Squirming Hawks, by Paul Krugman: The fiscal cliff poses an interesting
problem for self-styled deficit hawks. They’ve been going on and on about how
the deficit is a terrible thing; now they’re confronted with the possibility of
a large reduction in the deficit, and have to find a way to say that this is a
And so what you see, in reports like
this one from the Committee for a Responsible Federal Budget — is a lot of
squirming..., making a mostly incoherent case: it’s too abrupt (why?), it’s the
wrong kind of deficit reduction (???), and then this:
a better approach would be to focus spending cuts on low-priority spending
and on changes which can help to encourage growth and generate new revenue
through comprehensive tax reform which broadens the base – ideally by enough to
also lower tax rates.
Low-priority spending? I think that means spending on poor people and the
middle class. And isn’t it amazing how people who claim to be horrified,
horrified about deficits can’t stop talking about cutting tax rates?...
I guess Paul Krugman hasn't heard about the magic of tax cuts and supply-side economics.
Cato-at-Liberty has, and it's ticked at the CBO because "it assumes higher
tax rates generate more money" when making budget projections. That's right,
despite all the evidence against the claim that tax cuts actually increased
revenue -- it's a myth that won't die because people who know better, or ought
to, still promote it -- we should discredit the CBO for making the claim that
higher tax rates would help with the budget problem.
And that's not all. The CBO should be further discredited because it says the
stimulus package helped to ease the recession:
The CBO repeatedly claimed that Obama’s faux stimulus would boost growth. Heck,
CBO even claimed Obama’s spending binge was successful after the fact, even
though it was followed by record levels of unemployment.
I'll pass over the "record levels of unemployment' claim (but note that
peaked at 10.0% in October 2009, but was 10.8% at the end of 1982, at best
this is playing games with the word "levels" and ignoring population growth -- and if duration is the argument, as Reinhart and Rogoff recently noted, conditional on the type of recession this recovery is actually a bit better than most). On
the main claim about fiscal policy, there's plenty of emerging evidence supporting the contention that fiscal policy helped to ease the recession (and remember how
much of the stimulus package was tax cuts -- it's amusing to listen to
conservatives tell us how useless the tax cuts they fought for as part of the
stimulus package turned out to be, especially when in the next breath they argue
for more tax cuts). The CBO is dealing in actual evidence, the claims made by
Cato-at-Liberty are backed by nothing more than the Republican noise machine
that is so good at misleading followers.
Republicans just can't help themselves from attacking anyone and anything
that is inconvenient to their goals, and actual evidence has little to do with
it. Apparently, they learned nothing from the election. This is part of a larger
effort to discredit the CBO because it doesn't agree with Republican views on
the magic of tax cuts, and for other results the non-partisan agency has come up
with that Republicans don't want to hear (so they basically cover their ears and
The effort is successfully discrediting someone, but it's not the