Mr. Krugman, Mr. Romney, and Others on the Debt Ceiling Debacle

And Comments on the Comments

Here is a biased sample of comments on the debt ceiling/deficit reduction package that Congress will try to pass

the idea that a temporary disruption would permanently damage faith in US institutions now seems moot; if you haven’t already lost faith in US institutions, you’re not paying attention

---Paul Krugman on what would happen if the debt ceiling was not raised.  Paul is getting a little bit cynical.  Welcome to the world of The Dismal Political Economist Mr. Krugman.

A first guess: -0.4% off of fiscal 2012 real GDP growth, with an unemployment rate in November 2012 0.2% above the baseline.

A hideous waste of opportunity. There is nothing in there to boost employment and capacity utilization. Absolutely nothing.

---Brad DeLong, UC Berkley Econ Professor and Consummate Blogger.  He is suggesting that contractionary fiscal policy contracts the economy.  Insight unavailable to the President and Congress.

As president, my plan would have produced a budget that was cut, capped and balanced - not one that opens the door to higher taxes and puts defense cuts on the table. President Obama's leadership failure has pushed the economy to the brink at the eleventh hour and 59th minute. While I appreciate the extraordinarily difficult situation President Obama's lack of leadership has placed Republican Members of Congress in, I personally cannot support this deal.

---Mitt Romney, Former Massachusetts Governor and Presidential candidate.  Mitt waited until the deal was done to find his position, and determines the whole problem was President Obama doing this terrible thing to the Republicans in Congress.

The deficit negotiators “came very close” to a “grand bargain” in which taxes would be included, Carney said. “This was a mess,” he added. “There is no question. It was a circus at times.”

--- Jay Carney, Obama’s Press Secretary quoted in Politico.  It was a circus, but no high wire acts, just a bunch of clowns.

For now, Rep. Cantor has won the tax stare-down—and has become a favorite of the tea-party caucus in the process.

---Gerald F. Seib, the Premier political writer for the WSJ.  Keep watching your back Mr. Speaker.

We are about to sanction extortion as a legitimate Congressional negotiating strategy. Anyone think this is the last time we will see this happen?

---Mark Thoma on his Economist’s View blog.  What exactly did anyone expect after the “extortion” tactic worked to extend the Bush era tax cuts and to get a 2011 budget deal in April?



The Other David
Ricardo



Republican Get Spending Cuts They Want, No Tax Increases on Wealthy Americans and Democrats Get Blamed for Cutting Vital Programs. . .

---The Dismal Political Economist on June 24, 2011.  If Mr. Obama, the Democrats and the Republicans had just paid attention to him back in June and done then what they did now, everyone could have been saved a lot of time and trouble.