By William K. Black
(Cross-posted and Benzinga.com)
Chris Matthews considers it urgent and essential that President Obama and House Speaker Boehner reach what they call a “Grand Bargain” that would impose an austerity budget and begin to unravel the safety net. Why is it essential? Matthews provided no analysis or discussion. It was simply obvious that austerity and beginning to unravel the safety net were essential because otherwise we would face budget austerity via the so-called “fiscal cliff.” The form of austerity imposed by the fiscal cliff would throw us into recession, increase unemployment, increase the budget deficit and the debt, cut social programs (and military spending), but not unravel the safety net. If you think that adopting even greater austerity plus far more severe cuts to social programs and the safety net (i.e., what I term the “Great Betrayal”) in order to avoid “fiscal cliff” austerity is logically insane – then you might be rational. Matthews, however, thinks that ability to use logic makes you a problem.
On Friday, November 9, 2012, Matthews advised his viewers that it was essential to ignore Paul Krugman’s objections to the economic impact of the Grand Bargain because he was on “the far left.” (Matthews then danced around that label.) At no time did any of the MSNBC hosts ask anyone with economics expertise whether austerity and beginning to unravel the safety net would be harmful or helpful to the nation. The logical incoherence I have explained was never mentioned. The only time an economist was mentioned was Matthews’ fact and logic-free denunciation of Krugman. Matthews did not explain why Krugman opposed the Grand Bargain.
Matthews claimed that it was essential for Congress and the public to ignore a Nobel Laureate in Economics’ warnings that what was being proposed was a bad plan that would harm our economy. Matthews said that Obama (a lawyer and politician) must tell Krugman that he was going to ignore Krugman’s economics warnings because “I’m President, you’re a columnist.”
Matthews has again proved one of our family rules – it is impossible to compete with unintentional self-parody. Let’s try a slight variant of Matthews’ motif. If a Nobel Laureate in Physics writes a column warning that the President is proposing a bad plan to send humans back to the moon because the plan relies on bad physics the President should respond: “I’m President, you’re a columnist” – and proceed to ignore his warning.
Krugman is not remotely “far left” and his predictive record on economic policy is vastly superior to Geithner’s. Matthews and Obama might wish to consider that the July 2011 austerity deal would, under their own logic about the dangers of the faux fiscal cliff, have plunged America back into recession and doomed Obama’s chances of re-election whereas Krugman’s proposals for increased stimulus would have speeded the recovery and aided Obama’s victory.
Krugman is attempting one of the most difficult tasks in the world – saving a politician dreaming of creating a legacy from false promises of fame fed by his economically illiterate advisors. Matthews knows that Krugman would obliterate Geithner in any economic debate. The last thing that Obama needs more of is sycophants. They imperil his presidency and the nation.
Bill Black is the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. He spent years working on regulatory policy and fraud prevention as Executive Director of the Institute for Fraud Prevention, Litigation Director of the Federal Home Loan Bank Board and Deputy Director of the National Commission on Financial Institution Reform, Recovery and Enforcement, among other positions.
Bill writes a column for Benzinga every Monday. His other academic articles, congressional testimony, and musings about the financial crisis can be found at his Social Science Research Network author page and at the blog New Economic Perspectives.
Follow him on Twitter: @williamkblack