Krugman Does Ireland

At the Take Back the American Dream [1] conference this morning, Paul Krugman reprised what he said on the Colbert Report recently, concerning Ireland's austerity agenda and it's frightening resemblance to Mitt Romney's economic agenda [2].

If Mitt Romney is elected president, the U.S. will experience an economic disaster the likes of which have been recently seen in Ireland, according to Paul Krugman.

"Ireland is Romney economics in practice," the Nobel-Prize winning economist and New York Times columnist said on the Colbert Report on Monday. "I think Ireland is America's future if Romney is president." (h/t Politico [3].)

"They've laid off a large fraction of their public workforce, they've slashed spending, they've had extreme austerity programs, they haven't really raised taxes on corporations or the rich at all, they have 14 percent unemployment, 30 percent youth unemployment, zero economic growth," Krugman said.

Romney, the likely Republican nominee for president, recently suggested that the government [4] should lay off more firemen, policemen, and teachers, according to CNN. Romney's campaign website says [5] that if elected president, Romney would aim to slash federal spending at least 18 percent by the end of his first term.

As the saying goes, "Great minds think alike. 

OK, OK. Granted, I'm not a Nobel-Prize-winning economist. Far from it. Still, I've been writing about Ireland's austerity debacle [6] for what certainly seems like a long [7], long [8], long [9], long [10], long [11] time.

I've also written a lot about Mitt Romney's economic agenda [12], which is virtually identical to the budget written by Rep. Paul Ryan, and almost unanimously embraced by Republicans. 

  Budgets, Jim Wallis [13] says, are moral documents. They reveal our priorities, and show the world what — or whom — we're willing to sacrifice. Mitt Romney has shown us both.

In February, when Mitt Romney released his new economic agenda [14], Ezra Klein summed it up in less than 150 words [15].

Mitt Romney is promising that taxes will go down, defense spending will go up, and old-people programs won't change for this generation of retirees. So three of his four options for deficit reduction "taxes, old-people programs, and defense" are now either contributing to the deficit or are off-limits for the next decade.

Romney is also promising that he will pay for his tax cuts, pay for his defense spending, and reduce total federal spending by more than $6 trillion over the next 10 years. But the only big pot of money left to him is poor-people programs. So, by simple process of elimination, poor-people programs will have to be cut dramatically. There's no other way to make those numbers work.

Romney showed us his priorities with a budget that includes a 20% "across-the-board" tax cut that essentially requires across-the-board cuts to programs that serve and support the poor, as well as the working- and middle-classes. Romney showed us his priorities with a budget that preserves his 15% tax rate on capital gains and dividends, eliminate taxes on investment income for those earning more than $200,000 per year, and lower the corporate tax rate from 35% to 25%.

Romney showed us what and whom he is willing 10 sacrifice, with a budget that would require cutting non-defense programs by $637 billion in 2016 alone, and $6.5 trillion between 2014 and 2021. Romney showed us who and what he is willing to sacrifice with a budget that would shred the safety net, throwing 10 million off the benefit rolls for food stamps, and leave 30 million without health care coverage provided by the Affordable Care Act.

Romney showed us what and whom he is willing to sacrifice with his embrace of Paul Ryan's budget [16]. Romney showed us what and whom he is willing to sacrifice with his support of a budget that would end Medicare as we know it [17], and render America itself unrecognizable. 

I've written about how Romney's economic agenda would render America unrecognizable. [14]

  Yesterday, Bob Borosage wove an alternate narrative of life under a Romney presidency out of nine things Mitt Romney believes [18], reflected in his new economic agenda. It's a narrative of life in an America where rich no longer have "too little money."

It's a narrative of life in an America where:

• the wealthy no longer have "too little money"
• "those blessed by being born to the wealthy few should inherit the earth"
• the world is "the oyster of corporations seeking tax havens"
• Wall Street is "free to gamble with other people’s money, and you rubes are on your own"
• the military no longer has "too little money," where elderly workers no longer have "too much security and leisure"
• "our schools, water systems, roads and bridges, subways and trains, nutrition programs for children, Coast Guard and FBI" no longer get "too much money" and "do with much less"
• and "children must play the hand that fate dealt them. If they are the heirs to the rich, they live charmed lives. If they are born to the poor, they must rise above it "

But perhaps the best summary I've heard of Romney's budget comes from Republican columnist Frum.

Compassionate conservatism has been dead for a long time. Romney's Detroit speech cremated the remains. As a man, Romney remains far and away the most capable of the presidential candidates seeking the Republican nomination. But he has now finally eliminated the policy differences separating him from the radical congressional wing.

Actually, America wouldn't be entirely unrecognizable. If you've seen the snapshots of austerity from Europe [19], there's a haunting resemblance. That's where Krugman and I see eye to eye on Ireland [20]. 

  While he regularly accuses President Obama of "making us like Europe," Mitt Romney's economic agenda would truly make America more like Europe [21], because the Republican agenda is essentially that same austerity agenda shrinking national economies in Europe.

An odd thing happened during Mitt Romney’s victory-lap speech [22] after Tuesday’s Republican primaries: He didn’t once mention the word “Europe.”

The absence was jarring, because Romney’s claim that President Obama is dragging the United States toward a loathsome European-style “social welfare” future has been a staple of the former Massachusetts governor’s shtick ever since he started campaigning in earnest.

It’s always been an easy line for him: Europe, Romney’s audience understands, is the land of the not-free. The continent gave birth to Karl Marx, for crying out loud! Every now and then, socialist political parties actually take power!

But there is a big problem with Romney’s formulation. For the last year or two, Europe has been implementing, in real time, exactly the policies that Romney and congressional Republicans fervently believe are the best strategy for boosting economic growth. It’s called “austerity,” and it means cutting deficits, slashing spending, and chipping away at all those goodies the social welfare state provides.

Like I said before, I'm not a Nobel-winning economist. But when a Nobel laureate like Krugman says what I've basically been saying all along, I take it as a sign that I'm at least on the right track.