[Congressional Record Volume 158, Number 171 (Monday, December 31, 2012)]
[Extensions of Remarks]
[Pages E2024-E2025]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            PAUL KRUGMAN AND THE ECONOMIC CASE FOR FAIRNESS

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                           HON. BARNEY FRANK

                            of massachusetts

                    in the house of representatives

                       Monday, December 31, 2012

  Mr. FRANK of Massachusetts. Mr. Speaker, Paul Krugman has 
consistently and articulately defended programs that are essential for 
the quality of life for our most vulnerable residents, and exposed the 
flawed morality and impaired logic of those who seek to use the 
existence of a large national debt as an argument for exacerbating 
inequality in the United States. His column for Monday, December 31 is 
an excellent example of this, and I hope all Members will pay attention 
to its message.

                          Brewing Up Confusion

                           (By Paul Krugman)

       Howard Schultz, the C.E.O. of Starbucks, has a reputation 
     as a good guy, a man who supports worthy causes. And he 
     presumably thought he would add to that reputation when he 
     posted an open letter urging his employees to promote fiscal 
     bipartisanship by writing ``Come together'' on coffee cups.
       In reality, however, all he did was make himself part of 
     the problem. And his letter was actually a very good 
     illustration of the forces that created the current mess.
       In the letter, Mr. Schultz warned that elected officials 
     ``have been unable to come together and compromise to solve 
     the tremendously important, time-sensitive issue to fix the 
     national debt,'' and suggested that readers further inform 
     themselves at the Web site of the organization Fix the Debt. 
     Let's parse that, shall we?
       First of all, it's true that we face a time-sensitive issue 
     in the form of the fiscal cliff: unless a deal is reached, we 
     will soon experience a combination of tax increases and 
     spending cuts that might push the nation back into recession. 
     But that prospect doesn't reflect a failure to ``fix the 
     debt'' by reducing the budget deficit--on the contrary, the 
     danger is that we'll cut the deficit too fast.
       How could someone as well connected as Mr. Schultz get such 
     a basic point wrong? By

[[Page E2025]]

     talking to the wrong people--in particular, the people at Fix 
     the Debt, who've been doing their best to muddle the issue. 
     For example, in a new fund-raising letter Maya MacGuineas, 
     the organization's public face, writes of the need to ``make 
     hard decisions when it comes to averting the `fiscal cliff' 
     and stabilizing our national debt''--even though the problem 
     with the fiscal cliff is precisely that it stabilizes the 
     debt too soon. Clearly, Ms. MacGuineas was trying to confuse 
     readers on that point, and she apparently confused Mr. 
     Schultz too.
       More about Fix the Debt in a moment. Before I get there, 
     however, let's move on to Mr. Schultz's misdiagnosis of the 
     political problem we face.
       Look, it's true that elected politicians have been unable 
     to ``come together and compromise.'' But saying that in 
     generic form, and implying a symmetry between Republicans and 
     Democrats, isn't just misleading, it's actively harmful.
       The reality is that President Obama has made huge 
     concessions. He has already cut spending sharply, and has now 
     offered additional big spending cuts, including a cut in 
     Social Security benefits, while signaling his willingness to 
     retain many of the Bush tax cuts, even for people with very 
     high incomes. Taken as a whole, the president's proposals are 
     arguably to the right of those made by Erskine Bowles and 
     Alan Simpson, the co-chairmen of his deficit commission, in 
     2010.
       In return, the Republicans have offered essentially 
     nothing. Oh, they say they're willing to increase revenue by 
     closing loopholes--but they've refused to specify a single 
     loophole they're willing to close. So if there's a breakdown 
     in negotiations, the blame rests entirely with one side of 
     the political divide.
       Given that reality, think about the effect when people like 
     Mr. Schultz respond by blaming both sides equally. They may 
     sound virtuously nonpartisan, but what they're actually doing 
     is rewarding intransigence and extremism--which, in the 
     current context, means siding with the G.O.P.
       I'm willing to believe that Mr. Schultz doesn't know what 
     he's doing. The same can't be said, however, about Fix the 
     Debt.
       You might not know it reading some credulous reporting, but 
     Fix the Debt isn't some kind of new gathering of concerned 
     citizens. On the contrary, it's just the latest addition to a 
     group of deficit-scold shops supported by billionaire Peter 
     Peterson, a group ranging from think tanks like the Committee 
     for a Responsible Federal Budget to the newspaper The Fiscal 
     Times. The main difference seems to be that this gathering of 
     the usual suspects is backed by an impressive amount of 
     corporate cash.
       Like all the Peterson-funded groups, Fix the Debt seems 
     much more concerned with cutting Social Security and Medicare 
     than with fighting deficits in general--and also not nearly 
     as nonpartisan as it pretends to be. In its list of ``core 
     principles,'' it actually calls for lower tax rates--a very 
     peculiar position for people supposedly horrified by the 
     budget deficit. True, the group calls for revenue increases 
     via unspecified base broadening, that is, closing loopholes. 
     But that's unrealistic. And it's also, as you may have 
     noticed, the Republican position.
       What's happening now is that all the Peterson-funded groups 
     are trying to exploit the fiscal cliff to push a benefit-
     cutting agenda that has nothing to do with the current 
     crisis, using artfully deceptive language--as in that 
     MacGuineas letter--to hide the bait and switch.
       Mr. Schultz apparently fell for the con. But the rest of us 
     shouldn't.

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