Krugman's Historical Three Card Monte
Today's Krugman op-ed blog is a doozy. See if you can spot the intellectual and historical sleight of hand here:
No modern American president would repeat the fiscal mistake of 1932, in which the federal government tried to balance its budget in the face of a severe recession. The Obama administration will put deficit concerns on hold while it fights the economic crisis.
But even as Washington tries to rescue the economy, the nation will be reeling from the actions of 50 Herbert Hoovers — state governors who are slashing spending in a time of recession, often at the expense both of their most vulnerable constituents and of the nation’s economic future.
Can you spot it? He's quite correct that Hoover tried to balance the budget in 1932, and he's also arguably correct that doing so was harmful. But notice what he doesn't actually say and only implies: Hoover tried to balance the budget by cutting spending. He did NOT. In fact, he tried to balance the budget by signing the Revenue Act of 1932, which was a large tax increase, increasing the top marginal rate from the mid-20s to 63 percent. The effects of that tax increase on the deepening of the Great Depression can certainly be debated, but there's no doubt that it made matters worse to some degree or another, and that its relevance for cutting spending right now is questionable.
What is particularly galling about Krugman's blog post op-ed (those are just the first two paragraphs) is that he both leads the reader to believe Hoover slashed spending (in fact he raised it) and also refuses to engage the question of whether the mistake Hoover made was "balancing the budget" per se, or raising taxes. Again, one could have a good debate about the effects of the tax increase, but first Krugman would have to admit that it was in fact what Hoover did! (UPDATE: I should add that it's probably obvious why Krugman and other liberals would not want to admit that Hoover raised taxes to balance the budget - not only does it provide more evidence that Hoover was no friend of laissez-faire, it also puts them in the position of frequently taking the same policy position as Hoover did at the depths of the depression. Talk about some history Krugman would certainly like to sweep under the rug...) Notice further how "Clintonian" this is: he never lied here, just led the reader to believe something through implication that was not true.
In my last post, I wondered whether Krugman really read what his opponents have to say, leaving open the question whether he was ignorant or malicious. Today's blog entry leaves much less doubt: I'm doubtful he doesn't know the history and I'm far more certain that he very intentionally engaged in this sort of sleight of hand to take the important question of the role of tax increases off the table.
Nobel Prize winning scholars should behave better than that. So should the Nobel Prize committee.
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