Paul Krugman

Paul Krugman

The election is 36 days away, and most of the media are churning out their profiles of undecided voters in Ohio and polling snapshots. Only Paul Krugman has broken the illusion, moved past the election and its expected outcome, and focused on the expected policy prescription that lies ahead, the desire of most of official Washington to slash the budget along the lines of a proposal that gets far more credit than it deserves. Krugman, a voice outside Washington, has no problem explaining to everyone that the Bowles-Simpson plan actually stinks.

I ask that question because we already know what Mr. Obama will face if re-elected: a clamor from Beltway insiders demanding that he immediately return to his failed political strategy of 2011, in which he made a Grand Bargain over the budget deficit his overriding priority. Now is the time, he’ll be told, to fix America’s entitlement problem once and for all. There will be calls — as there were at the time of the Democratic National Convention — for him to officially endorse Simpson-Bowles, the budget proposal issued by the co-chairmen of his deficit commission (although never accepted by the commission as a whole) [...]

…despite the bizarre reverence it inspires in Beltway insiders — the same people, by the way, who assured us that Paul Ryan was a brave truth-teller — the fact is that Simpson-Bowles is a really bad plan, one that would undermine some key pieces of our safety net. And if a re-elected president were to endorse it, he would be betraying the trust of the voters who returned him to office.

Consider, in particular, the proposal to raise the Social Security retirement age, supposedly to reflect rising life expectancy. This is an idea Washington loves — but it’s also totally at odds with the reality of an America in which rising inequality is reflected not just in the quality of life but in its duration. For while average life expectancy has indeed risen, that increase is confined to the relatively well-off and well-educated — the very people who need Social Security least. Meanwhile, life expectancy is actually falling for a substantial part of the nation.

Krugman only had time in the op-ed to focus on the retirement age increase, but at his blog he expanded a bit further. Bowles-Simpson also lowers marginal tax rates for no discernible reason, and according to Krugman “it offers nothing on Medicare that isn’t already in the Affordable Care Act.” It’s worse than that, actually; it uses a “magic asterisk” to slow health care costs, by merely pronouncing that cost growth will be limited to a certain percentage, without providing any guidance on how to get there. And of course, health care costs represent pretty much all of the budget issues over the long term.

While Krugman doesn’t have a K Street office or anything, I don’t believe he’s completely insulated from knowing what’s swirling around in the corridors of power. And indeed, you don’t have to do much digging to know that the deficit scolds are coming to make a deal. Bowles and Simpson teamed up to raise over $25 million for a front group that will push the grand bargain in the next several months. The fiscal cliff (actually a slope; the world doesn’t end on January 1 with no action) provides a great opportunity. Talks are already in the works. Not much sleuthing needed to be done here.

Krugman felt the need to write this column, and to set up the election, 36 days out, as a referendum on the safety net:

This election is, as I said, shaping up as a referendum on our social insurance system, and it looks as if Mr. Obama will emerge with a clear mandate for preserving and extending that system. It would be a terrible mistake, both politically and for the nation’s future, for him to let himself be talked into snatching defeat from the jaws of victory.

He’s surely aware that the President has already tried to cut safety net programs once, and has expressed interest in a grand bargain since before his inauguration. I see this as more of a way to “cut off the ring,” to place a narrative on the race that makes Obama’s future moves more difficult, in whatever way an influential columnist can. Obama has already re-endorsed extending progressive taxation as a way to close Social Security’s long-term funding gap. His Vice President went further by saying there will be “no changes in Social Security.” Now the most important liberal columnist wants to force Obama in the post-election aftermath to carry a mandate of protecting Social Security and Medicare and Medicaid.

It doesn’t mean that any of this will work. We have a Republican Party that wants to transform the social insurance system, and a Democratic Party that just wants to cut it. But it’s interesting that Krugman uncorks this now.