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.“

The Nobel prize-winning economist, Paul Krugman, had a great piece on his blog Saturday, “Broken Windows, Ozone, and Jobs.”

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:

I’ve actually been avoiding thinking about the latest Obama cave-in, on ozone regulation; these repeated retreats are getting painful to watch. For what it’s worth, I think it’s bad politics. The Obama political people seem to think that their route to victory is to avoid doing anything that the GOP might attack — but the GOP will call Obama a socialist job-killer no matter what they do. Meanwhile, they just keep reinforcing the perception of mush from the wimp, of a president who doesn’t stand for anything.

No argument here.

Whatever. Let’s talk about the economics. Because the ozone decision is definitely a mistake on that front.

As some of us keep trying to point out, the United States is in a liquidity trap: private spending is inadequate to achieve full employment, and with short-term interest rates close to zero, conventional monetary policy is exhausted.

This puts us in a world of topsy-turvy, in which many of the usual rules of economics cease to hold. Thrift leads to lower investment; wage cuts reduce employment; even higher productivity can be a bad thing. And the broken windows fallacy ceases to be a fallacy: something that forces firms to replace capital, even if that something seemingly makes them poorer, can stimulate spending and raise employment. Indeed, in the absence of effective policy, that’s how recovery eventually happens: as Keynes put it, a slump goes on until “the shortage of capital through use, decay and obsolescence” gets firms spending again to replace their plant and equipment.

Krugman’s next paragraph is the one I started with and then he ends:

More broadly, if you’re going to do environmental investments — things that are worth doing even in flush times — it’s hard to think of a better time to do them than when the resources needed to make those investments would otherwise have been idle.

So, a lousy decision all around. Are you surprised?

Not any more.

Now, we don’t know who will win next year’s presidential election. But the odds are that one of these years the world’s greatest nation will find itself ruled by a party that is aggressively anti-science, indeed anti-knowledge. And, in a time of severe challenges — environmental, economic, and more — that’s a terrifying prospect.

Paul Krugman had a terrific column in the New York Times Sunday, “Republicans Against Science.”  He discusses not just the anti-science nature of the GOP  as it applies to global warming, but their anti-knowledge approach as it applies to economic theory.

Here’s more:

Jon Huntsman Jr., a former Utah governor and ambassador to China, isn’t a serious contender for the Republican presidential nomination. And that’s too bad, because Mr. Hunstman has been willing to say the unsayable about the G.O.P. — namely, that it is becoming the “anti-science party.” This is an enormously important development. And it should terrify us.

To see what Mr. Huntsman means, consider recent statements by the two men who actually are serious contenders for the G.O.P. nomination: Rick Perry and Mitt Romney.

Mr. Perry, the governor of Texas, recently made headlines by dismissing evolution as “just a theory,” one that has “got some gaps in it” — an observation that will come as news to the vast majority of biologists. But what really got peoples’ attention was what he said about climate change: “I think there are a substantial number of scientists who have manipulated data so that they will have dollars rolling into their projects. And I think we are seeing almost weekly, or even daily, scientists are coming forward and questioning the original idea that man-made global warming is what is causing the climate to change.”

That’s a remarkable statement — or maybe the right adjective is “vile.”

The second part of Mr. Perry’s statement is, as it happens, just false: the scientific consensus about man-made global warming — which includes 97 percent to 98 percent of researchers in the field, according to the National Academy of Sciences — is getting stronger, not weaker, as the evidence for climate change just keeps mounting.In fact, if you follow climate science at all you know that the main development over the past few years has been growing concern that projections of future climate are underestimating the likely amount of warming. Warnings that we may face civilization-threatening temperature change by the end of the century, once considered outlandish, are now coming out of mainstream research groups.

In a AAAS presentation last year, the late William R. Freudenburg of UC Santa Barbara discussed his research on “the Asymmetry of Scientific Challenge“: New scientific findings are found to be more than twenty times as likely to indicate that global climate disruption is “worse than previously expected,” rather than “not as bad as previously expected.”

I was just at a conference of some of the top climate scientists in the world, and their projections are considerably more dire than the IPCC, as I’ll report later this week.

But never mind that, Mr. Perry suggests; those scientists are just in it for the money, “manipulating data” to create a fake threat. In his book “Fed Up,” he dismissed climate science as a “contrived phony mess that is falling apart.”

I could point out that Mr. Perry is buying into a truly crazy conspiracy theory, which asserts that thousands of scientists all around the world are on the take, with not one willing to break the code of silence. I could also point out that multiple investigations into charges of intellectual malpractice on the part of climate scientists have ended up exonerating the accused researchers of all accusations. But never mind: Mr. Perry and those who think like him know what they want to believe, and their response to anyone who contradicts them is to start a witch hunt.

So how has Mr. Romney, the other leading contender for the G.O.P. nomination, responded to Mr. Perry’s challenge? In trademark fashion: By running away. In the past, Mr. Romney, a former governor of Massachusetts, has strongly endorsed the notion that man-made climate change is a real concern. But, last week, he softened that to a statement that he thinks the world is getting hotter, but “I don’t know that” and “I don’t know if it’s mostly caused by humans.” Moral courage!

Of course, we know what’s motivating Mr. Romney’s sudden lack of conviction. According to Public Policy Polling, only 21 percent of Republican voters in Iowa believe in global warming (and only 35 percent believe in evolution). Within the G.O.P., willful ignorance has become a litmus test for candidates, one that Mr. Romney is determined to pass at all costs.

So it’s now highly likely that the presidential candidate of one of our two major political parties will either be a man who believes what he wants to believe, even in the teeth of scientific evidence, or a man who pretends to believe whatever he thinks the party’s base wants him to believe.

And the deepening anti-intellectualism of the political right, both within and beyond the G.O.P., extends far beyond the issue of climate change.

Lately, for example, The Wall Street Journal’s editorial page has gone beyond its long-term preference for the economic ideas of “charlatans and cranks” — as one of former President George W. Bush’s chief economic advisers famously put it — to a general denigration of hard thinking about matters economic. Pay no attention to “fancy theories” that conflict with “common sense,” the Journal tells us. Because why should anyone imagine that you need more than gut feelings to analyze things like financial crises and recessions?

Now, we don’t know who will win next year’s presidential election. But the odds are that one of these years the world’s greatest nation will find itself ruled by a party that is aggressively anti-science, indeed anti-knowledge. And, in a time of severe challenges — environmental, economic, and more — that’s a terrifying prospect.

Related Posts:

• If You Are Anti-Science, You Are Anti-Jobs
• Huntsman Slams Perry on Climate and Evolution: We Are “On the Wrong Side of Science and Therefore in a Losing Position.”

Ohio EPA Proposes Pollution Limits on Fracking

Companies drilling for oil and natural gas in shale formations in Ohio might soon face air pollution limits on new wells.

The practice of horizontal drilling and hydraulic fracturing, or “fracking,” in pursuit of gas can require multiple wells on a single site, creating a concentration of equipment that can leak hazardous airborne compounds, The Columbus Dispatch reported. That’s causing concern about the pollutants the drilling operations might release, and the Ohio Environmental Protection Agency has proposed requiring oil and gas drillers to get permits that would set pollution limits.

“This is no longer the individual little well you see out in farm fields,” Ohio EPA spokesman Mike Settles said. “This is a sizable operation with pieces of equipment that need to be covered by an air permit.”

Ohio has more than 64,000 active oil and gas wells, but they had not been considered significant threats to air quality.

Environmental groups appear to have more qualms with the idea than drillers do.

“I don’t see anything that’s particularly adverse to the industry’s interests,” said Tom Stewart, vice president of the Ohio Oil and Gas Association.

A coalition that includes the Ohio Environmental Council and other environmental groups argue there are loopholes in the permit proposal that leave room for more pollution because the permits wouldn’t apply to certain activities and because companies wouldn’t be required to install the best available pollution filters.

The permits wouldn’t limit air pollution from drilling or fracking, a technique in which water, chemicals and sand are pumped in to crack the ground and release gas or oil, because those are “temporary activities,” Settles said.

It’s possible that benzene and other hazardous compounds could evaporate from the waste water fracking produces, said Teresa Mills, Ohio organizer for the advocacy group Center for Health, Environment and Justice.

Emerging Powers Call for Extending Climate Deal

Brazil, South Africa, India and China said Saturday that November’s UN climate talks should aim to extend the Kyoto Protocol, the only binding global deal to cut greenhouse gases.

The four key emerging powers — seen as critical to the success of any future effort to combat climate change — said keeping Kyoto alive should be the “central priority” at the key UN summit in South Africa.

The bloc released the statement after two days of talks in southeast Brazil to prepare for the next UN climate conference scheduled to take place in Durban from November 28 to December 9.

The ministers “reaffirmed that the Kyoto Protocol is a cornerstone of the climate change regime,” it said.

Xie Zhenhua, a top Chinese climate change official, said he hoped the statement would “send a sign to the international community that we are pursuing efforts to make the Durban conference a success.”

Gallup Poll: Global Climate Worry Up Slightly Since 2009

Global concern about climate change has risen only very slightly over the past two years, as consumers have focused on more immediate economic worries, according to an opinion poll published on Sunday.

Nielsen’s latest global online environment and sustainability survey showed that 69 percent of 25,000 Internet users in 51 countries were concerned about climate change in 2011, slightly up from 66 percent in a similar poll in 2009, but down from 72 percent in 2007.

“Focus on immediate worries such as job security, local school quality and economic wellbeing have all diminished media attention for climate stories in the past two years,” said Maxwell Boykoff, who was an adviser to the survey and is senior visiting research associate at the University of Oxford’s Environmental Change Institute.

Despite State Department Green Light for Keystone XL, Pressure on Obama Continues

Protesters remain undaunted by a U.S. State Department decision Friday giving preliminary approval to the controversial Keystone XL pipeline meant to pump tar sands oil from Alberta, Canada, to the Gulf Coast of Texas.

Demonstrations have been taking place all week in front of the White House and included a “No Tar Sands Caravan” bus tour that stopped in Boulder and Denver earlier in the week. More than 400 people, including prominent climate change writer Bill McKibben, have been arrested in Washington, D.C.

Michael Brune, executive director of the Sierra Club, told the New York Times President Obama needs to veto the project despite the State Department’s initial green light.

“It will be increasingly difficult to mobilize the environmental base and to mobilize in particular young people to volunteer, to knock on thousands of doors, to put in 16-hour days, to donate money if they don’t think the president is showing the courage to stand up to big polluters,” he said, referring to the Obama’s ability to win re-election in 2012.

Apparently deeming himself a Nobel laureate of “Washington wisdom,” Will proceeded to offer a dose of his brilliance. “One of the ways that this simple, workable legislation is going to be made to work is the IRS is going to hire about 16,000 new agents,” Will proclaimed. That may be Will’s version of “Washington wisdom,” but it’s not true. This past week, IRS Commissioner Doug Shulman debunked the right-wing myth that IRS agents are going to auditing taxpayers to determine if they have health insurance.

The consensus economic view, however, is profoundly different. Nobel Prize-winning economist Paul Krugman inadvertently shows the sorry state of the understanding by economists of global warming in a recent blog post, in which he writes down a “toy model that hopefully clarifies the issues” of climate policy:

See! The problem can be boiled down to three straight lines, intersecting at the optimal balance of economic and environmental impacts. This level of understanding is about as developed as recognizing that burning fossil fuels could heat up the atmosphere, which physicists realized in 1896, 114 years ago.

Unfortunately, Krugman’s toy is actually better than most economic thinking.

Business-as-usual projections used by the federal government, such as the Energy Information Administration, the Environmental Protection Agency, the Department of Labor, and the Congressional Budget Office, don’t take into account climate disruption, which comes in the form of temporary, regional catastrophes (a flood, storm, hurricane, heat wave, wildfire), widespread catastrophes (collapse of coral reefs and forests, decadal drought), and possibly global catastrophe (several feet of sea level rise, permanent El Nino, permafrost melt). The International Energy Agency has only begun to do so in its most recent world energy outlook.

Popular economic models for climate policy, such as Dr. William Nordhaus’s DICE model, use climate damage formulas that have no basis in reality, maxing out at 10% reductions in GDP under runaway global warming ten times what has already been experienced. Citing such models, Congressional Budget Office chief Doug Elmendorf testified that the U.S. economy would be “relatively insulated from climate effects” from 4-6°C warming — at least 500% more warming than present. His “pessimistic estimate” of the damages? Three percent of GDP.

Krugman also writes about the work of Harvard economist Martin Weitzman:

As for the welfare sensitivity: Marty Weitzman has managed to scare me, by pointing out that there’s a pretty plausible case that a rise of 5 degrees C – which is no longer an outlandish prediction – would be utterly catastrophic. You don’t have to be sure about this; just a significant probability is enough.

Climate scientists have come to the consensus that a rise of more than 2 degrees C — about three times present warming — would be utterly catastrophic, and repeatedly caution that even that threshold is not necessarily safe. It is frankly baffling that even the best economists studying climate policy have the fantasy that modern human civilization has a reasonable possibility of sustaining 5 degrees C of warming without suffering on an unprecedented scale.

There are beginning efforts by the federal government to at least include some assessment of the cost of carbon pollution in its analyses, using a “social cost of carbon” in new energy regulations. But even this crude mechanism isn’t factored into policy where it’s really needed, such as the Departments of Treasury and Defense.

That said, Paul Krugman is orders more brilliant than I can even fathom, and back-of-the-napkin calculations can be a powerful tool, if the scribbles are the result of a brilliant mind. For example, climate scientist Stephen Schneider praises the effectiveness of “simple simulations of complex models” in his excellent book “Science as a Contact Sport.” Schneider, by the way, has been considering the prospect of doomsday geoengineering since 1996.

If we can do health care reform…that really does limit the growth in health care cost, then what’s left is a problem that we can deal with with fairly moderate policy. Things that would be politically impossible right now, but economically aren’t hard at all. [...]

You would end up still with the U.S. having lower taxes than almost all other OECD countries. And you’d end up with our social programs enhanced, not reduced, because we’d have universal health care coverage and some other improvements in the social safety net, and we would be good for the foreseeable future. All of this hinges on being able to actually talk about tax increases, even modest ones, without it being political suicide. It requires that you be able to talk about spending health dollars wisely and not have people start screaming about death panels.

Watch it:

The Wonk Room has more.

Is Paul Krugman history's greatest monster? (Wikimedia)

The man himself alludes to this, but both Arnold Kling and Megan McArdle seem to think that Paul Krugman should feel deeply embarrassed to have written the following in August 2002:

The basic point is that the recession of 2001 wasn’t a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.

If you read the read the entire column, Krugman was actually expressing skepticism that the Fed’s policies would have this result. He was saying that people were understating the odds of a “double dip” recession. But he didn’t say a double dip recession was inevitable. He said that if a double dip recession were to be avoided, the most likely mechanism would be the inflation of a housing bubble. As it happens, we didn’t get a double dip recession. Instead, we got soaring household spending driven by a housing bubble that replaced the NASDAQ bubble. The column, in other words, was completely correct. And it’s not as if Krugman never revisited the housing the bubble question between 2002 and the fall of 2008. It was precisely because he recognized, as early as 2002, that policy was aimed at producing a new round of bubble-led growth that he was able to see before most that there were major bubble-related risks to the economy.

– “And first off the government doesn’t create jobs. Let’s get this notion out of our heads that the government creates jobs. Not in the history of mankind has the government ever created a job. Small business owners do, small enterprises do. Not the government.” [RNC Chairman Michael Steele, 2/2/09]

– “Instead of focusing on three major issues — job creation, housing and compassion for Americans who have lost jobs through no fault of their own — to boost the economy, this bill has morphed into a bloated government giveaway.” [Sen. Saxby Chambliss (R-GA), 2/10/09]

– “When it comes to slow-moving government spending programs, it’s clear that it doesn’t create the jobs or preserve the jobs that need to happen.” [House Minority Leader John Boehner (R-OH), 1/21/09]

However, when Defense Secretary Robert Gates announced plans to end production of the F-22 at the current 187 planes — down from the 381 planes the government was expected to order — many of these same conservatives were up in arms over the jobs that would be lost.

Chambliss, in particular, said that he was concerned people in his state would lose jobs if F-22 production was cut, because “when it comes to stimulating the economy, there’s no better way to do it than to spend it in the defense community.” Sen. Johnny Isakson (R-GA), who also voted against the economic recovery package, similarly said, “I also believe that it is unacceptable that this administration wants to eliminate 2,000 jobs in Marietta and potentially 95,000 jobs nationwide at a time when unemployment rates are rising across the country.”

Today on ABC’s This week, New York Times columnist Paul Krugman called out this hypocrisy:

KRUGMAN: What’s so wonderful is watching Republican congressmen saying, “But this will cost jobs!” The very same Republican congressmen who were denouncing the stimulus, saying government spending never creates jobs, but cutting defense spending costs jobs. It’s wonderful.

Watch it:

Military correspondent David Axe has pointed out that it’s possible very few workers will lose their jobs because of Gates’s announcement. In fact, thousands of workers will likely be “snapped up for active production lines churning out F-16s, F-35s, C-130s and modernized C-5s for Lockheed, not to mention the prospect that industry rivals Boeing and Northrop might lure Lockheed workers for their own active production lines for the F-15, F/A-18 and others.”

I think Joe Stiglitz is being a bit unfair here:

The U.S. government is basically using the taxpayer to guarantee against downside risk on the value of these assets, while giving the upside, or potential profits, to private investors, he said.

“Quite frankly, this amounts to robbery of the American people. I don’t think it’s going to work because I think there’ll be a lot of anger about putting the losses so much on the shoulder of the American taxpayer.”

It’s a bit more subtle than that. The government is guaranteeing private investors against downside risks but has secured for itself a fair share of the upside. In other words, you have a situation where the private investors are taking a chance of a small loss in exchange for the opportunity at a big win. The government is taking a chance of a large loss in exchange for the opportunity of a big win and giving up all the autonomy and decision-making power in the meantime. In one scenario, taxpayers and investors alike make a bunch of money. In another scenario, taxpayers lose a ton of money—many hundreds of billions—and investors lose a small amount. It’s a bet that looks fair if (a) you think the win-win scenario is much more likely than lose-lose, or (b) you think the social gains from creating recapitalized banks exceed the fiscal cost to the taxpayers of suffering through lose-lose. Option (a) seems like wishful thinking, but option (b) is perfectly reasonable. The unreasonable thing here is that the Geithner Plan seems to allocate an unreasonable large share of the social gains of recovery back to the financier class. So I think Stiglitz is only being slightly unfair.

Meanwhile, I actually think the most distressing thing about the criticism from folks like Krugman and Stiglitz is what you can infer reading between the lines from how ferocious it is. They, and other leading critics, are acting like people who’ve been totally shut out of the consultation/communication loop. And it’s distressing to see people of their stature and expertise getting shut out while the administration works harder on kissing Wall Street’s ass to try to persuade the finance class to avoid deliberately sabotaging the economy.

The Obama administration seems to respond to criticism from the right by turning the other cheek and becoming more solicitous, while responding to criticism from the left by putting its fingers in its ears.

Here’s an intriguing swathe of Ryan Lizza’s profile of Rahm Emanuel:

“They have never worked the legislative process,” Emanuel said of critics like the Times columnist Paul Krugman, who argued that Obama’s concessions to Senate Republicans—in particular, the tax cuts, which will do little to stimulate the economy—produced a package that wasn’t large enough to respond to the magnitude of the recession. “How many bills has he passed?” [...] “Now, my view is that Krugman as an economist is not wrong. But in the art of the possible, of the deal, he is wrong. He couldn’t get his legislation.”

Whether or not you think Emanuel is right about the legislative politics, it seems to significant for the White House Chief of Staff to concede that Krugman is correct about the economics and the legislation President Obama signed into law may, in virtue of its concessions to conservatives, be too small to rescue the economy.

I also always find this particular form of ping-pong to be a big odd:

1. Practical Politician A offers Proposal X.
2. Outside Commenter B says that X is too moderate on the merits.
3. Practical Politician A angrily retorts that better legislation on the merits would have been impossible to secure.

I think the right way to understand the (1)/(2) dynamic here is that the criticism in step (2) makes it easier to secure the passage of legislation. If you propose something, and every single progressive in all the land immediately lauds it as the greatest bill ever written, then your legislation is now an extreme left proposal and it’s doomed. If you’re going to make concessions to political reality then you need to weather a bit of criticism from your left—that’s what establishes the proposal as moderate and sensible. Things like “some liberal economists such as Paul Krugman say the proposal is too small” is a helpful piece of context-setting that prevents the proposal from appearing too radical.

Cato’s Brink Lindsey has an informative, but ultimately pretty strange, new research paper out titled “Paul Krugman’s Nostalgianomics: Economic Policies, Social Norms, and Income Inequality”. You could almost think of it as two papers, in fact. One an informative discussion titled “Economic Policies, Social Norms, and Income Inequality” looking at the transition from the low-inequality equilibrium of postwar America to the high-inequality equilibrium of the present day. And the other a kind of silly attack on Paul Krugman that accuses him of being a proponent of misguided “nostalgianomics.”

The basic shape of things, however, goes like this. For a long time, a lot of people just kind of shrugged off increasing levels of inequality as the inevitable result of broad impersonal forces—the terms “skill-biased technological change” and “superstar effect” came into play a lot here. More recently, a group of social science researchers and a group of progressive media figures have called attention to the substantial evidence that SBTC and superstar effects can’t account for the whole thing. Krugman is both a very prominent social scientist and a very prominent progressive media figure, so he’s played an important role in calling attention to this stuff. In his paper, Lindsey takes the unusual-for-a-libertarian tack of agreeing with Krugman (and others) that public policy changes have played an important role. But he argues that the changes have mostly been changes that, on net, are positive. So it’s wrong of Krugman to espouse nostalgianomics and support a return to the policies of the 1950s. Which is fine, except I read almost every Krugman column and I’ve read Conscience of a Liberal (and, indeed, other works of Krugmanania such as Pop Internationalism and Peddling Prosperity) and it’s not as if the book ends with a call for the return of comprehensive regulation of airline fares or the re-establishment of the AT&T monopoly. To observe that the growth of inequality has policy roots isn’t to say that the right response to it is to methodically reverse every policy change of the past thirty years. It’s simply to deny the previous conventional wisdom—that it would be impossible to reverse the growing inequality of our society.

Indeed, I think that in a lot of ways the most interesting recent research on inequality turns out to be about skill-biased technological change after all. Specifically, Claudia Goldin and Lawrence Katz argue in The Race Between Education and Technology that we shouldn’t look at SBTC as something that just comes along and causes inequality. Rather, it causes inequality when society fails to respond to SBTC by expanding the quantity of educated citizens. Seen in this light, the SBTC component of growing inequality is, indeed, a policy failure.

But more broadly, the generic “progressive” idea is that we should have a more progressive tax code that spends more money on egalitarian social welfare programs. That’s not a return to the 1950s. It’s an effort to ensure that the gains of the past 30 years worth of policy shifts are spread more equitably. More liberal immigration policy, for example, is good for immigrants and on net good for the economy, but it’s bad for low-wage native born workers. But it really is on net good for the economy. In principle, the pie could be redistributed (through tax-and-transfer or tax-and-service) such that everyone winds up with more pie than they had before (and the immigrants end up with much more pie) rather than giving huge additional pie slices to the richest people. And the same goes for most of this over stuff. That’s what I’m for, and I’m pretty sure it’s what Krugman’s for. Conscience ends with a call for universal health care, not with a call for a return of the ban on interstate banking.

Q: Do you agree, or how do you respond to Paul Krugman in the New York Times who said that centrists have done their best to “make the plan weaker and worse?”

NELSON: Well, first of all, they’re not cuts. Let’s just get that up front. These are adjustments downward from numbers that were offered by the House in their version and by the Senate in its version.

Watch it:

Nelson’s compromise bill provides 12 to 15 percent fewer jobs than the House legislation. Yglesias notes that Nelson helped cut one of the “least-controversial and most highly-stimulative provisions, deciding that that was a good place for ‘adjustments downward.’”

Look, there’s some people who have said that it’s not big enough, there are others who say it’s too big. Well, the — as I said before, Democrats or Republicans, we welcome good ideas. And so the challenge for all of us, I think, is to identify good ideas, good spending plans, that deliver on my commitment to create or save 3 million jobs. I want this to work. This is not an intellectual exercise, and there is no pride of authorship. If members of Congress have good ideas, if they can identify a project for me that will create jobs in an efficient way, that does not hamper our ability to — over the long term — get control of our deficit, that is good for the economy, then I’m going to accept it.

If Paul Krugman has a good idea, in terms of how to spend money efficiently and effectively to jump-start the economy, then we’re going to do it. If somebody has an idea for a tax cut that is better than a tax cut we’ve proposed, we will embrace it. So, you know, one of the things that I think I’m trying to communicate in this process is for everybody to get past the habit that sometimes occurs in Washington of whose idea is it, what ideological corner does it come from. Just show me. If you can show me that something is going to work, I will welcome it.

Maybe Krugman will reply on his blog. Either that or maybe Secretary of State Hillary Clinton can broker some kind of sit-down.

But right now we seem to be facing two major economic gaps: the gap between the economy’s potential and its likely performance, and the gap between Mr. Obama’s stern economic rhetoric and his somewhat disappointing economic plan.

Today in his press conference, a reporter questioned Obama about Krugman’s criticisms. Obama said that he is open to the economist’s ideas: “If Paul Krugman has a good idea, in terms of how to spend money efficiently and effectively to jump-start the economy, then we’re going to do it.” Watch it:

Watch it:

Last month, Krugman told radio host Bill Press that he is “in communications” with the Obama team.

Transcript:

CHIP REID: Thank you, Mr. President-Elect. I’d like to follow up on that. Larry Summers, as he said, is up on the Hill now, and we’re told he’s getting an earful from some Democrats who say this plan just isn’t big enough. And I know you resisted putting a number on it, but your staff has talked about a high end of $800 billion or something like that. They say if that’s true, and 40 percent of it is tax cuts that don’t have the bang for the buck, that spending has, it’s not big enough. Paul Krugman today said it falls far short for what you’re going to need to put America back to work. How do you respond to those critics?

OBAMA: Look, there’s some people who have said that it’s not big enough, there are others who say it’s too big. Well, the — as I said before, Democrats or Republicans, we welcome good ideas. And so the challenge for all of us, I think, is to identify good ideas, good spending plans, that deliver on my commitment to create or save 3 million jobs. I want this to work. This is not an intellectual exercise, and there is no pride of authorship. If members of Congress have good ideas, if they can identify a project for me that will create jobs in an efficient way, that does not hamper our ability to — over the long term — get control of our deficit, that is good for the economy, then I’m going to accept it.

If Paul Krugman has a good idea, in terms of how to spend money efficiently and effectively to jump-start the economy, then we’re going to do it. If somebody has an idea for a tax cut that is better than a tax cut we’ve proposed, we will embrace it. So, you know, one of the things that I think I’m trying to communicate in this process is for everybody to get past the habit that sometimes occurs in Washington of whose idea is it, what ideological corner does it come from. Just show me. If you can show me that something is going to work, I will welcome it.

Paul Krugman reminds us of Sanjay Gupta’s unfair and inaccurate attacks on Michael Moore and Sicko. It’s a fair point, but if this is the worst thing you can say about Gupta it’s honestly not so bad. The plus side is that it means you’ll have as Surgeon General a guy who’s genuinely excellent at going on television and talking about medical issues. That’s potentially a very useful asset in a debate over health care reform, and even leaving that aside just means a guy who can do the Surgeon General’s basic public health and health education functions with an unusual degree of effectiveness.

But the Sicko thing really should remind us that we do exist in a pretty demented political culture, and one that reaches its peak of derangement on cable television broadcasts.

KRUGMAN: But we’ve lost 2 million in the past year. And we need more than a million extra jobs just to keep up with population growth. We’re already down 3 million jobs right now. … By the time any stimulus package gets going really, we’re going to be way down in the whole. Three million is not going to be enough actually to close the gap.

Watch it: