Wednesday, October 6, 2010

Krugman Reduced To Shilling for the Democrats

The other day I heard a liberal radio program KSCO “What’s Left” rag on the Republican Pledge plan. The primary ammunition was an article by Paul Krugman (Downhill With the G.O.P.), where he cites another economist Howard Gleckman of the “nonpartisan” (quotations added) Tax Policy Center has done the math. As he points out, the only way to balance the budget by 2020, while simultaneously (a) making the Bush tax cuts permanent and (b) protecting all the programs Republicans say they won’t cut, is to completely abolish the rest of the federal government: “No more national parks, no more Small Business Administration loans, no more export subsidies, no more N.I.H. No more Medicaid (one-third of its budget pays for long-term care for our parents and others with disabilities). No more child health or child nutrition programs. No more highway construction. No more homeland security. Oh, and no more Congress.” The deejay hammered anyone who called with an alternate view with, “There is no way this will work, look at what a nonpartisan economist said.”

The flaws in Krugman's article starts with the Tax Policy Center, which is anything but non-partisan, and is part of the Brookings Institute, which is a progressive think tank that embraces Krugman's Neo-Keynesian theories. As I said before Krugman views taxes and revenue as a zero sum gain; the more taxes the more revenues, the less taxes to less revenue. They refused to acknowledge decades of history that that have shown higher tax rates create diminishing returns (see video below). During the Kennedy, Reagan, Clinton and Bush years, tax cuts actually increased tax revenues; the fact that Regan and Bush redistributed increased government spending as debt, does not negate the fact that the tax cuts did increase revenues. The true root of Krugman's belief system is businesses in the free market can not be trusted to properly invest and spend the money they create, so it is necessary to heavily tax all earnings so the government can re-distribute earnings through targeted tax breaks and low interest loans; in other words they want to tax business and loan the money back to them as they see fit.

Krugman is also using the Progressive spin on the Bush tax cuts. What they want you to believe is Congress is going to cut taxes. This of course is ludicrous, because the tax cuts we are talking about occurred 10 years ago. What the Democrats are talking about is raising taxes, about $700 billion over 10 years on those that make over $250,000, which they call the rich. What’s interesting is the Democrats have already spent the money and are bemoaning the fact that if they can’t raise these taxes on the rich, then they will have to borrow the money, which will add to the deficit. Don’t you wish you could use this logic on your boss? There is also no doubt in anyone’s mind any tax increases will increase unemployment and reduce GNP by as much or more as the tax revenue it raises. And since the $700 billion figure is based on 2009 GNP computed over 10 years, there is a real possibility that the tax revenues will be considerably less as the GNP is reduced.

When John Maynard Keynes wrote his theories on macroeconomics, he was still a firm believer in the free market and argued that his theories were designed to save capitalism. He was also pragmatic; when asked what he would do if he was wrong about any of his theories, he was famous for saying, “I will change my mind, what do you do?” But Krugman's Neo-Keynesian theories have thrown out any real attempt to save capitalism, concentrating more on Social Justice and the redistribution of wealth; in this matter Krugman has become what Keynes called idiotic, which is a Socialist; more accurately a New Deal Socialist. Krugman has forsaken any real economic thought and has simply created a partisan economic theory based on the spending wants of the progressive Democrats. This was driven home in his most recent article “Fear and Favor”. In this article Krugman throws away any credibility he might have had left, and shows himself as nothing but a shill for the Democratic party. While he had one passing economic comment about the Bush tax cuts, the rest of the article was a non-economic tirade against Fox News; starting with calling the Tea Party the Klu Klux Klan, “A note to Tea Party activists: This is not the movie you think it is. You probably imagine that you’re starring in “The Birth of a Nation.” Then, being true to form, he marks off a list of the tired old complaints we have already heard about Fox from the progressives, “Ministry of Propagana”, "Orwellian fair and balanced”, and of course Fox now runs the Republican Party, which has been bought and paid for by Rupert Murdoch.

So now we know Paul Krugman and Robert Gibbs pretty much have the same job. The only difference is, much like Krugman’s allegation that Fox hires lawyers, scientists and economic prostitutes, Krugman complains most about what he has become, and much like the Climatologists that worked in obscurity until global warming reared it's ugly head, he has sold his soul to extend his 15 minutes of fame beyond it's usefulness. I will leave you with these three You Tube videos. The first is an Obama and Hillary debate. In this debate, Obama said he would raise the Capital Gains tax, even though it would reduce tax revenues for the sake of "fairness". This is the same logic used by Krugman and the political elite who really don’t care about tax revenues, they just want control of income so they can be the ones who re-distribute wealth according to their economic planning.

The second is a debate between Linda McMahon and Dick Blumethal for a Connecticut Senate seat, which has become an overnight sensation on "how to create a job". This is the best example I have seen that demonstrates how someone as intelligent as Paul Krugman, is so clueless to how the world really works outside academia.

And the third is Nancy Pelosi explaining how food stamps and unemployment insurance are the best way to create jobs.

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