Tag Archives: Paul Krugman

Were They Making Wishes Or Predictions?

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On January 3rd, Stephen Moore posted an article at Hot Air about the predictions by the so-called economic gurus about the economy in 2025.

The article reports:

Well, Donald Trump has done it again!

He stumped the chumps. The “chumps” in this case were the “blue-chip” academic and financial economists whose consensus forecast this time last year was of high inflation and low economic growth. Wrong on both counts.

As you’ve probably heard, the GDP growth for Q3 came in at a red-hot 4.3%, following 3.5% for the second quarter. Some 90% of professional economists got it wrong — all underestimating the strength of the Trump economy. QED: These weren’t random errors. These were “hate Trump” errors.

They also predicted inflation of above 3% for 2025. It’s going to come in at closer to 2.7%, with the last two months trending down to the Fed inflation target of 2%.

Starting in the second quarter, GDP has been nearly twice as high as predicted.

To quote the inimitable special agent Maxwell Smart, “Missed it by that much.”

This isn’t the first time the whiz kids whiffed on the Trump economy. These are the same Keynesian economists who warned at the start of Trump’s first term that we would see a stock market crash. The stock market is today at record highs on all three indices. Paul Krugman, who won a Nobel Prize in economics and wrote regularly for The New York Times for years, famously feared a second Great Depression if Trump policies took hold.

The danger in putting a businessman in the White House was that if he succeeded, he would make all of the politicians look useless. How long have Americans put up with wasteful spending and fraud from a government that was constantly demanding more of the taxpayers’ money? On a side note, who wrote the grants for the daycare centers in Minnesota, who approved them, and who signed the checks? Would that fraud have been discovered and dealt with under another administration?

The article concludes:

If these blue-chippers had any integrity, they’d admit that they don’t know what they are talking about and send back their Ivy League PhDs.

Fat chance that will ever happen. Instead these prophets of doom will continue to give the entire economics profession a black eye. No wonder it is known as “the dismal science.”

If You Believe This…

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On Tuesday, PJ Media posted an article about a recent claim made by The Washington Post about the impact of illegal immigration on America’s economy. Of course The Washington Post did not call it illegal immigration–they simply called it ‘immigration.’

The article reports:

Then on Tuesday morning, I came across this headline in The Washington Post: “The economy is roaring. Immigration is a key reason.” 

I immediately wondered if I might be concussed. 

Upon further review, I had no head injuries, and I hadn’t touched a drop of booze since last Friday, so I was indeed reading the headline correctly. Sorry, Burger King, there’s a new Home of the Whopper. 

Last fall, I began reminding readers that the MSM Biden bias was going to have to be at least three times stronger than it was in 2020 to get the slurring idiot in the White House reelected. They created a fictional Joe Biden out of whole cloth back then. He’s become such a mess that they are now creating a fictional version of their fictional version. They aren’t even pretending that the real Joe Biden is right in front of our eyes. 

The cheerleading for the economy is to be expected. It’s a kitchen table issue that they hope they can hide somewhere in a cluttered pantry. Over at The New York Times, Paul Krugman writes an almost weekly column telling readers not to believe their lying household budgets and dwindling savings accounts. His most recent effort has a headline that almost rivals the one we’re discussing today: “Bidenomics Is Still Working Very Well.” 

The article includes this quote from The Washington Post article:

There isn’t much data on how many of the new immigrants in recent years were documented versus undocumented. But estimates from the Pew Research Center last fall showed that undocumented immigrants made up 22 percent of the total foreign-born U.S. population in 2021. That’s down compared to previous decades: Between 2007 and 2021, the undocumented population fell by 14 percent, Pew found. Meanwhile, the legal immigrant population grew by 29 percent.

The article at PJ Media notes:

The authors don’t mention the inconvenient fact that record numbers of people are crushing the border and have been for months. The numbers are so overwhelming that the government is scrambling to keep tabs on as many as they can by putting them up in hotels on the taxpayer’s dime. 

This immigration isn’t much of a boon to state and local economies. We continually cover stories here about the financial strain that the “immigrants” are placing on states and cities all over America, like this recent one that Catherine wrote. 

Even if, as the authors posit, the economy is “roaring,” because of the “immigrants,” it’s only in one area. The southern border crisis is dragging the economy down in many ways. The “Rah! Rah!” in this article is akin to celebrating a $5000 bonus check on the same day that your mechanic tells you that your car needs $7000 worth of work to get back on the road again. 

I wonder if anyone still believes The Washington Post.

Inflation Isn’t Over, And The Damage Will Continue

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No one who has bought groceries recently or filled up their gas tank believes inflation is over. Yet recently economist Paul Krugman declared, “Inflation is over. We won.” I guess he doesn’t do the grocery shopping in his family. Yes, inflation has slowed. However, we are still dealing with the price increases that occurred in the past three years. If the baseline is where we were when President Biden took office, the inflation rate is somewhere over 15 percent. If we are talking about the past few months, the number is much lower. However, that number is in addition to the 15 percent that we have already been dealing with.

On Saturday, Real Clear Politics posted a commentary about the damage the Biden administration has done to the economy.

The commentary notes:

The truth is that the wild inflation, high interest rates, bank failures, and other economic harms of the last three years were all entirely avoidable and all entirely caused by President Biden and the Democrats’ arrogant and unwise policies.

This is not “Monday morning quarterbacking.” Some of us were saying this well before the fact. My May 7, 2021 column (“Joe Biden, Economy Killer”) accurately forecast the inflation, rising interest rates, and rising government debt service long before the Biden administration even acknowledged the risks were real.

The U.S. economy did not need another giant stimulus plan when Biden and the Democrats took control in 2021. The U.S. gross domestic product, knocked down by the COVID shutdown in the first half of 2020, had jumped up by a record 33% in the third quarter of 2020 and by another 4% in the fourth quarter, all before Biden took office. The S&P stock market had risen 16.3% in 2020. Employers were waiting for workers to come back to work, and another stimulus package had been passed with bipartisan support in the last quarter of 2020. Happily, the inflation rate was only 1.4% as 2020 ended, with a one-year Treasury rate of just 0.10% and a 10-year Treasury rate of just 0.95%

The commentary concludes:

The Congressional Budget Office last week revised its government deficit estimates upward, expecting $48.3 trillion of government debt by 2034. Interest expense on the federal debt this year has already jumped up to $870 billion, which is larger than the defense budget. Additionally, Biden’s higher interest rates will continue to increase debt service costs as old government debt rolls off and is replaced at higher costs. The risk is stark: a 3% higher interest rate on even the existing $33 trillion level of federal debt equates to $1 trillion of extra federal interest expense each and every year, on top of the already giant existing debt service number.

There is no painless way to pay down this deficit or cover this extra annual government interest cost. The need for billions and billions of extra tax money or budget cuts will fuel fierce political fights, populist divisions, and national anger for years to come. All this public unrest will also be the legacy of the bad Democratic economic policies since 2021. Professor Krugman, when it comes to Bidenomics, “We lost.”

I believe we can turn this around, but it will take an administration that includes people who have worked in the private sector and run businesses. Whatever administration is elected in November needs to include people hired for their qualifications and experience–not for any other reason.

Why Does The Establishment (Republicans and Democrats) Hate Donald Trump?

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Yesterday Victor Davis Hanson posted an article at American Greatness titled, “Why Do They Hate Him So?” The article analyzes the reasons that President Trump is opposed by both the political left and the establishment right.

The article states:

Again, why the unadulterated hatred? For the small number of NeverTrumpers, of course, Trump’s crudity in speech and crassness in manner nullify his accomplishments: the unattractive messenger has fouled an otherwise tolerable message.

While they recognize in the abstract that the randy JFK, the repugnant LBJ, and the horny Bill Clinton during their White House tenures were far grosser in conduct than has been Donald Trump, they either assume presidential ethics should have evolved or they were not always around to know of past bad behavior first hand, or believe Trump’s crude language is worse than prior presidents’ crude behavior in office.

The article continues:

Had Donald Trump in his first month as president declared that he was a centrist Republican —as many suspicious Never Trumpers predicted that he would, true to past form—and promoted cap-and-trade and solar and wind federal subsidies, tabled pipeline construction and abated federal leasing for gas and oil production, stayed in the Iran nuclear deal and Paris Climate Accord, appointed judges in the tradition of John Paul Stevens and David Souter, praised the “responsible” Palestinian leaders, pursued “comprehensive immigration reform” as a euphemism for blanket amnesties, then Trump would be treated largely as a George H.W. Bush or George W. Bush: hated, of course, but not obsessively so.

More importantly, had Trump just collapsed or stagnated the economy, as predicted by the likes of Paul Krugman and Larry Summers, he would now be roundly denounced, but again not so vilified, given his political utility for the Left in 2020 as a perceived Herbert Hoover-esque scapegoat.

Had Trump kept within the media and cultural sidelines by giving interviews to “60 Minutes,” speaking at the White House Correspondents’ Dinner, bringing in a few old Republican hands to run the staff or handle media relations like a David Gergen or Andrew Card, Trump would have been written off as a nice enough dunce.

But Trump did none of that. So, the hatred of the media, the Left, the swamp, and the celebrity industry is predicated more on the successful Trump agenda. He is systematically undoing what Barack Obama wrought, in the manner Obama sought to undo with his eight years the prior eight years of George W. Bush.

But whereas the Obama economy stagnated and his foreign policy was seen by adversaries and rivals as a rare occasion to recalibrate the world order at American’s expense, Trump mostly did not fail—at least not yet. We are currently in an economic boom while most of the world economy abroad is inert. Had the economy just crashed as predicted, the Trump agenda would have been discredited and he would be written off a pitiful fool rather than an existential monster.

Again, hatred arises at what Trump did even more than what he says or how he says it.

The obvious conclusion:

The bipartisan Washington establishment? If an outsider Manhattan wheeler-dealer without military or political experience can at last call an appeased China to account, can avoid a Libyan fiasco, can acknowledge that America is tired of a 18-year slog in Afghanistan when others would not, or believes ISIS thrived as a result of prior arcane restrictive U.S. rules of engagement—and he is proven largely right—then what does that say about the credentialed experts who dreamed up the bipartisan conventional wisdom that with a few more concessions China would eventually become Palo Alto or that Libya would bloom at the heart of the Arab Spring?

The Left detests Trump for a lot of reasons besides winning the 2016 election and aborting the progressive project. But mostly they hate his guts because he is trying and often succeeding to restore a conservative America at a time when his opponents thought that the mere idea was not just impossible but unhinged.

And that is absolutely unforgivable.

Be prepared for a very nasty year before the election in 2020. There are a lot of very unhinged people in politics and in the media.

If Your State Has High Unemployment, Read This

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Forbes Magazine posted a story last Tuesday about what has happened to the North Carolina economy. The change began in 2013 (just before we got here). At that point the North Carolina General Assembly was controlled by Republicans and a Republican was governor.

The article reports:

Unemployment insurance (UI) reform in North Carolina continues to be the gift that keeps on giving. The 2013 UI reform, made possible by the Republican-dominated General Assembly and Governor Pat McCrory, will enable $240 million in tax savings for state employers in 2016 alone, thanks to a UI Trust Fund that has grown to over $1 billion. In addition, the Tar Heel State’s 2013 tax reform bill will once again lower the corporate income tax rate, from 5% to 4% (it was 6.9% prior to 2013).

Please follow the link above to read the entire story, but here are a few of the highlights:

In February of that year, Governor McCrory signed a bill that reduced the maximum amount and duration of unemployment benefits to levels in line with those of neighboring states. This triggered the cutoff of long-term federal UI benefits being moved up by six months.

…Ironically, in his 2010 economics textbook, Krugman (Paul Krugman) expressed an opposing sentiment. “Public policy designed to help workers who lose their jobs can lead to structural unemployment as an unintended side effect,” wrote Krugman, explaining that granting more generous benefits “reduces a worker’s incentive to quickly find a new job.”

…Due to the reforms, however, the federal UI tax hikes were halted in 2014, and dropped back to standard rates after the debt was paid off last year. The result has been significant tax relief for job providers.

The second major change in 2013 was the recalibration of DES under the leadership of former state House Speaker pro-tempore Dale Folwell. Today, the call center answers 97% of incoming calls, up from a dismal 5%, and the average appeals process has been driven down to just 74 days from seven months.

…Today, North Carolina’s fiscal health is in far greater shape than it was in 2012, thanks to bold unemployment insurance reforms that will enable an additional $240 million in tax relief for state employers in 2016. For a roadmap to UI reform, states should look no further than North Carolina, where a crackdown on fraud has saved tax dollars and early debt repayment has enabled massive savings for job creators.

The numbers above are helping draw additional businesses and jobs to North Carolina. I like that, but I also wish that other states would follow our lead. The five-percent plus unemployment rate in America is a joke–the labor participation rate is dangerously low. I am hoping for all Americans to have a chance to find the jobs they want. Following the example set by North Carolina would be a step in that direction.

Misplaced Prorities

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During a period of danger and unrest around the world, the Obama Administration is attempting to balance the budget on the backs of our military. Hopefully Congress has more sense than that.

Yesterday The Hill posted an article detailing some of the proposed cuts to our military. I have no doubt that there are places in our military that can be cut, but I believe that reducing the army to pre World War II levels is not wise. I also believe that reducing benefits to soldiers who have been at war for almost thirteen years is also wrong–not to mention the veterans of previous wars whose benefits will be cut.

The Hill reports:

Lawmakers, as well as groups that represent veterans and the military, accused the Pentagon of balancing its pocketbook on the backs of soldiers and their families.

“We know the Defense Department must make difficult budget decisions, but these cuts would hit service members, making it harder for them and their families to make ends meet,” said Paul Rieckhoff, the founder and CEO of Iraq and Afghanistan Veterans of America (IAVA).

Coupled with a 1 percent ceiling on pay hikes and assuming a 5 percent annual increase in housing costs, the Military Officers Association of America estimated an Army sergeant with a family of four would see an annual loss of $1,400. An Army captain would lose $2,100, it said.

The group said those figures doesn’t account for other costs that would affect military families, such as increased prices at military commissaries because of another budget proposal and an increase in healthcare fees for military family members. 

Meanwhile, on August 29, 2013, the New York Times reported:

Paul Krugman and others attribute essentially all of the SNAP spending growth to the depressed economy. They have the general direction right – a more depressed economy will cause unemployment and antipoverty programs to spend more – but have missed the single largest factor increasing program budgets: program rules that are more generous now than they were in 2007.

Veterans benefits, Supplemental Security Income, Medicaid and Temporary Assistance for Needy Families all experienced a depressed economy, too, but they somehow managed through it without doubling their spending. Veterans benefits increased the most among these – 49 percent beyond inflation and population growth – compared with 110 percent for SNAP. (These data, which exclude administrative costs, can be found in the Bureau of Economic Analysis’ National Accounts Table 3.12.) Even state unemployment benefit spending, which is directly linked to layoffs in the economy, increased “only” 24 percent beyond inflation and population growth. (The italics are mine)

We are taking money away from people who have earned it and giving it to people who have not. Admittedly, we have to take care of the poor, but we have created a system that encourages poverty–not discourages it.

In May 2013, this chart appeared at The Blaze:

Guess How Many More Americans Are on Food Stamps Now as Compared to 10 Years Ago

As usual, the Obama Administration is punishing the producers and encouraging non-producers to continue not producing. Cuts should be made to both the administration of our food stamp and welfare programs and those receiving aid, and these programs should be redone to encourage work–not poverty. President Obama has undone the welfare reforms that President Clinton put in place during his administration. Those reforms resulted in a decrease in the welfare rolls. We need to bring those reforms back and examine those programs before we begin cutting military benefits.

Just a note. I don’t appreciate it when the President and members of Congress refer to Social Security and Medicare as entitlement programs. The government set up those programs and has been willing to take money from people who work to support them for many years. If they are entitlement programs, then the people who work should not be required to pay into them. As long as the government is taking money from working people with the promise of eventually giving it back to them, these are not entitlement programs.

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Some Wisdom Regarding The Fiscal Cliff

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Marc Thiessen posted an article at the Washington Post on Monday which provided a way forward for the Republicans in the budget debate.

Mr. Thiessen states:

So what should Republicans do? Resist the call for a down payment, and insist on real tax reform as the price for any new revenue from limiting deductions. If both sides can’t agree on such reforms this year, they can do it next year. The Post reports this morning that “with tax rates set to rise automatically in January . . . Democrats say they have little incentive before then to cut a deal that falls short of their revenue goals. That means going over the cliff, at least for a short time, remains a possibility, they say.”

If Obama and the Democrats want to take us over the fiscal cliff, let them lead the way. Once the Bush tax cuts expire, every American will pay higher taxes — which means the pressure for tax reform on both sides will be even greater. By contrast, if Republicans give away the revenues from deductions and loopholes today, they will alleviate that pressure and have no revenues left to pay for a simpler, fairer, pro-growth tax code next year.

Guy Benson at Townhall.com has a different approach that also might work:

Short on good options, here’s one play GOP leaders might be able to make to regain some of the high ground and throw the White House back on its heels: Embrace Simpson/Bowles.  President Obama established a bipartisan debt commission with great fanfare in 2010.  Its leaders were Alan Simpson, a former Republican Senator, and Erskine Bowles, President Clinton‘s former Chief of Staff.  The panel was tasked with engineering a solution to right America’s fiscal ship.  In the end, they produced a set of recommendations that received the blessing of a majority of its members.  The commission’s blueprint drew a fair amount of criticism from conservatives, but was roundly blasted by liberals.  Liberal malcontents like Paul Krugman torched the plan with noteworthy ferocity.  The president shelved the recommendations, and they’ve been collecting dust ever since.

Bringing back Simpson/Bowles is not a great idea, but it is a good starting point for the debate.  Simpson/Bowles calls for a 3-to-1 ratio of real spending reductions to tax increases and caps federal spending as a percentage of GDP at 21 percent. This is a great place to start.

The thing to remember here is that it is not in the interest of Washington bureaucrats to cut spending at all–their power comes from growing the budget. Unless the Congress and the President are backed into a corner with no escape route, they will not cut spending. They will pledge to cut spending down the road, but it will never happen. Going over the fiscal cliff or passing Simpson/Bowles may be our best options at this time. Elections have consequences. Until we elect people who actually want to cut spending, spending will not be cut.

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The Little Engine That Could

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Most of us grew up hearing the story of the little engine that could–the train that made it up the incredibly steep mountain despite being small and seemingly insignificant. In today’s economic news we have another little engine that could.

Investor’s Business Daily posted a story yesterday about the economic success story of the small country of Estonia. Paul Krugman posted a short article in the New York Times on Friday stating:

Jörg Asmussen is Germany’s man at the ECB, which means that what he says matters. Here’s his speech in Riga earlier this week, asserting that the Baltic experience shows that austerity and internal devaluation actually do work. Notice that his evidence comes entirely from one year of fairly fast growth after an incredible decline. So it’s important to say that this proves very little.

One of the things to note about many liberals is that when the facts disagree with their theories, they dismiss the facts as irrelevant. Anyway, Estonian President Toomas Hendrik Ilves responded to Mr. Krugman’s comments with a number of tweets (follow the above link to Investor’s Business Daily to read some of them), but the facts tell the true story.

The article reports:

Estonia did the opposite of what Krugman prescribed over three years, and as a result shook off recession and returned to high economic growth. It now stands like a colossus disproving Krugman’s policy prescriptions.

America, on the other hand, has been following Mr. Krugman’s advice for three years. What have we got to show for it? Results matter.

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Fear Mongering For Fun And Profit

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Yesterday’s Washington Examiner posted an editorial by the newspaper staff on the practice of using fear to block Republican attempts to cut the federal budget.

The editorial states:

“To be a little melodramatic, the budget would kill people,” New York Times columnist Paul Krugman recently told CNN about House Budget Chairman Paul Ryan’s Path to Prosperity. “No question.” With the Federal Emergency Management Agency’s disaster relief fund set to run out of money Thursday, and with none of the federal government’s 12 appropriations bills signed into law so far, you can expect a lot more melodramatic quotes like this one in the coming weeks.

Oddly enough, when faced with a Congress that was not going to give it more money, the Federal Emergency Management Agency (FEMA) discovered that it actually did have enough money to finish the fiscal year.

The editorial reminds us that sixteen years ago, when the Republican Congress was debating welfare reform, Bob Herbert in the New York Times warned its readers that welfare reform “would hurt many people, would kill some and would help no one.”

The editorial at the Washington Examiner reviews the history:

Herbert could not have been much farther from the mark. Two years later, after President Clinton had signed welfare reform into law, New York Times journalist Jason DeParle reported that “welfare rolls have fallen more than 40 percent in three states that have been among the most energetic in urging recipients to work: Oregon, Wisconsin and Indiana. And caseloads have declined by 25 percent or more in 16 other states.” DeParle’s article said nothing about people dying in the streets of Portland, Milwaukee or Indianapolis.

Please follow the link to the Washington Examiner editorial for more examples of using fear to avoid reducing the size of the federal government. The cure for fear is knowledge, and it is time for American voters to understand the negative impact on America of an ever-increasing government.

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Why Texas And Rick Perry Are Being Attacked From Many Directions

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"The Honorable Rick Perry (front right), ...

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The establishment Republican party does not want Rick Perry to run against President Obama in 2012–that is illustrated by the recent buzz about Paul Ryan or whether Sarah Palin would run. The Democrat party (and the liberal media) do not want Rick Perry to run–that is illustrated by recent attacks on both Texas and Rick Perry. For example, on August 22, Paul Krugman wrote an article in the New York Times about the low wages in Texas and the fact that job growth should have been better than it was.

He stated:

First, the debate over the alleged Texas miracle is not over whether Texas is in fact a miserable failure. All the critics need to show is that Texas is not in fact the miracle Perry claims. And it isn’t.

Second, defenders of the miracle claims seem remarkably unwilling to confront the key argument. People like me point out that Texas has not, in fact, been immune to the recession. Since there’s a long-term shift of population and jobs to Texas, you’d expect job growth in Texas to be higher than in the rest of the country even in a recession, and the key question is whether that growth has been sufficiently high to keep up with population — and it hasn’t.

Well, the Texas Public Policy Foundation begs to differ. They posted a rebuttal to one of Mr. Krugman’s attacks on the Texas economy. In their rebuttal, they point out:

 It’s a better bet that almost 1.9 million people have fled New York and Massachusetts over the last decade because they couldn’t find a job in those states, and that many of them came to Texas because there were jobs here for them because of our model of gover­nance incorporating low taxes and spending, a predictable, low level of regulation, and a sound civil justice system—with minimal federal interference.

From this perspective, the Texas Miracle is that Texas’ unemployment rate is only 8.2% after a net inflow of 781,542 job seekers and their families have come here looking for work. Not to mention the demand for work created by international migration and normal population growth. While New York’s 8% unemployment rate come after 1.5 million people left the state.

The Texas Model has led to strong economic growth for our state, and it can do the same for the entire country.

What are these attacks about? Under Rick Perry, the State of Texas has instituted tort reform. The state has also recently passed a law that requires the loser in a lawsuit to pay the court costs. Needless to say, this prevents a lot of unnecessary lawsuits and makes less work for lawyers.

These are the three top groups that contributed to the Democrat party in 2010:

 Candidate Committees     $58,923,992

 Retired                               $33,819,391

 Lawyers/Law Firms          $29,914,538

Rick Perry is a threat to both the Republican establishment and the Democrat party. His election would put tort reform nationwide on the table and might even result in a more reasonable court system.

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