Thursday, June 7, 2012

Liars Figure

I worry that people are going to think that I’m obsessed with Paul Krugman. But he keeps showing up on TV saying the most ridiculous things. And I cannot figure out why the people who are sitting next to him are not staring at him as if he has two heads—like I am.

He was back at it on Sunday on ABC’s This Week with George Stephanopoulos arguing that the economy is so bad because the government has essentially been following Mitt Romney’s economic policies for the past few years. I’m not kidding. Go to the ABC News web site and watch it yourself.

Krugman’s reasoning is that Romney is advocating “austerity” and that the country has been enduring “austerity” for the entire length of Barack Obama’s presidency to date. Note: I have decided to put the word “austerity” in quotes any time it is used by a politician or a pundit. This is to highlight the fact that different people use the word to mean different things, which only confuses things. Some people use the word to mean private sector austerity, which translates to higher taxes. Other people, like Krugman, use it to mean public sector austerity, which translates to reductions in government spending.

So Krugman is arguing that, under President Obama, the government has been cutting spending. And he even has a chart to illustrate this, and darned if it doesn’t show a huge drop in public spending during the past three and a half years. But his chart—which I discussed in April and which he brought out again on Sunday—is hugely and ineptly deceptive. By combining state and local spending with federal spending, it masks the huge increase in federal spending. The fact that it shows overall public spending going down just reflects how bad the economy is. State and local governments have cut spending because they have run out of tax revenues. So, like a lot of people, Krugman is disappointed in Obama, but in his case it’s because Obama has been cutting government. I suppose that’s indirectly true, but it’s completely untrue when speaking of the federal government.

Krugman is not the only one trying to argue that the president is miserly with public monies. A couple of weeks ago global commentary editor Rex Nutting wrote on contended, “Of all the falsehoods told about President Barack Obama, the biggest whopper is the one about his reckless spending spree.” He supported this assertion with a chart showing the annualized percentage growth in spending during each presidential term going back to Ronald Reagan’s first one. According to the chart, the biggest spender was Reagan (in his first term) followed by George W. Bush (in his second term). So the Reagan years weren’t the era of greed and government cutbacks after all!

This was a clever trick on Nutting’s part, but as plenty of others (including fact check columnists and web sites) have pointed out, how much spending has gone up or down from one term to another doesn’t really tell you how much spending happened during a term or how much the deficit was added to. Comparing deficits under each president is a much better way to compare spending policies. Even better is to compare deficits stated as a percentage of gross national product, that is, how much of the U.S. economy is in hock to creditors. At the end of Reagan’s two terms, this percentage was 52.6 percent. At the end of George W. Bush’s two terms, it was at 74.1 percent. At the end of 2011, it was at 99.7 percent—by far an all-time high. In other words, the money owed by the federal government is now very close to the value of the country’s entire economy.

If the percentage increase in spending under Obama comes out low, it is only because the baseline for his spending was the emergency stimulus authorized by Congress in the last days of the Bush administration. What should have been a one-off jump in spending simply became the plateau for even more spending growth. There’s your economy-killing “austerity,” Professor Krugman. What drives me crazy is that people like Krugman and Nutting, who manipulate numbers to create false impressions that don’t fool anybody, are very intelligent people. So they clearly know that they are misleading (or trying to, anyway) people. What I can’t figure out is, why do they do it? And why don’t more people laugh at them and stop inviting them to be on news panels?

Implicit in this manipulation is this argument: Obama isn’t as bad or, at least, any worse than other presidents when it comes to spending. You often hear the president’s defenders point to the fact that George W. Bush and a Republican Congress passed the Medicare Prescription Drug, Improvement, and Modernization Act without paying for it. They also point to Bush’s two wars that he didn’t pay for. And you know what? They’re right. He did exactly what they say. What they don’t explain is how this justifies even more federal spending, by several magnitudes, that also isn’t paid for. It’s like the guy who pours gasoline all over the living room blaming the guy who left the burning cigarette in the ashtray.

Whatever you think of the stimulus packages that were passed in 2008 and 2009, they did have bipartisan support at the time and were worth a try to boost the economy. Unfortunately, the larger one (2009) did not spend its $831 billion in a very stimulative way. And it was eclipsed by the business uncertainty that derived from, first, a prolonged fight over the Patient Protection and Affordable Care Act and, second, the looming provisions and inevitable cost increases of the act itself.

When it comes to the economy, both Republicans and Democrats have let the country down. Voters may feel justified in punishing one party or the other or both. But the only question that matters is which presidential candidate is more likely to move things in a better direction. Mitt Romney has endorsed Paul Ryan’s budget. If he sticks with that, there will be plenty to attack him on because it is very detailed and guarantees significant pain. But it would, over time, reduce the deficit.

What is Obama’s alternative? We don’t know because he speaks only in generalities and criticizes the House of Representatives for not passing bills that would make little difference anyway. The president’s problem is that people have to be wondering if he even has a plan. After all, if he did have a plan, wouldn’t he, as a sitting president, be implementing it already?

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