George Will apparently took the holiday weekend off from his regular appearances on the roundtable on This Week, but GOP flack Dan Senor did his best to make up for his absence. After what was otherwise a fairly rational discussion on the jobless recovery, the fact that the stimulus wasn't large enough to get the economy back on track and whether doing anything more is possible politically given the Republicans don't even want to allow for unemployment benefits to be extended, Senor claims that the debt burden and fear of taxes being raised is the reason the unemployment numbers are terrible. Thankfully, Paul Krugman was there to beat back Senor's nonsense.
SENOR: He didn't send a mixed message. He actually was very clear. If the Congress didn't pass the stimulus, unemployment would rise about 8 percent. If they passed the stimulus, it would stay below 8 percent. His problem is being held accountable to what he said would occur if his bill -- if his stimulus package was passed.
And now he's saying, well, it could have been this -- unemployment could have been 13 percent, 14 percent or 15 percent, what he said in Wisconsin last week. The reality is, you may be right that the crushing effects of the debt burden won't be felt for some time, but it is having an effect on investors and lenders and employers today.
People know this -- this debt and deficit burden is unsustainable without major tax increases in the future. Major tax increases and the uncertainty that's associated with them makes it very hard for the private-sector economy to engage. And that's who's on the sidelines right now.
KRUGMAN: I just want to say, that's a -- there is not a hint of what you're saying in the data, not a hint that the debt burden is what's discouraging -- businesses aren't investing because they have massive excess capacity.
I trust Senor's advice on economic policy about as much as I'd trust him to tell the truth about why we invaded Iraq. Krugman had a much longer spot on GPS this Sunday as well. I wish to hell the administration would start listening to him and quit with the deficit fear mongering by expecting anyone to take this "bipartisan" commission seriously as anything other than an excuse to trash our social safety nets. They do nothing but give hacks like Senor and the rest of the deficit hawks credibility.
I'm also sick to death about this conversation never including our tax policies which actually encourage businesses to take jobs overseas and our trade laws. It's time for our government to start representing the interests of the workers of this country and not just multi-national corporations that would be happy if all of us were working for slave wages while CEO's and Wall Street investors maximize their profits. As I've said before, this is class warfare and the workers and what's left of the middle class are losing it. I'm happy that we've at least got the Paul Krugman's of the world talking about how wrong-headed those policies are that manages to get some air time on our corporate media. Sadly voices like his are too few and too far between.
Full transcript via ABC News below the fold.
TAPPER: Let me bring -- let me bring this out, because we -- I had this made. This is something that -- in February, the Obama administration was very excited. They brought out this icon, which shows all the jobs being lost, and then the stimulus passes, and how job losses and now job gains happen.
Now we have this. I think I'm doing this correctly. And, Paul, where -- where are we going from here? And how much does this really bad bar graph impact the stimulus politics?
KRUGMAN: Well, I mean, now, we know that that's -- last -- last month, the previous month wasn't as good as it looks and the current month isn't as bad as it looks...
TAPPER: Because of the census.
KRUGMAN: ... because of census jobs. So it's -- so what's actually happening is the private sector is continuing to add jobs, but slow, not enough to make a dent in the unemployment.
Yes, it -- this has been always the -- the track for stimulus. If you -- if you do a half-measure, which is what we did, in the face of this incredibly negative shock to the economy, the worst financial shock since the 1930s, then the odds were even -- in -- in advance, the odds were pretty good that you were going to end up with a situation where things were actually not all that good, even after the stimulus had gone into effect.
And then the argument -- the counterfactual that says, well, they would be much worse if we hadn't done this, although true, doesn't cut very much politically.
Plus, there's this worldwide panic. I mean, it's not just the United States. Everyone out there has been saying, oh, you know, we've got to move, because even though the arithmetic says that what we spend on stimulus now isn't really going to matter very much, the bond markets will turn on us.
And this is -- I've been calling it the attack of the invisible bond vigilantes, because everybody is afraid that the bond market is going to turn on us, and they -- they're doing that, even though the actual fact is that the bond markets are signaling a willingness to lend the U.S. government lots of money at very low interest rates, because they see the U.S. government as the only safe thing out there.
RAMOS: There's going to be no recovery without -- without jobs. I mean, we have created -- the private sector created 83,000 jobs. And just to keep pace with the new workers, we need 130,000 per month. So -- so we are in a really bad situation.
But are we going to be cutting deficits right now? I mean, is that -- is that the way to go?
KRUGMAN: I'm simply...
RAMOS: We -- we can go -- I'm sorry -- we can go the way of Greece or -- or I don't know if you've seen the video coming from Puerto Rico, but they've been cutting the deficit, and then we have this violent repression of the police against students and demonstrators. (crosstalk) Is that what we want?
KRUGMAN: ... the countries -- the countries that actually have gone the fiscal austerity route...
TAPPER: Germany and Greece.
KRUGMAN: Well, Germany is only saying they're going to do it. They haven't done it yet. Greece is a -- Greece is a special case, because they really were massively irresponsible, you know, mega times.
But look at Ireland, which has been a good soldier in this crisis, has done everything it was supposed to, savage cuts. Their deficit has hardly gone down, because their economy has shrunk so much that the revenues have collapsed. They have mass unemployment. It's -- it's -- it's a mess. And the -- and the markets aren't even rewarding them.
They're -- you know, the -- the cost of insuring against an Irish default has gone up, not down, after the austerity. So there's this -- you know, while we actually have some evidence of -- of how this works, and it works terribly.
TAPPER: Cynthia?
TUCKER: Well, I think that President Obama deserves some of the blame for the politics on this, not the policy. He does want more stimulus, and that's absolutely the right approach, I think. But the public is clearly confused about the difference between short-term deficits and long-term deficits.
The -- our problem will become enormous in about 2015 or 2020, but the very worst way to go about cutting the deficits is to let people stay unemployed. If they're jobless, they can't pay taxes. If they can't pay taxes, the deficit gets worse.
And I think that the president could have done a much better job of explaining that. I think he still could, but he sent mixed messages. He has a deficit reduction commission. He's talked about cutting or freezing federal agencies. And people get confused by that, and they think that problems are immediate.
SENOR: He didn't send a mixed message. He actually was very clear. If the Congress didn't pass the stimulus, unemployment would rise about 8 percent. If they passed the stimulus, it would stay below 8 percent. His problem is being held accountable to what he said would occur if his bill -- if his stimulus package was passed.
And now he's saying, well, it could have been this -- unemployment could have been 13 percent, 14 percent or 15 percent, what he said in Wisconsin last week. The reality is, you may be right that the crushing effects of the debt burden won't be felt for some time, but it is having an effect on investors and lenders and employers today.
People know this -- this debt and deficit burden is unsustainable without major tax increases in the future. Major tax increases and the uncertainty that's associated with them makes it very hard for the private-sector economy to engage. And that's who's on the sidelines right now.
KRUGMAN: I just want to say, that's a -- there is not a hint of what you're saying in the data, not a hint that the debt burden is what's discouraging -- businesses aren't investing because they have massive excess capacity.
But let -- let me say, on the politics, there's an interesting contrast between Obama 18 months in and Ronald Reagan 18 months in. Eighteen months into the Reagan administration, things were terrible. The bottom was falling out of the economy. The unemployment rate had risen much more drastically. And in Reagan's case, it was a recession that started on his watch, as opposed to -- to the Obama case.
Reagan was absolutely, completely defending his philosophy, didn't -- gave no ground whatsoever in his public statements, in his speeches during 1982. Obama's been trimming the whole way, saying, oh, yes, well, we'll going to -- we're going to freeze discretionary spending...
TAPPER: And non-security discretionary.
KRUGMAN: ...we don't have to worry... went on FOX News to say, you know, if we don't balance the budget, we'll have a double-dip recession, which had all of his -- his own economists going, "Oh, my god. What did he say?" So he -- he has been giving mixed messages.
His -- his urge to split the difference between the sides, even when one side is actually certainly, from his own point of view, totally wrong, has certainly hindered. Would it have made a difference if he was stronger? I don't know. But he's certainly not been strong...
