During a contentious panel on ABC’s This Week on Sunday, Sen. Ron Johnson (R-WI) found himself at odds with his fellow panelists — and with the facts — about Social Security’s solvency.
Johnson and fellow panelist Rep. Debbie Wasserman-Schultz (D-FL) had been discussing the long-term solvency of Social Security when Johnson made the claim that the Social Security Trust Fund was a myth, and that the revenue generated from the sale of securities to the federal government somehow should not count in calculating the program’s fiscal health.
Nobel Prize-winning economist Paul Krugman jumped in to point out that Johnson was unwilling to accept even the most basic facts over the way Social Security is funded, all for the sake of a talking point:
KRUGMAN: You said ‘let’s start with the facts,’ but we’ve just run aground right there.
JOHNSON: Exactly my point, we have got to agree on the facts and figures.
KRUGMAN: But your facts are false…Social Security has a dedicated revenue base, it has a trust fund based on that dedicated revenue base. You can’t change the rules mid stream and say ‘oh, suddenly the trust fund doesn’t count.’ [...] It’s important to realize that the facts that are being brought out here are in fact non-facts.
During a roundtable discussion on George Stephanoupolos’ This Week Sunday morning, GOP political consultant Mary Matalin got into a heated exchange with Nobel Prize-winning economist Paul Krugman, calling him a “liar” for previously referring to Paul Ryan’s Medicare reform plan as a “voucher” program:
MATALIN: You have mischaracterized and you have lied about every position and every particular of the Ryan plan on Medicare, from the efficiency of Medicare administration, to calling it a voucher plan, so you’re hardly credible on calling somebody else a liar.
But this is exactly what the Ryan proposal is — turning Medicare from a “defined benefit” into a “defined contribution” plan. Seniors would get a voucher from the federal government that they could use to help pay for a selection of private plans.
Although the Romney/Ryan campaign has shied away from this phrase in favor of the euphemistic “premium support,” Ryan himself has specifically referred to his proposal as a “voucher” program in the past.
One of the least appreciated but easily-confirmed facts about the current state of the American economy is that the number of Americans employed by the government has gone down under President Obama. But apparently this is news to one the Republican Party’s most prominent tea party conservatives. During a roundtable discussion on ABC this morning over the size and adequacy of the 2009 stimulus, a flabbergasted Sen. Rand Paul (R-KY) asked economist Paul Krugman if he was actually arguing that government employment had gone down under Obama:
PAUL: The thing I don’t understand is that you’re arguing that the government sector is struggling. Are you arguing that there are fewer government employees under Obama than there were under Bush?
KRUGMAN: Of course. That’s a fact. That’s a tremendous fact.
PAUL: No, the size of growth of government is enormous under President Obama.
KRUGMAN: If government employment had grown as fast under Obama as it did under Bush, we’d have a million and a half more people employed right now — directly.
PAUL: Are there less people employed or more people employed now by government?
As Krugman quickly pointed out on his blog, the answer is “less.” Now, perhaps Paul was thinking of employment by the federal government alone, which did tick up just slightly: 2.77 million at the end 2008 versus 2.8 million currently. But add in state and local government jobs, and the hard number for government employment dropped by around 600,000 after Bush left office.
As a matter of fact, the share of jobs in the economy provided by the public sector went up following the 2001 recession under George W. Bush, the 1990 recession under George H.W. Bush, and the 1981 recession under Ronald Reagan. Only after the latest recession, which hit just before Obama took office, did the share of public jobs drop.
In no small part this is due to another point Krugman made — that the stimulus, while large, was inadequate to the country’s needs. This has been particularly true in the area of state aid. Spending cuts at the state level overtook additional spending at the federal level in late 2009 and have been driving a contraction in the public sector ever since.
Rep. Paul capped off his anti-Keynesian argument with the strangely Zen-like assertion that “Roads don’t create business success. It’s the other way around. Business success allows us to build roads.” It’s unclear what this could mean. While tax revenue is dependent on economic growth, the very nature of a depression is a self-reinforcing negative spiral in the private market. Business success is sluggish, meaning employment and income is sluggish, meaning consumers are held back from buying enough goods and services, so business success remains sluggish. The whole point of Keynesian stimulus — of which government employment is one form — is to move money into the hands of consumers by the alternative route of the government and thus reverse the process.
Sen. Paul’s office released a statement — with a corresponding radio interview — responding to the debate with Krugman. It read in part:
The only logical number we could have been discussing was the number of federal workers. Since the last time I checked, Barack Obama was the President, not a mayor or governor. Under President Obama, the federal workforce has grown by 143,000 according to the Labor Department… Yet Professor Krugman added in local and state workers to inflate this number, an irrelevant point at best.
The 143,000 number excludes federal postal workers, and it’s not clear why Sen. Paul’s office would think that exclusion necessary. Including postal workers, as ThinkProgress did, the federal workforce only went up 27,000 between December of 2008 and now — an increase of around one percent. Hardly “enormous” growth.
Nor is it clear why Sen. Paul calls the state and local numbers “irrelevant.” As pointed out above, state and local budgets are deeply intertwined with federal spending, a point even the conservative American Enterprise Institute conceded. And the larger context of Sen. Paul’s disagreement with Prof. Krugman was the economic value of government employment, in which case a state or local job is as good (or as bad, depending on your view) as a federal one.
He discusses the forthcoming paper on “The New Climate Dice,” by NASA’s James Hansen along with Makiko Sato and Reto Ruedy, in which they attribute some of the uber-extreme heat waves to global warming. I blogged on the first draft of that paper back in January (click here, excerpted below).
Krugman ends his discussion this way:
This drought has already sent corn prices to their highest level ever. If it continues, it could cause a global food crisis, because the U.S. heartland is still the world’s breadbasket. And yes, the drought is linked to climate change: such events have happened before, but they’re much more likely now than they used to be.
Now, maybe this drought will break in time to avoid the worst. But there will be more events like this. Joseph Romm, the influential climate blogger, has coined the term “Dust-Bowlification” for the prospect of extended periods of extreme drought in formerly productive agricultural areas. He has been arguing for some time that this phenomenon, with its disastrous effects on food security, is likely to be the leading edge of damage from climate change, taking place over the next few decades; the drowning of Florida by rising sea levels and all that will come later.
And here it comes.
Will the current drought finally lead to serious climate action? History isn’t encouraging. The deniers will surely keep on denying, especially because conceding at this point that the science they’ve trashed was right all along would be to admit their own culpability for the looming disaster. And the public is all too likely to lose interest again the next time the die comes up white or blue.
But let’s hope that this time is different. For large-scale damage from climate change is no longer a disaster waiting to happen. It’s happening now.
Here is some chart-filled analysis of Hansen’s paper from my January post:
“Climate dice,” describing the chance of unusually warm or cool seasons relative to climatology, have become progressively “loaded” in the past 30 years, coincident with rapid global warming. The distribution of seasonal mean temperature anomalies has shifted toward higher temperatures and the range of anomalies has increased. An important change is the emergence of a category of summertime extremely hot outliers, more than three standard deviations (σ) warmer than climatology.
This hot extreme, which covered much less than 1% of Earth’s surface in the period of climatology [1951-1980], now typically covers about 10% of the land area. We conclude that extreme heat waves, such as that in Texas and Oklahoma in 2011 and Moscow in 2010, were “caused” by global warming, because their likelihood was negligible prior to the recent rapid global warming. We discuss practical implications of this substantial, growing climate change.
One of the things that irritates me most is people — progressives in particular, because conservatives tend to be more vigilant on this score — who dismiss culture as if it’s unimportant, or as if people aren’t influenced by it. And my favorite counterargument of the moment comes from Paul Krugman, who went into economics because he wanted to be Hari Seldon when he grew up:
The background story is, I read Foundation back when I was in high school, when I was a teenager, and thought about the psychohistorians, who save galactic civilization through their understanding of the laws of society, and said “I want to be one of those guys.” And economics was as close as I could get. Those are pretty unique novels — they really are structured nothing like even the great bulk of science fiction, because they are about how social science can be used to save humanity…, we don’t exactly have the laws of psychohistory, but we do have some pretty good guidelines. The other thing, of course, is in Foundation, Hari Seldon is able to put together his long term plan and actually nudge history in the direction he wants it to go, and so far I’m feeling not like Hari Seldon but like Cassandra. I keep on predicting bad things, no one will believe me, and then they happen…Not everyone, obviously, but social scientists in general … I have friends, political scientists, sociologists, who all share an interest at least in certain kinds of science fiction. It’s speculative, we’re thinking about what society could be like. Never mind the gadgets, although they create the alternative worlds, but a lot of it is thinking about society.
Fiction is about defining the outer limits of possibility: you show a kid a world where economists can shape the fate of humanity, and he’ll embrace realistic possibilities for social science he might never have been attracted to in the first place. Show girls superheroines and master archers as well as princesses and maybe some activity will catch a spark. I sometimes write that a movie or television show feels surprising because I didn’t think it was something that could exist. What really ends excites me about those pieces of art is that they’re times when popular entertainment is matching what’s truly possible in the world, and occasionally exceeding it. It’s artistically and societally depressing when media rooted in imagination turns out images and societies that are vastly more crabbed than our world actually is.
By that I don’t mean that we can’t explore oppression, or myopic people. But when books, or music, or movies fall into replicating the same old character tropes, or means of interactions between people, or possibilities for science and technology without acknowledging that society’s moved on around them, there’s something sad about that, both as a failure of art, and of excitement for the future. Or, as D.H. Lawrence put it, in a marvelous line cited by Austin Allen in an essay on the power of literature, fiction “Changes the blood first. The mind follows later, in the wake.”
Nobel Prize winning economist Paul Krugman hit back against the GOP’s claim that American businesses pay the highest corporate taxes in the world during an appearance on ABC’s This Week Sunday morning, lashing out at Mitt Romney’s California campaign co-chair and former Hewlett Packard CEO Carly Fiorina.
Fiorina — who unsuccessfully challenged Sen. Barbara Boxer’s (D-CA) senate seat in 2010 — insisted that “we now have the single highest business tax rate in the world” and claimed that companies are moving jobs overseas to avoid this burden. Krugman snapped back against her assertion, noting, “nothing you said about business taxes is actually true”:
FIORINA: We now have the single highest business tax rate in the world. Guess what, with the highest tax rate in the world, we see the same thing around the world as we see in states. States with lower tax rates have more jobs, more people. People leave states with higher tax rates. The data is crystal clear.
KRUGMAN: Nothing you said about business taxes is actually true. …. If you look at the actual tax collections in the United States on business, they’re lower than other advanced countries. And if you look at the alleged finding that high business taxes cause job loses in states, it goes away. Kick the tires even slightly and the whole thing falls apart. It’s just not true.
Indeed, a recent study from the Center for Tax Justice (CTJ) found that “the U.S. is already one of the least taxed countries for corporations in the developed world.” As a share of GDP, the U.S. had the second lowest tax rate, behind only Iceland. In 2009, U.S. corporate taxes had fallen to only 1.3 percent of GDP, from 4 percent in 1965.
The Political Economy Research Institute at the University of Massachusetts concluded that “the worst fears of the policy debates over raising additional revenue from high-income households to sustain spending on public services are unlikely to materialize.” Millionaires will attempt to avoid higher taxes by changing the composition of their incomes, but don’t, in fact, move to avoid the higher fees.
To be a modern Republican in good standing, you have to believe — or pretend to believe — in two miracle cures for whatever ails the economy: more tax cuts for the rich and more drilling for oil. And with prices at the pump on the rise, so is the chant of “Drill, baby, drill.” More and more, Republicans are telling us that gasoline would be cheap and jobs plentiful if only we would stop protecting the environment and let energy companies do whatever they want.
In place of the news round up today, I’m excerpting Paul Krugman excellent op-ed, “Natural Born Drillers.” The Nobel-prize winning economist debunks popular but fact-free right-wing myths:
Thus Mitt Romney claims that gasoline prices are high not because of saber-rattling over Iran, but because President Obama won’t allow unrestricted drilling in the Gulf of Mexico and the Arctic National Wildlife Refuge. Meanwhile, Stephen Moore of The Wall Street Journal tells readers that America as a whole could have a jobs boom, just like North Dakota, if only the environmentalists would get out of the way.
The irony here is that these claims come just as events are confirming what everyone who did the math already knew, namely, that U.S. energy policy has very little effect either on oil prices or on overall U.S. employment. For the truth is that we’re already having a hydrocarbon boom, with U.S. oil and gas production rising and U.S. fuel imports dropping. If there were any truth to drill-here-drill-now, this boom should have yielded substantially lower gasoline prices and lots of new jobs. Predictably, however, it has done neither.
Solar power is advancing at a remarkable rate. Major investments by the Obama administration and much greater investment by the Chinese government have accelerated competition, driving down prices for high-quality solar modules. Installation of solar projects in China has exploded. In China, 195 projects, with a total capacity of over 1.8 GW, will be installed within 2011, comparable to installations in the United States. In today’s New York Times, Paul Krugman describes how the fossil fuel industry and its allies are attacking solar’s success:
We are, or at least we should be, on the cusp of an energy transformation, driven by the rapidly falling cost of solar power. That’s right, solar power. If that surprises you, if you still think of solar power as some kind of hippie fantasy, blame our fossilized political system, in which fossil fuel producers have both powerful political allies and a powerful propaganda machine that denigrates alternatives. [...]
Let’s face it: a large part of our political class, including essentially the entire G.O.P., is deeply invested in an energy sector dominated by fossil fuels, and actively hostile to alternatives. This political class will do everything it can to ensure subsidies for the extraction and use of fossil fuels, directly with taxpayers’ money and indirectly by letting the industry off the hook for environmental costs, while ridiculing technologies like solar.
Solar powered-electricity is getting close to the price of coal-fired electricity, Krugman notes. “And if we priced coal-fired power right, taking into account the huge health and other costs it imposes, it’s likely that we would already have passed that tipping point.”
Krugman: ”It would have forced firms to spend on upgrading or replacing equipment, helping to boost demand. Yes, it would have cost money — but that’s the point! And with corporations sitting on lots of idle cash, the money spent would not, to any significant extent, come at the expense of other investment.“
This was the same point I was (briefly) making in my Friday post on Obama’s dreadful decision: “The standard would not have any noticeable negative impact on the economy and, if anything, would have driven investment and innovation even in the short term.”
Krugman explains why this is especially the case in the severe economic downturn we are now in: