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Posts tagged ‘Paul Krugman’

Mark Halperin Corrects Himself on Obamacare ‘Death Panels’.

Time magazine’s senior political analyst Mark Halperin on Tuesday corrected himself regarding a comment made a day earlier about Obamacaredeath panels”  during “The Steve Malzberg Show.”

Halperin, co-author of “Double Down: Game Change 2012,” said on Newsmax TV Monday that the so-called death panels, which decide which critically ill patients receive care and which don’t, are “built into” the Affordable Care Act.

“We do need to do some of that in this country, because we can’t afford to spend so much on end-of-life care,” he said. “A very high percentage of our healthcare spending is for a very small number of people at the last stages of their life.”

Story continues below video.

On Tuesday, however, he corrected himself on Twitter, saying, ‘My bad.”

It’s not the first time a high-profile media figure has raised eyebrows with views on death panels.

Economist and New York Times columnist Paul Krugman told ABC’s “This Week with Christiane Amanpour” in 2010 that the only way the U.S. will get its debt crisis under control is by the use of “death panels” and a national sales tax.

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© 2013 Newsmax. All rights reserved.

GOP Food Stamp ‘Cuts’ Actually Increase Spending.

The food stamp bill passed by the Republican-controlled House of Representatives earlier this month, widely criticized for supposedly cutting the nutrition assistance program to the poor, would actually raise spending over the next decade by 57 percent, to $725 billion from the $461.7 billion that was spent on the program in the last decade.
No sooner had the House voted, 217 to 2010, on September 19 to pass the Nutrition Reform and Work Opportunity Act than the usual suspects were rushing to portray the measure as stingy and coldhearted.
“House Republicans Pass Deep Cuts in Food Stamps,” was the headline in the New York Times national news section. The Republican “war on food stamps” shows that the congressmen are “mean-spirited class warriors,” wrote Nobel laureate Paul Krugman.
That line of attack seems to be getting traction. “I agree with Krugman here,” a prominent New York rabbi wrote on Facebook. A news reporter at the Wall Street Journal posted on Facebook, “It’s stark to have this wonderful Pope preaching charity at the same time House Republicans are defunding food stamps.”
Alas, the episode says more about the quality of Republican communications (poor) and of the press (often shallow and reflexively hostile to Republicans) than it does about what would actually happen to food stamps under the 110-page bill the House passed.
The non-partisan Congressional Budget Office estimates that the House bill would spend $725 billion on food stamps over the years 2014 to 2023. The Department of Agriculture’s website offers a summary of spending on the program that reports spending totaling $461.7 billion over the years 2003 to 2012, a period that included a dramatic economic downturn.
This is a great example of how and why it is so difficult to cut government spending, and how warped the debate over spending has become. The Republicans want to increase food stamp spending 57 percent. The Democrats had previously planned to increase it by 65 percent (to $764 billion over 10 years instead of the $725 billion in the Republican bill), so they depict the Republicans as “mean-spirited class warriors” seeking “deep cuts.”
Now, one can argue that because of inflation, or the eroding value of the dollar, the Republican increase of 57 percent is really some smaller percentage increase. But that pretty quickly turns into a discussion not of food stamp policy but of monetary policy. Which is a fine discussion to have some time, but not the one at hand here.
What’s really in the Republican food stamp bill? The usual mix of special-interest silliness and occasional incremental progress that’s in most big pieces of legislation. My personal favorite is Section 306, which gives the secretary of agriculture one year to conduct a review and report back to Congress on “the economic and public health benefits of white potatoes on low-income families who are determined to be at nutritional risk.”
There’s also a mandate “to increase the purchase of Kosher and Halal food” for the emergency food assistance program. Another section deals with Indian tribes and the preparation and consumption of “traditional food,” including “marine mammals.”
One provision in the bill ends food stamp benefits for households in which a member receives “substantial lottery or gambling winnings.” The next paragraph makes it clear the recipients can get back on the dole if they gamble away their winnings.
Another provision ends food stamp benefits for convicted murderers and rapists, but only if the conviction comes after the Nutrition Reform and Work Opportunity Act is passed, so as to avoid the Constitution’s Article I prohibition on ex post facto law.
The legislation tries to catch up with the “eat-local” movement, authorizing the use of food stamps for buying a Community Supported Agriculture, or CSA, share, and providing $20.6 million a year to support farmers’ markets.
Other provisions in the bill are aimed at cracking down on fraud, encouraging able-bodied adult recipients to work, and making sure that state programs that allow food-stamp use at restaurants (a relatively new and growing phenomenon) are aimed at serving elderly, homeless, and disabled clients, rather than at people who would just rather go out to dinner.
The bill does not appear to address the desire by the mayor of New York, Michael Bloomberg, to ban the use of food stamps for the purchase of sugary beverages. Nor does it appear to do anything to address the research linking food stamps to obesity among nonelderly women.
There will always be some people who are so sick, poor, old, young, or unlucky that they need help with food, and, despite what Professor Krugman would have you believe, there’s a pretty broad consensus in this country about the desirability of helping those people, through both private charity and government programs.
The real policy action is over how to strengthen the economy to the point where more people are able to feed themselves without help from the government or from charity. Instead, the politicians in Washington are mandating studies of white potatoes. Look for those spuds soon at a federally subsidized farmer’s market near you, along with some halal marine-mammal-meat.
Ira Stoll is editor of and of He is the author of JFK, Conservative, coming October 15 from Houghton Mifflin Harcourt. Read more reports from Ira Stoll — Click Here Now.

© 2013 Newsmax. All rights reserved.

By Ira Stoll

Ira Stoll: Columbia Prof’s Book Praises Modern Capitalism, Flaws and All.

A Nobel laureate in economics who teaches at a New York-area Ivy League university has published a new book attacking the Bush tax cuts.

Relax, it’s not Paul Krugman.

The professor is Edmund Phelps, who teaches at Columbia, not Princeton. And if you can get past the sniping at the Bush tax cuts (a big “if”), there’s some value to be extracted from his book, “Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge and Change,” which is just out from Princeton University Press.

Professor Phelps divides economies into three categories: modern capitalist, socialist, and corporatist. He argues that the modern capitalist variety is superior to both the socialist and corporatist variety, both by the measure of promoting labor force participation and by the measure of reported job satisfaction and life satisfaction.

So far, so good. Even if, as Phelps writes, “over the years, more and more in the general public came to be persuaded by the arguments of Mises and Hayek against the socialist economy,” it can only help to have the arguments restated anew, and supplemented, by an economist with the stature of Phelps.

Special: Learn Which Companies are Going to be Tomorrow’s Winners 

Things get even more interesting when Phelps tries to trace what he sees as a decline in modern capitalism beginning as early as the mid-1960s and continuing through the present day. One suspect is what the author calls the “new corporatism”:

“Regulations of industries are instituted, aimed at shielding companies or workforces from competition. … Shakedowns of companies by communities, nonprofits, or governments extract donations or other accommodations. … The new corporatist economy, then, is pervaded by fears of holdups by the government, by stakeholders, by organized labor, and by an ocean of persons and companies ready to litigate.”

Perhaps relatedly, Phelps decries the influence of what he calls a culture of entitlement. “Many academics, once researchers endlessly testing ideas, now rate themselves so highly that they pontificate with no research at all,” he writes (take that, Professor Krugman!).

“The growing sense of entitlement helps explain the ever-rising outlays for the safety net, which, in artificially raising economic independence beyond what people’s private wealth would provide, makes it harder to obtain employee loyalty and employee engagement. The attitude of entitlement can only make it harder for a start-up firm to obtain employees who take the initiative, give a hand to others, and lend the concentration and judgment on which success importantly depends,” Phelps writes.

The author is on thinner ice, in my view, when he asserts that “wealth competes with innovation-seeking.” He writes that, “given the monetary rewards, more and more able and talented young people chose to go into the financial sector, rather than into the business sector.” He writes, “few would deny that lives or earning and wealth accumulation do not offer the gratification and pride that lives of creation and innovation offer.”

But that is a false dichotomy. Which sector, “financial” or “business,” is Warren Buffett in? Which sector is a partner in a Silicon Valley venture capital firm in? At the very, very top, anyway, the monetary rewards are richer for technology entrepreneurs than for investment bankers.

Also unconvincing, in my view, is Phelps’s claim that “the resurgence of family values” has “drained companies of some of their innovative spirit.” And his claim that “more and more people accept the positions taken by their political party or religion or friends rather than working out their own positions. It would be surprising if this conformity did not weigh on innovation in the business economy.”

In fact, if anything, data shows that since the 1960s in the United States, political party affiliations have eroded, and independent thinking and individual choice in both politics and religion is on the rise.

As for the author’s claim that “family values” are somehow at odds with commercial success or economic growth, the best counterargument is his own acknowledgments section, the first sentence of which counts among his “many advantages” in his career his “parents” and “a happy marriage with my wife Viviana.”

In a footnote, Phelps recounts that in the winter of 1969-1970, he watched with the philosopher John Rawls from the Center for Advanced Study in the Behavioral Sciences as radicals occupied a building on the Stanford Campus and set it afire. “Later they attacked the Center, burning a bank of offices where we worked. Rawls’ manuscript survived, as did mine, though a nearby one was a total loss.”

Modernity is great, or, as the late Wall Street Journal editor Robert Bartley put it, “on a net basis, modernity is good for you.” The question of whether the late-1960s radicals were rebelling against tradition or against modernity is complicated, a topic for a book or a column of its own. But surely even a Nobel laureate economist ensconced at Columbia can figure out that whatever the great villain is in the story of the American economy or culture since the 1970s, it isn’t “the resurgence of family values.”

Ira Stoll is editor of and of

Special: Learn Which Companies are Going to be Tomorrow’s Winners 

© 2013 Newsmax. All rights reserved.

By Ira Stoll

Krugman Accused of ‘Spectacularly Uncivil Behavior’.

A pair of Harvard economists have accused controversial New York Times columnist Paul Krugman of “spectacularly uncivil behavior” in a dispute over the effects of massive government debt on the future of growth.

“We admire your past scholarly work, which influences us to this day. So it has been with deep disappointment that we have experienced your spectacularly uncivil behavior the past few weeks,” says a letter to the scribe from Kenneth Rogoff and Carmen Reinhart.

“You have attacked us in very personal terms, virtually nonstop, in your New York Times column and blog posts,” the economists said.

The brawl between scholars, described in a Wall Street Journal article, erupted over a piece Krugman penned for the New York Review of Books, in which he says the economists “lost their canonized status” and have become “objects of much ridicule.”

The economists’ paper was published in 2010, titled “Growth in a Time of Debt,” and concluded that post-World War II levels of public debt that topped 90 percent of a country’s gross domestic product (GDP) created years of slow economic growth.

The Harvard economists argued that governments should cut spending in order to prevent such a crisis from reoccurring. Krugman, who is also an economist, typically argues in his columns for more government spending, particularly in the case of entitlement programs.

“Notably, they continue to write in a way that suggests, without stating outright, that debt at 90 percent of GDP is some kind of threshold at which bad things happen,” Krugman wrote.

Rogoff and Reinhart countered that Krugman’s characterization was “selective and shallow” and “deeply misleading.”

Meanwhile, Krugman has dismissed the economists’ challenge as meaningless: “This could go on forever, and both they and I have other things to do.”

© 2013 Newsmax. All rights reserved.


By Audrey Hudson

Stockman Sees Fed-Fueled Bubble Bursting in Economic Chaos.

The U.S. economy is in a bubble inflated by “phony money” from the Federal Reserve and will burst within a few years, warned David Stockman, who was budget director for President Ronald Reagan.

In an essay published yesterday in the New York Times, Stockman wrote that the Fed’s quantitative easing policies in the aftermath of the credit crisis have flooded stock markets with cash even while the “Main Street economy” remains weak. The combination, he wrote, is “unsustainable.”

“When it bursts, there will be no new round of bailouts like the ones the banks got in 2008,” wrote Stockman, a former senior managing director at Blackstone Group LP and a former Republican congressman from Michigan. “Instead, America will descend into an era of zero-sum austerity and virulent political conflict, extinguishing even today’s feeble remnants of economic growth.”

Stockman, 66, is the author of “The Great Deformation: The Corruption of Capitalism in America,” which will be published tomorrow. In a previous book published after he resigned as budget director in 1985, Stockman criticized his former Reagan administration colleagues for failing to cut spending along with the supply-side tax cuts they enacted.

“We’re borrowing money and burying the future generations in debt,” he said in an interview today on Bloomberg Television.

Ben Bernanke

The Fed, led by Ben S. Bernanke, is purchasing $85 billion in assets every month. The Fed is leaving its key interest rate near zero while it tries to reduce unemployment below 6.5 percent and hold inflation below 2.5 percent.

Those policies, Stockman said today, benefit speculators and bond traders and have created the “greatest bond bubble in history.”

The Standard & Poor’s 500 Index rose to a record high last week, closing at 1,569.19 on March 28. That surpassed the previous record of 1,565.15 set in October 2007. Today, the S&P 500 added 0.1 percent to 1,570.05 as of 9:40 a.m. in New York.

Among the other culprits Stockman blamed for what he termed a “state-wreck” are President Franklin Delano Roosevelt for weakening the gold standard in 1933, President Richard Nixon for removing the convertibility of dollars to gold and “lapsed hero” Alan Greenspan, the former Fed chairman, for keeping interest rates too low for too long.

‘Monetary Prison’

Investors will sell, Stockman wrote, at any hint that the Fed is starting to remove assets from its balance sheet.

“Notwithstanding Bernanke’s assurances about eventually, gradually making a smooth exit, the Fed is domiciled in a monetary prison of its own making,” he wrote, warning of unsustainable fiscal policies as well. “These policies have brought America to an end-stage metastasis. The way out would be so radical it can’t happen.”

In 2010, Stockman agreed to pay $7.2 million to settle a lawsuit with the Securities & Exchange Commission that claimed he had misled investors as chief executive officer of Collins & Aikman Corp., a maker of auto parts. He neither admitted nor denied wrongdoing.

Paul Krugman, the Princeton University economist and New York Times columnist, responded on his blog yesterday, saying that he was “disappointed” in Stockman’s “gee-whiz, context- and model-free numbers embedded in a rant — and not even an interesting rant.”

Krugman called Stockman’s piece “cranky old man stuff,” and summarized it this way:

“We’ve been doomed, yes doomed, ever since FDR took us off the gold standard and introduced unemployment insurance. What about those 80 years of non-doom? Just a series of lucky accidents. Now we’re really doomed. I mean it!”

© Copyright 2013 Bloomberg News. All rights reserved.

EU’s Rehn Emerges as Scapegoat for Austerity as Cyprus Struggles.

European Union Economic and Monetary Affairs Commissioner Olli Rehn has emerged as the frontman for crisis-management policies from Berlin that are spreading economic pain as debt turmoil reignites.

Rehn faced a torrent of criticism and a call to resign after helping broker a rescue package from Cyprus that fell apart on Tuesday over a demand to raid bank deposits. He has become the defender of German-inspired austerity that helped deepen the 17-nation euro region’s recession.

Almost two years after Rehn announced the “beginning of the end” of the debt crisis, the euro area is headed for a back-to-back annual economic contraction for the first time. Now, Rehn has become a scapegoat as Germany and the International Monetary Fund let the commissioner take the rap for the Cyprus bailout that hangs in limbo, said an EU official who declined to be named.

“As soon as things go wrong, people start looking around for who to blame,” William White, former head of economic analysis at the Bank of International Settlements, said in a March 19 telephone interview. “Everybody will be pointing the finger.”

The conflict over a country that makes up 0.2 percent of the euro zone’s 8.6 trillion-euro ($11 trillion) economy may jeopardize the gains that Rehn helped shepherd over the past three years of crisis fire fighting. In that period, the EU has set up two rescue funds, passed eight economic-governance laws, enacted a deficit-limitation treaty, and agreed to a “roadmap” for a better-run monetary union.

Austerity Criticism

The challenge Rehn, 50, is facing over the Cypriot bailout comes on top of criticism of the austerity he has administered to other nations as a condition for receiving loans.

Nobel laureate Paul Krugman, who has called on European leaders to increase spending to boost growth, labeled Rehn’s policy decisions “cockroach ideas” because they keep coming back no matter how hard you try to stamp them out.

“The amazing thing is the way men who know neither theory nor the history of previous crises are utterly convinced that they know what to do in our current crisis; and how their confidence in their prescriptions has been unaffected by the fact that they have been wrong about everything so far,” Krugman wrote on his blog this month. “What’s even more amazing is the fact that these men are actually running things.”

Greek Forecasts

In May 2010, the Greek government agreed to 30 billion euros of austerity as a condition of its first rescue package. Rehn, three months into his role as budget chief, forecast the Greek economy would contract 3 percent that year and 0.5 percent in 2011.

The economy shrank by 4.9 percent and 7.1 percent as the budget-cutting program crushed domestic demand. Last year, when Rehn forecast a 1.1 percent expansion for Greece, output slumped 6.4 percent, according to the commission’s latest estimate published last month.

Krugman has “engaged in more of a zoological debate than an economic debate,” Rehn told the Finnish newspaper Helsingen Sanomat this month. “It’s been unclear to me where the money for the stimulus would have come from.”

Rehn, who received a doctorate in international political economy from Oxford University, describes himself as a fan of the U.S. counter-culture of the 1960s and traces a line from rock legend Neil Young to incoming Bank of England governor Mark Carney, having observed that “Canadians are cool.”

‘Saving Europe’

He cited Carlo Bastasin’s “Saving Europe: How National Politics Nearly Destroyed the Euro” as one of his favorite books of 2012.

“It’s based on a very sound understanding of the economics and politics of the euro, and is well-researched,” he said.

Now he’s fighting those battles all over again, trying to bring together German Finance Minister Wolfgang Schaeuble, whose government will face bailout-weary voters in September, and Cypriot officials who’ve seen their banking system hobbled by losses on Greek sovereign bonds.

European finance ministers said they had a deal with the International Monetary Fund and Cypriot President Nicos Anastasiades after negotiating through the night of March 15. Anastasiades agreed to impose a levy of 6.75 percent on bank deposits of up to 100,000 euros and 9.9 percent on amounts above that threshold in return for a 10 billion-euro rescue package.

Unraveling Deal

“This has been a very difficult process, but the result conceived tonight reaches the essential goals of both maintaining financial stability and ensuring debt sustainability in Cyprus,” Rehn said at a press conference shortly before dawn on March 16 in Brussels. “It is so important that this political agreement has now been reached.”

The deal began to unravel almost immediately with protesters on the streets of the Cypriot capital rejecting the deposit tax. Lawmakers killed it March 19 and now officials are scrambling for a Plan B.

“It’s a bit unfair to pick on Rehn, but he’s an easier target than Schaeuble,” Charles Wyplosz, director of the International Center for Money and Banking Studies in Geneva, said in a telephone interview. “Anyone in the room who failed to see that was a mistake is to be blamed.”

Rehn is the one getting the public censure.

Nessa Childers, an Irish member of the European Parliament, called for his resignation in a March 19 letter to Jose Manuel Barroso, president of the European Commission, which proposes policies enacted after approval by governments and the European Parliament.

“Somebody somewhere has to be accountable and the buck stops with him,” Childers said in a telephone interview. “This was not only undemocratic, but incompetent. Was anyone thinking about the big picture?”

© Copyright 2013 Bloomberg News. All rights reserved.

Trillion-Dollar Coin? WH Says No Way.

The Obama administration has killed any notion of minting trillion-dollar platinum coins to solve the nation’s debt ceiling woes.

In a written statement released Saturday, White House Press Secretary Jay Carney says there are only “two options” to deal with the looming need for the U.S. government to pay creditors for federal funding it has already spent. Minting the proposed currency to pay it off and avoid an impending battle with Capitol Hill is not one of them.

“Congress can pay its bills or it can fail to act and put the nation into default,” he writes.

Carney blames Congressional Republicans for having “played politics” during the last negotiations over the country’s borrowing limit in summer 2011. The stalled talks resulted in a downgrade of the U.S. credit rating by Standard and Poor’s.

“The President and the American people won’t tolerate Congressional Republicans holding the American economy hostage again simply so they can force disastrous cuts to Medicare and other programs the middle class depend on while protecting the wealthy,” the statement reads. “Congress needs to do its job.”

The Treasury Department has been staving off the ceiling using accounting tricks for months – most recently on Dec. 31. But with no comprehensive solution reached during the recent ” Fiscal Cliff” negotiations, a brewing fight on how to deal with the $16.4 trillion borrowing limit is set for the late winter.

ANALYSIS: How do you solve a problem like the debt ceiling?

The coin proposal has floated around academia and economic policy circles for some time, but gained traction after the cliff ordeal, when it was taken up by cheeky monetary wonks and some members of the progressive left.

The idea follows that should Congress fail to extend the debt limit, Treasury could begin minting trillion dollar coins (in a process explained mostly seriously by Jim Pethokoukis on his American Enterprise Institute blog), a number of which could then be put toward fulfilling debt obligations in the event new legislation stalls in Congress. The Federal Reserve would hold the hefty currency until it was time to pay the bills.

While there are laws in place to regulate how much paper, gold, silver or copper currency can be circulated by the government, there is nothing so clearly stated when it comes to platinum.

The White House statement comes a day after Senate Majority Leader Harry Reid and Democrats urged the president to “take any lawful steps” to avoid default – “without Congressional approval, if necessary.” In response Republican Leader Mitch McConnell railed against the notion in a written statement.

“Democrats are looking at everything from the ridiculous (printing a trillion-dollar coin) to outright abdication of Congressional responsibility,” it reads. “But avoiding this problem will only make it worse.”

The idea to mint the coins as a way around the federal debt ceiling won a high profile advocate Friday when Pulitzer Prize winning economist Paul Krugman used his New York Times column to say “Mint the coin!”

But a senior administration official told ABC News there was one key factor in making that course of action impossible: The Federal Reserve said it would not view the coin as viable.

“Since they wouldn’t view the coin as viable, the issue isn’t not wanting to do the coin. We just can’t,” the White House official said.

In other words, the scheme favored by folks like Krugman just would not work.

ABC’s Gregory Krieg contributed reporting.


By Matthew Larotonda | ABC News Blogs

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