Paul Krugman, May 20:
Where Are the Deficit Celebrations?
For three years and more Beltway politics has been all about the deficit. Urgent action was needed to avert crisis. A Grand Bargain absolutely had to be reached. Fix the Debt, now now now!
So where are the celebrations now that the debt issue looks, if not solved, at least greatly mitigated? And it’s not just recovering revenues: health costs, the biggest driver of long-run spending, have slowed dramatically.
What we’re getting from the deficit scolds, however, are at best grudging admissions that things may look a bit less dire…
[T]hink about the personal career incentives of the professional deficit scolds. You’re Bowles/Simpson, with a lucrative and ego-satisfying business of going around the country delivering ominous talks about The Deficit; you’re an employee of one of the many Pete Peterson front groups; and now, all of a sudden, the deficit is receding, and you had nothing to do with it. It’s a disaster!
And so the deficit progress must be minimized and bad-mouthed.
Ezra Klein, May 22:
Stop celebrating our falling deficits.
It’s time to stop celebrating last week’s Congressional Budget Office report. Our deficits aren’t dropping because we’re doing something right. They’re dropping because we’re doing everything wrong.
My initial piece on the CBO report led with the surprising news that the agency had knocked more than $600 billion off its projections for the deficit over the next decade. But as I wrote then, the deficit is following a weird path. It’s not a gradual decline. It’s not a temporary uptick as we spend to create jobs followed by a sharper decline as the economy recovers. It’s a sharp decline followed by a gradual rise — it looks a bit like a Nike Swoosh.
The types of policies matter, too. We want to cut the deficit by reducing spending on programs that don’t add much to the economy and raising taxes on people who can afford it. Instead, a lot of our deficit reduction is coming through sequestration, which everyone agrees is pretty much insane, and which focuses on the part of the budget that isn’t growing. Basically none of the savings are coming through entitlement reforms that will grow in the second or third decades, or through tax reforms.
It’s as if we took all the good ideas people had to help the economy and reduce the deficit and did the opposite. But because Washington myopically focuses on the number that denotes the deficit rather than the policies behind it or how well it matches the likely path of the economy, many in town are celebrating the report and declaring their work pretty much done, at least for now.
I take great comfort in the above quotes, for the following two reasons:
(1) No matter how you slice it, Krugman or Klein has to be completely full of it. It is impossible for them both to be correct on this.
(2) Ezra Klein apparently doesn’t read Paul Krugman’s blog.
UPDATE: Let me make sure you guys don’t just think this is a funny gotcha based on Krugman’s rhetorical flourish. I am not basing my post on the clearly contradictory titles of Krugman and Klein’s respective blog posts. There’s a reason I quoted both of them at length: their substantive analysis of the CBO report is totally different. Krugman is saying the good news on the deficit front is coming from ObamaCare and other sensible reforms, which the myopic budget slashers had nothing to do with. Klein, in contrast, is saying that the bad news on the deficit front is coming from short-term gimmicks that don’t rein in long-term entitlements like Medicare and Medicaid.
So to be clear, I wasn’t using a figure of speech when I said “full of it.” I mean, at least Krugman or Klein (a) didn’t bother reading the CBO report to see what was driving the revision, (b) tried to read it but made a mistake, or (c) is consciously lying.
(Note that I am not accusing Krugman of lying, or of being stupid. I am quite prepared to believe that he didn’t read the report carefully before firing off his blog post about it.)