« Frankel: 'Black Swan' Should Refer to Something Else | Main | Links for 08-21-2012 »

Monday, August 20, 2012

Ferguson 'Was Very Carefully Trying to Mislead His Readers'

Niall Ferguson has a really bad defense of himself:

The worst case against the Obama administration, by Ezra Klein: ...On Sunday, Paul Krugman noticed Niall Ferguson writing something apparently false about the Affordable Care Act. Today, Ferguson responded to Krugman’s critique by saying, in effect, that he wasn’t wrong so much as he was very carefully trying to mislead his readers.

The sentence in question is straightforward enough. Ferguson wrote:

The president pledged that health-care reform would not add a cent to the deficit. But the CBO and the Joint Committee on Taxation now estimate that the insurance-coverage provisions of the ACA will have a net cost of close to $1.2 trillion over the 2012–22 period.

The intended meaning is pretty clear. Ferguson is saying Obama “pledged” that the Affordable Care Act would reduce the deficit, “but” the Congressional Budget Office and Joint Tax Committee now say otherwise.

The problem, as Krugman pointed out, is that the CBO and the JCT do not now say otherwise. Ferguson is simply wrong. But that’s understandable. The CBO did release a confusing report back in March 2012 in which they updated their estimates for the insurance coverage provisions of the law (which is to say, the part of the law that spends money) without including estimates for the revenue provisions, or the Medicare provisions, which are the parts that save money. It was easy to get confused. But if you actually read the report, it said that the Affordable Care Act was going to cut the deficit by more than the CBO initially thought, not by less.

But Ferguson says he wasn’t confused. Rather, he phrased his original comments very carefully in order to deceive his readers.

Brad DeLong is not amused. See this too. But let's go back to Ezra:

...the main reason to mistrust Ferguson is that, for years now, his argument has been wrong.
Almost since the crisis began, Ferguson has pushed a very specific theory with a very specific prediction: The bond markets, he has said, are going to revolt against American debt. And if that doesn’t happen, inflation is going to run amok. ...
These predictions — and others, like when Ferguson warned that ”the Chinese clearly feel they have enough U.S. government bonds” — were the testable hypotheses generated by Ferguson’s worldview. That worldview, in essence, was that the United States was under imminent threat from its debt, and that the result would either be a crisis as the U.S. proved unable to pay its creditors or runaway inflation as the Fed printed money in excess of what the economy could handle.
These predictions were wrong. But Ferguson hasn’t updated the theory to account for their failure. Instead, he has simply applied that same theory to argue that Paul Ryan ... should be vice president, because his deficit-reduction plan could “end four years of economic underperformance [and] stop the terrifying accumulation of debt.” ...
And this is really a rather important point about the current crisis. There is a strain of thinking that argued, from the beginning, that Obama’s policies would fail because the required borrowing would send interest rates soaring. Ferguson was a member of this club, but so was the Wall Street Journal editorial board, which warned, back in May 2009, that the bond vigilantes “appear to be returning with a vengeance now that Congress and the Federal Reserve have flooded the world with dollars to beat the recession.”
It is no surprise that most of the folks who bought into this theory were early and enthusiastic backers of Paul Ryan. After all, he bought into this theory, too, and his initial budgets included deep, quick cuts. More so than any other politician, he translated this theory into legislation. But the theory’s primary predictions proved wrong. That has not, however, had any reputational impact on the people who believed those predictions, and their champion is now on the GOP’s presidential ticket, but neither he nor his backers appear to have rethought any element of their critique or of their program. ...
Whatever you believe about Obama’s policies, the Ferguson/WSJ/Ryan theory has clearly failed in its main predictions, and it’s worrying to see that this hasn’t led to a more serious effort to rethink its premises. ...

The people pushing the Ferguson line and the austerity that follows from it have done a lot of harm, yet it "has not ... had any reputational impact." No accountability at all, and we are worse off becasue of it.

    Posted by on Monday, August 20, 2012 at 01:55 PM in Economics | Permalink  Comments (85)



    Feed You can follow this conversation by subscribing to the comment feed for this post.