Ferguson vs Krugman

22nd August 2012

And a big hand as he enters the ring to Paul Krugman, from Albany, New York state. The London School of Economics and Princton professor who was awarded the Nobel economics laureate will slug it out from the blue corner.  The battle is over the US economy.

Neither of their weights is known but Ferguson is 11 years younger and perhaps fitter – or as his opponents would doubtlessly put it, lacks 11 years of experience and maturity. And before considering their punch-up, don't forget that, for historical reasons, the red colour belongs to the Republicans while Democrats are blue – the opposite to European tradition.

The Guardian sets the scene "In a forthright cover story for Newsweek magazine entitled Hit the Road, Barack, Ferguson argues that the US "needs a new president" because Obama has broken almost all of his campaign promises of four years ago, and attacks the US president's foreign policy, healthcare reforms and economic and fiscal policy."

It continues: "To say that commentators in the US have criticised the piece would be an understatement. Nor is it Ferguson's political views they object to (the Glasgow-born historian was an adviser to Obama's 2008 Republican rival, John McCain). Rather, and somewhat embarrassingly [for Ferguson], they dispute the accuracy of his facts and the logic of his argument.

Plain misrepresentation and deliberately misleading

"We are not talking about ideology or even economic analysis here," writes Krugman, who has already slugged out several bouts with the Glaswegian turned American resident.  His big punch is to accuse Ferguson of "just a plain misrepresentation of the facts," of "unethical commentary" and "deliberately misleading readers".

He wants Newsweek to print an "abject correction" of what he calls one particularly "cheap shot" on healthcare reform.

Ferguson, a friend of Republican vice-presidential hopeful Paul Ryan, has since responded in a hard hitting after fight post for the Newsweek-owned Daily Beast website,  Using all hit powers of rhetoric, he argues: "You know you have hit the target when Paul Krugman takes time out from his hiking holiday." 

But back to the fight itself. This New Yorker blog  shows the animosity which appears to go beyond crowd pleasing  histrionics.  It relates how the two have repeatedly clashed over the deficit and Medicare.  Ferguson got an early punch in n claiming that "Obamacare" will add more than a trillion dollars to the deficit over the next ten years. More, it will reduce the United States to a Greece-like dependancy on international handouts.

This is Ferguson as his ringside pals love him. It's views like this that make him a big hitter (and big earner) on the right wing/hedge fund lecture circuit.

Ferguson punches hard – and first

Ferguson, a Newsweek favourite, wrote:

"Despite having been-full disclosure-an adviser to John McCain, I acknowledged his opponent's remarkable qualities: his soaring oratory, his cool, hard-to-ruffle temperament, and his near faultless campaign organization. Yet the question confronting the country nearly four years later is not who was the better candidate four years ago. It is whether the winner has delivered on his promises. And the sad truth is that he has not.

"In his inaugural address, Obama promised "not only to create new jobs, but to lay a new foundation for growth." He promised to "build the roads and bridges, the electric grids, and digital lines that feed our commerce and bind us together." He promised to "restore science to its rightful place and wield technology's wonders to raise health care's quality and lower its cost." And he promised to "transform our schools and colleges and universities to meet the demands of a new age." Unfortunately the president's scorecard on every single one of those bold pledges is pitiful."

Ferguson published  a rebuttal on the Daily Beast, calling Krugman's objection "truly feeble," and adding: "I very deliberately said ‘the insurance coverage provisions of the ACA,' not ‘the ACA.' There is a big difference." But this might be too clever for the audience.

Krugman taking control

After this, it seems, according to ringside judges, that Krugman is the master of the ring. The Ferguson line that "The president pledged that health-care reform would not add a cent to the deficit. But the CBO (Congressional Budget Office)  and the Joint Committee on Taxation now estimate that the insurance-coverage provisions of the ACA (Affordable Care Act or so-called Obamacare) will have a net cost of close to $1.2 trillion over the 2012-22 period." is demolished as a very partial partial reading.  Ferguson has apparently taken one figure in isolation, ignoring other countervailing numbers which would destroy his line.

Krugman comes out again, boxing his way to accuse his old enemy of misrepresenting the facts on his website. Krugman gets in a good blow by alleging Ferguson knows nothing of bond markets – if the US was as near to bankruptcy as he suggests, why is the yield on US bonds so low while the dollar has gained ground?

Who pays taxes? The poor?

And when Ferguson takes stock market growth from January 2009 while he looks at job numbers from January 2008 – a year before Obama became president – his footwork looks weak.  He also looks decidedly shaky when he writes in his best populist style:

"Welcome to Obama's America: nearly half the population is not represented on a taxable return–almost exactly the same proportion that lives in a household where at least one member receives some type of government benefit. We are becoming the 50-50 nation–half of us paying the taxes, the other half receiving the benefits."

The rebuttal machine that is Krugman and his corner beat that one into the dust.  They say that while it is true that 46 percent of households did not pay federal income tax in 2011, most of these households pay other taxes including state and local taxes which add up to as much as federal income tax.  And more would pay income tax if they weren't so hard up.

It is to hoped – at least in the Obama corner – that the rest of the Republican campaign is as easy to trash as Ferguson was in the preliminary bout.


More on Mindful Money

Paul Ryan’s path to recovery – or renewed financial crisis?

Pass the debt parcel – Are
we burdening future generations?

Paul Krugman versus Ron Paul

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