $5,000 vacation - increasing its total debt load and making its situation less sustainable.

2. A family struggles to make ends meet, and faces significant debt. It's worried about the impact of that debt on its short-term, and especially upon its long-term, financial well-being. But catastrophe strikes, mom is diagnosed with cancer, and the family needs to spend $100,000 in uninsured medical costs to keep her alive and thus goes deeper into debt.

Is Douthat truly unable to understand the difference between choosing to spend yourself deeper into debt when your financial picture is good and you have the option of reducing your debt load, and going deeper into debt in response to catastrophe? Or of the policy choices and economic consequences involved in choosing between spending that benefits the masses and tax cuts directed at the rich? If he has read Krugman, he shouldn't be. When the Bush tax cuts were initially proposed, for example, Krugman wrote,

His argument went as follows: given its projected surpluses over the next decade, the federal government may not only pay off its debt, but actually find itself using surplus cash to buy private assets. This could cause problems, he suggested, because it would be "difficult to insulate the government's investment decisions from political pressures." So we should engage in "pre-emptive smoothing of the glide path," which turns out to mean cutting taxes enough so that the federal government never does pay off its debt, after all.

Now I would quarrel with those surplus projections. I would also point out that in declaring "it is far better . . . that the surpluses be lowered by tax reductions than by spending increases," Mr. Greenspan was out of bounds. Since when is it the Fed's business to say that we should have a tax cut rather than, say, a new prescription drug benefit -- or for that matter a missile defense system? (Neither program is factored into those surplus projections.)

When the economy was souring, Krugman didn't oppose tax cuts as a stimulus measure, but instead wrote why Bush's plan would not be effective as stimulus:

Now Mr. Bush could have tried to sell his plan in terms of the ideology that the plan actually reflects. But he has never done so. Instead, he has engaged in an elaborate disinformation campaign. Part of this effort involves an attempt to deny the plain fact that the tax cuts will mainly go to the very, very well off. But the campaign's most striking feature has been the attempt to sell the tax cut as a short-run stimulus to spending -- as the answer to an economic slowdown that Mr. Bush has done his best to play up, and which his doomsday rhetoric may have worsened.

What's ironic is that the timing of the Bush tax plan makes it just about completely useless as a short-run stimulus package. In order to keep the headline numbers down, the plan delays the really big tax cuts far into the future, putting hardly any money into the hands of consumers this year and not much next year. And recently administration officials have begun to admit that if they are really serious about doing something for the economy now, they need to add an immediate tax cut onto the plan.

But then the question arises: why not adopt the add-on and forget about the original plan? Or better yet, why not implement one of the short-run stimulus plans proposed by Democratic senators, and discuss those huge long-term tax cuts for the rich at our leisure?

Douthat should also know that, as far as Krugman is concerned, he's asking the wrong question:

How did a huge surplus turn into a huge deficit? The recession, the tax cut and terrorism -- in that order -- all played a role. Also, it now seems clear that the big surplus in 2000, almost twice as large as the surplus in the previous year, was an aberration -- that tax receipts were inflated by the technology bubble. In retrospect it's hard to believe that we locked in large, long-term tax cuts based on exactly one year in which the non-Social-Security budget was in significant surplus. (Thanks, Mr. Greenspan.)

But anyway, ''Who lost the surplus?'' is the wrong question. The right question is whether the Bush administration has any plan to return to a balanced budget, let alone to honor George W. Bush's promise to use the Social Security surplus to pay down debt. And the answer is no.

That is, it should be obvious to anybody who reads Krugman that he is not particularly concerned with any particular year's budget deficit or surplus, but is instead focused on the long-term.

And if Douthat needs to be spoon fed, well how about that - Krugman has even penned a piece in response to those who "want to know why I’m blaming Obama’s deficits on Bush, and why I think Obama deficits are good, while Bush deficits weren’t." The criticism is of debt, not deficits; deficits can result from a prior administration's policies; and when it comes to stimulus spending the "zero bound" makes an enormous difference. But Douthat knows all of this, doesn't he?

Seriously, was Douthat's attack on Krugman a confession of incompetence, of willful ignorance, or of mendacity?