Sunday, October 28, 2012

Paul Krugman closes his own private enthusiasm gap

No one on the more or less mainstream left has been harder on Obama than Paul Krugman, who began tearing out his hair at the proposed size of the stimulus before Obama took office and did not let up for almost three years thereafter. The nadir came as details of the debt ceiling deal emerged last summer: Krugman's July 31, 2011 column was originally titled "Capitulation" and lives on online as The President Surrenders.  His bitterness reached this crescendo:
In fact, Republicans will surely be emboldened by the way Mr. Obama keeps folding in the face of their threats. He surrendered last December, extending all the Bush tax cuts; he surrendered in the spring when they threatened to shut down the government; and he has now surrendered on a grand scale to raw extortion over the debt ceiling. Maybe it’s just me, but I see a pattern here.

Yes, the debt ceiling deal was disillusioning, and droves of Democrats followed Krugman into the slough of despond.  Nine days later, the disgust peaked with Drew Westen's What Happened to Obama, a 3000-word screed on the front page of the New York Times Sunday Review that portrayed Obama as a craven conflict-averse surrender monkey while belittling his legislative accomplishments.  As I pointed out at the time, this rhetorical nuke dropped on ground zero in the liberal heartland relied almost entirely on Krugman's critique of the stimulus for its substantive attack on Obama's record.

Yet Krugman has had a change of heart over the past year. His esteem for the president has grown more swiftly than the economy -- to the point where, if Obama's base followed Krugman's lead, there would be no enthusiasm gap. Perhaps it's an accelerating case of 'you don't know what you've got till it's [almost] gone.

But I think the change also stems from Obama's swift pivot to confrontation in the wake of the debt ceiling debacle. Krugman concluded his "Capitulation" column with a set of prophecies that proved to be a rare instance of failure in his capacity as Cassandra:
It is, of course, a political catastrophe for Democrats, who just a few weeks ago seemed to have Republicans on the run over their plan to dismantle Medicare; now Mr. Obama has thrown all that away. And the damage isn’t over: there will be more choke points where Republicans can threaten to create a crisis unless the president surrenders, and they can now act with the confident expectation that he will. 

What followed, instead, was Obama laying down the gauntlet to the GOP with the American Jobs Act; re-introducing his own alternative to Bowles-Simpson, with a proposed $1.5 trillion in new revenue over ten years; coolly letting the "sequestration" cuts mandated by the Budget Control Act become law (for the present), leading to far more gnashing of teeth by Republicans spooked by the mandated defense cuts than by Democrats; a pair of pitched battles and victories over the payroll tax cut and another one over student loan rates; an aggressive defense of his own record and attack on Republican proposals in the election campaign; and a declaration that he would veto any attempt to stave off the fiscal cliff that did not enclude letting the Bush tax cuts for the wealthiest 2% expire. 


And so, fifteen months later, Krugman views Obama through an altered lens. Yesterday, he offered up a tribute that was almost as astonishing in its way as if Mitt Romney were to suddenly season his implicit acquiescence to Obama's foreign policy with explicit praise.  Ascribing Obama's apparent resilience in Ohio to the auto bailout and the killing of Bin Laden, Krugman concluded:
And what the auto rescue and the bin Laden strike have in common is that they were both very courageous decisions — decisions that could easily have gone wrong, that faced lots of second-guessing. You can criticize Obama for many things (and I have, and will in future), but he showed true grit when it mattered, and now seems likely to reap the reward.
The post is titled "Fortune Favors the Brave" -- and I imagine that Krugman writes the headlines on his own blog.

Bowing to electoral reality, Krugman has also absolved Obama for refraining in election season from pushing the American Jobs Act, or other dramatic stimulus that Krugman feels the country so desperately needs.  His most recent recognition of that reality also includes a little pocket revision of his own assessment of the 2009 stimulus:
Voters have been told over and over again that the 2009 stimulus didn’t work (actually it did, but it wasn’t big enough), and a few days before a national election is no time to try to change that big a false belief. So all that the administration feels able to offer are measures that would, one hopes, modestly accelerate the recovery already under way. 
There's a bit of irony here. Krugman is referring to Republicans' relentless and successful disinformation campaign about the stimulus.  But his own equally relentless denigration of its scope and composition caught the ARRA in a rhetorical pincer movement.  Perhaps Krugman has been influenced by Michael Grunwald's well documented revisionist tribute to the legislation, The New New Deal (as, perhaps, was the Times editorial board, which recently referred to the stimulus as "an enormously successful effort"). In any case, that backhanded compliment strikes a very different tone from this November 2010 sideswipe:
...fearing opposition in Congress, the Obama administration offered an inadequate plan, only to see the plan weakened further in the Senate. In the end, the small rise in federal spending was effectively offset by cuts at the state and local level, so that there was no real stimulus to the economy.
Looking back to that critique, might Krugman now agree with a partial rebuttal by, er, me?
Wasn't one of the core purposes of the stimulus to offset spending cuts by state and local governments? That's what stimulus does -- offset drops in demand. Of course, Krugman believes that there was too little state aid, along with too little of everything, in the Recovery Act, and naturally a stimulus should do more than offset other government spending cuts. But still, offsetting those cuts is a "real stimulus to the economy." The Recovery Act unquestionably preserved hundreds of thousands of state and local government jobs, and GDP would have been lower if this hadn't been done.

This may seem a semantic quibble. But it's a symptom, I think, of an oversimplified narrative. Krugman has implied elsewhere that the right-sized stimulus would have set the economy roaring back to life (as has Martin Wolf). To what degree is that credible? If Obama had asked for $1.2 trillion and got $950 billion, what's the math on the counterfactual? Unemployment at 8.3%?  And the effect of such a drop on the electorate? I confess it could be substantial. But there's an awful lot of what-ifs there, beginning with the premise that a substantially larger stimulus could have got through the Senate. And the narrative leaves out some externalities, such as the Euro sovereign debt crisis, which seemed to stop a decent-looking recovery in its tracks. Not to mention the credible possibility, forecast now by a growing number of economists and business leaders (e.g., here and here), that a substantial recovery may be on the horizon now.
Not quite. The recovery has not been as strong as we might have hoped, and Krugman still sees an urgent need (as does, doubtless, Obama) for more short-term action against joblessness. But Krugman too now sees some light at the end of the tunnel -- if its mouth isn't utterly blocked by a Romney victory and massive spending cuts. And for that gradual recovery, he is ready to ascribe some credit whree credit is due.

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