Krugman’s blog, 6/9/15

There were three posts yesterday.  The first was “The Chutzpah Caucus:”

Sen. John Thune is coming in for quite a lot of ridicule for this:

Obamacare is a failed policy, because we may be able to kill it with an absurd legal challenge! It’s a policy version of the classic definition of chutzpah: killing your mother and father, then pleading for mercy because you’re an orphan.

But Thuneism is just a more naked version of the style of argument we’ve been seeing all along. Conservatives are constantly belittling the ACA for its failure to cover all the uninsured — only one-third covered, it’s often asserted, although that number is out of date and also ignores the fact that the law wasn’t supposed to cover undocumented immigrants. But what’s the biggest factor limiting coverage? Um, refusal of red states to expand Medicaid and their refusal to help implement the rest of the law:

In states that want Obamacare to work, most of the eligible uninsured have already been covered. So the general complaint is that “Obamacare is a failure because our sabotage has successfully slowed its implementation.” Thune is just taking that logic a bit further.

They truly are the mole people.  The second post yesterday was “The Party of Fiscal Responsibility in Action:”

One of the greatest confidence tricks ever pulled in American politics was the way Republicans managed, for a while anyway, to convince centrists that they were apostles of fiscal responsibility. Paul Ryan presented budgets that combined huge tax cuts for the rich with not quite as huge benefit cuts for the poor, added some magic asterisks — basically deficit-increasing redistribution from the have-nots to the haves, with added fraudulence — and receivedawards for fiscal responsibility.

Anyway, at this point we have evidence of what such politicians actually do in office, thanks to the many US states where Republicans control both the governor’s office and the legislature. And the result is an epidemic of fiscal crisis, despite a recovering economy. Yes, some Democrat-controlled states are also having problems. But they didn’t go around pretending to be the nation’s fiscal saviors, and the biggest state controlled by Democrats, California — which was supposed to be a basket case — is in quite good fiscal shape.

And yes, I think this observation is a lot more important than Marco Rubio’s personal financial difficulties, although those are pretty bizarre.

Yesterday’s last post was “The Least Worst Crisis:”


I was, I think, one of the first commentators to notice that a funny thing was happening in Iceland: the nation that was supposed to be Ground Zero for financial disaster was actually having a milder crisis than many others, thanks to heterodox policies — debt repudiation, capital controls, and massive devaluation. Now, as Matthew Yglesias points out, Iceland is getting ready to lift the controls, and its experience still looks remarkably good considering the circumstances.

And as Yglesias says, the interesting contrast is with Ireland, now being hailed as a success story for austerity because things eventually stopped getting worse and have lately been getting a bit better. Talk about lowering the bar.

I suppose someone will ask about possible parallels with Greece. Well, if Greece is forced out of the euro it will be in a position to try an Iceland-style devaluation (and will surely have imposed capital controls). Whether it will work as well as it did in Iceland is an open question — for one thing, leaving the euro is very different from never having joined — and I’m still hoping that the whole thing can be avoided. For now, let’s just say that sometimes heterodoxy works much better than the orthodox will ever admit.



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