Paul Krugman Slams Republican Plans For More Spending Cuts

What does it take to convince a Republican that trying to “improve” the economy by cutting government spending doesn’t work? According to Nobel Prize winning economist Paul Krugman? Nothing. They can’t be convinced. Ever.

In an op-ed for the Sunday Times, Krugman highlights the reality that faces our economy. It’s been 6 years since the Federal Reserve lowered interest rates to between 0 and .25%. They literally cannot get any lower. Since then, the GOP and other Very Serious People have been demanding austerity (cutting deficits and reducing government spending) or else inflation and a collapsed economy will destroy us all. This is the exact opposite of what textbook economics say we should do, and what previous presidents (including Republican presidents) have actually done, to get out an economic slump.

And here we are, six years later: The economy is still limping along and inflation is lower than the what the Federal Reserve and sane economists actually want. I won’t pretend to understand the intimate details because I’m not getting paid a crap load of money to understand fiscal policy. On the other hand, Republicans and the Very Serious People are getting paid quite handsomely to understand it. But they won’t:

Thus we were told again and again that budget deficits were our most pressing economic problem, that interest rates would soar any day now unless we imposed harsh fiscal austerity. I could have told you that this was foolish, and in fact I did, and sure enough, the predicted interest rate spike never happened — but demands that we cut government spending now, now, now have cost millions of jobs and deeply damaged our infrastructure.

We were also told repeatedly that printing money — not what the Fed was actually doing, but never mind — would lead to “currency debasement and inflation.” The Fed, to its credit, stood up to this pressure, but other central banks didn’t. The European Central Bank, in particular, raised rates in 2011 to head off a nonexistent inflationary threat. It eventually reversed course but has never gotten things back on track. At this point European inflation is far below the official target of 2 percent, and the Continent is flirting with outright deflation.

If your predictions of economic catastrophe have been wrong for six years straight, shouldn’t you rethink your conclusions? If we see the horrible real world effects of full austerity/massive cuts to government spending in Europe pushing them into a third recession in 6 years, shouldn’t we not be talking about about any more cuts?

Apparently not:

it(‘s) crucial that influential people understand those realities. Unfortunately, too many still don’t; one of the most striking aspects of economic debate in recent years has been the extent to which those whose economic doctrines have failed the reality test refuse to admit error, let alone learn from it. The intellectual leaders of the new majority in Congress still insist that we’re living in an Ayn Rand novel; German officials still insist that the problem is that debtors haven’t suffered enough.

This bodes ill for the future. What people in power don’t know, or worse what they think they know but isn’t so, can very definitely hurt us.

I differ from Krugman on this point. Of the many many times he’s discussed this peculiar blindness, he tends to believe that it’s a matter of pride, ego or hysterical adherence to a failed economic policy. I would believe that from the rank and file conservative who, literally, doesn’t know any better. They believe what Fox News tells them and can’t be bothered to go any deeper than that.

On the other hand, I truly believe that Republicans and the Very Serious People know damn well that austerity will do a lot of damage and they don’t care. Remember, Republicans have been waging a scorched earth campaign against Obama since the very day he was inaugurated. And it’s been working for them. The more they hurt the economy, the more they can blame the president and the Democrats.

Even as Krugman slams the “austerians” for their blindness, Krugman doesn’t go far enough in condemning them for their willfull blindness. It’s bad enough to cling to a dangerous and disproved set of policies out of hubris, it’s quite another to do so with the intent of maximizing the suffering of the American people.

At some point we have to stop treating Republican sabotage of the economy as “politics” and call it what it really is: A criminal assault on the people and institutions of this country.