Taxing Our Way To Prosperity, Krugman Edition

Paul Krugman comes out in favor of the sort of austerity program he has bashed for years when done in Europe:

You’re probably tired of hearing this, but modern G.O.P. economic discourse is completely dominated by an economic doctrine — the sovereign importance of low taxes on the rich — that has failed completely and utterly in practice over the past generation.

Think about it. Bill Clinton’s tax hike was followed by a huge economic boom, the George W. Bush tax cuts by a weak recovery that ended in financial collapse. The tax increase of 2013 and the coming of Obamacare in 2014 were associated with the best job growth since the 1990s. Jerry Brown’s tax-raising, environmentally conscious California is growing fast; Sam Brownback’s tax- and spending-slashing Kansas isn’t.

His editors dropped one word - his second paragraph originally opened with "Don't think about it".

But folks who do think about it will wonder why the Dread Reagan boom gets such short shrift; why comparing Clinton's tax hikes at the start of a recovery to the Bush tax cuts at the start of a recession to the Obama tax hikes midway through a recovery makes any sense; and why we are comparing California to Kansas rather than low-tax Texas.

Folks with a bit of a memory will recall that Paul Krugman pounded the Obama stimulus as too small and timid back in 2009 but was scarcely calling for higher taxes on anyone. He eventually even admitted that lower taxes on lower income people (e.g., cutting the payroll tax) could be stimulative.

And folks armed only with an economics textbook will wonder just what growth model would predict that higher taxes on the rich lead to higher growth.

Just for example - back in 2010 Krugman opposed attempts to boost aggregate demand by lowering taxes on the rich because either (a) they would simply save the money, or (b) even if they propped up consumption by spending it, they could just as well have borrowed to maintain their consumption.

Of course, if that is true, one might flip that coin and argue that raising taxes on the rich won't have any impact either. If they pay for their higher taxes by reducing their savings, then the net of public and private savings is unchanged and the economic impact is tiny. If they pay for their higher taxes with a combination of reduced savings and reduced consumption, then the net impact is a contraction of private sector demand, which does not sound expansionary.

Now, maybe in some environments the government can claim they were up against a borrowing constraint. In that case, raising taxes and spending all of it, while forcing their rich to reduce both their savings and consumption, can still lead to a net increase in public and private aggregate demand.

But does anyone actually have the impression that in 2010, with long term rates at historically low levels and short term rates near zero, that the government was having a hard time borrowing? My goodness, that ready access to funds has been Krugman's argument in favor of increased stimulus spending; is he now going to pretend that only tax hikes could make that spending possible?

Don't think about it.

FACT-CHECKING THE OPINION CHECKERS: Krugman is reporting from LiberalLand with this:

The real revelation on Wednesday, however, was the way some of the candidates went beyond expounding bad analysis and peddling bad history to making outright false assertions, and probably doing so knowingly, which turns those false assertions into what are technically known as “lies.”

For example, Chris Christie asserted, as he did in the first G.O.P. debate, that he was named U.S. attorney the day before 9/11. It’s still not true: His selection for the position wasn’t even announced until December.

Actually, it is still not false. This is from a PolitFact link provided in Krugman's column:

A spokeswoman for Christie, Samantha Smith, wrote in an email Friday that Christie received a phone call on Sept. 10, 2001, from Attorney General John Ashcroft that set in motion a months-long hiring process.

"The point he was making was on Sept. 10 he accepted the job," Smith said in a phone interview.

Smith pointed to an article in New Jersey's Star-Ledger newspaper from Sept. 11, 2001, which read: "President Bush nominated former Morris County freeholder Christopher Christie as the state's next U.S. attorney yesterday."

It continues: "...the White House notified Christie that he is the President's choice and that extensive background checks on his qualifications would begin immediately."

The story, written by Kate Coscarelli and Robert Cohen, estimated that those checks would take "up to six weeks, after which the formal nomination would be put forth to the Senate."

Christie was officially confirmed by the U.S. senate on Dec. 20, 2001, and sworn into office on Jan. 17, 2002.

But Christie is a Republican, so you know the claim is still rated Mostly False. A different source, Political Ticker NJ,  has this:

Here’s the Star-Ledger on the morning of September 11, 2001, probably the most famous “where were you on the morning of” in state history since JFK was assassinated.

“President Bush nominated former Morris County freeholder Christopher Christie as the state’s next U.S. attorney yesterday, but the candidate’s lack of criminal-law credentials generated a new round of opposition from New Jersey lawyers.”

Obviously, for an appointment that requires the advice and consent of the US Senate, a nominee does not assume the position on the day he’s first nominated. But this is clearly what Christie meant when he said “appointed,” both in fact and in context.

Gawker wrote that “Christie was rumored for the appointment in early September, pre-9/11, but wasn’t officially nominated for the post until December of that year, and wasn’t confirmed until January 2002.”

But that’s wrong, too. This wasn’t a “rumor.” Right here on PolitickerNJ, we reported on October 2, 2001, “There was some good news last week for former Morris County Freeholder CHRISTOPHER CHRISTIE, after the two Democrats representing New Jersey in the U.S. Senate said that they would not block his appointment as the United States Attorney.” If the Senators were already agreeing not to oppose, then the nomination was clearly more formal than just a rumor.

 

Comments

[Ignatz Ratzkiwatzki]

Mama mia, now over 500 homes destroyed. I didn't think there was 500 homes there to burn.

[Ann]

Hi, Ig

So glad to hear you are okay! My first apt. was on the third floor of an old Victorian House. I was told it was used for Victorian balls. Way cool. (Except, I didn't have any furniture to speak of.)

Anyways, the fool on the second floor decided to put gasoline on his fire because it wasn't big enough. The fire raced up the fireplace wall right through my floor to the attic and back to my place. Lost everything pretty much, except my dog survived putting her nose under a patio door. (Patio roof garden overlooking a Baptist church. ) She was a white shepherd. When I got her back she was a dark gray. The firemen didn't know anything about a WHITE dog.

Only telling you this story, because I know what it's like to loose everything in a fire. I can still smell it.

[narciso]

Yikes ann that must have been a terrifying moment.

[maryrose]

Whoa Ann
I can picture how fast that must have happened
Your guardian angel was watching over you

[Ann]

It was terrible, narciso. It was right after Christmas, so all my gifts were gone too.

The worse thing was my dog. Really, she was just a puppy. She got Mange from the trauma and lost all of her hair. She would sit in my convertible passenger seat and people would laugh at her at a stop sign. :( (I am not kidding.!)

New thread.

[Ann]

Maryrose:

You know you are right. Someone made me sign up for renters insurance right before it happened.

I wasn't even sure if I was covered yet.

Okay, I'm done whining. Go Trump!!!!

Someone should compare Trumps family to Jeb's family. Just another reason I like Trump.

[Should be handled like firearms, gingerly.]

Gasoline is powerful enough to get us to the moon. It is that energy dense, which is surprising to most people. They just don't get the scale of it, even though cupfuls can power your auto blocks and blocks.

[GUS]

hot wet hot woman

[GUS]

hot teen body and nipples.

[Ignatz Ratzkiwatzki]

Feelin' OK Gus?

[Extraneus]

Er...

Errant search terms?

[The Imp]

Bra = boobhammock
Seatbelt = boobytrap

[Michael (fpa Patriot4Freedom)]

Never ceases to amaze me how Dems conveniently overlook two significant facts about the Clinton economy
of the '90's:

1- The Internet boom
2- Repubs taking the House in '94, resulting in the capital gains tax reduction, reduced federal spending, and balanced budget.

[Tom Bowler]

Hey TM, congrats on getting linked by Taranto in his WSJ dissection of Krugman!

“Christie is a Republican, so you know the claim is still rated Mostly False,” quips blogger Tom Maguire. That may be unfair; perhaps Reid simply doesn’t like Christie, or, more charitably, maybe he’s just a stickler about legalisms.

A quibble with your counter to Krugman on the demand side effects of tax cuts for the rich: Tax cuts for the rich are a supply side move, so why argue the demand side effects? We've had seven years of demand side policy and look where they've gotten us. The lowest workforce participation rate since Carter.