These days Americans get constant lectures about the need to reduce the budget deficit. That focus in itself represents distorted priorities, since our immediate concern should be job creation. But suppose we restrict ourselves to talking about the deficit, and ask: What happened to the budget surplus the federal government had in 2000?Krugman has a lot more to say. Go read the whole article.
The answer is, three main things. First, there were the Bush tax cuts, which added roughly $2 trillion to the national debt over the last decade. Second, there were the wars in Iraq and Afghanistan, which added an additional $1.1 trillion or so. And third was the Great Recession, which led both to a collapse in revenue and to a sharp rise in spending on unemployment insurance and other safety-net programs.
So who was responsible for these budget busters? It wasn’t the man in the street.
President George W. Bush cut taxes in the service of his party’s ideology, not in response to a groundswell of popular demand — and the bulk of the cuts went to a small, affluent minority.
Similarly, Mr. Bush chose to invade Iraq because that was something he and his advisers wanted to do, not because Americans were clamoring for war against a regime that had nothing to do with 9/11. In fact, it took a highly deceptive sales campaign to get Americans to support the invasion, and even so, voters were never as solidly behind the war as America’s political and pundit elite.
Finally, the Great Recession was brought on by a runaway financial sector, empowered by reckless deregulation. And who was responsible for that deregulation? Powerful people in Washington with close ties to the financial industry, that’s who. Let me give a particular shout-out to Alan Greenspan, who played a crucial role both in financial deregulation and in the passage of the Bush tax cuts — and who is now, of course, among those hectoring us about the deficit.
So it was the bad judgment of the elite, not the greediness of the common man, that caused America’s deficit. And much the same is true of the European crisis.
Krugman wants to stop the shift in blame. He wants to keep it where it belongs so that we can learn from the mistakes and prevent them in the future:
Does any of this matter? Why should we be concerned about the effort to shift the blame for bad policies onto the general public?But this is an age old struggle between the tiny 1% on the top and the bottom 90%. Inevitably the 90% lose until a severe crisis, then there is blood in the street and new top 1% arises and the whole squeeze starts again. This story is as old as civilization. It is an undulterated story of tragedy. While the few party, the many are bled dry. Sure there is a little material progress, but it could be so much more. We could be living in a paradise if the greed at the top could be capped and the resources turned to productive use instead of excess and sybaritic living.
One answer is simple accountability. People who advocated budget-busting policies during the Bush years shouldn’t be allowed to pass themselves off as deficit hawks; people who praised Ireland as a role model shouldn’t be giving lectures on responsible government.
But the larger answer, I’d argue, is that by making up stories about our current predicament that absolve the people who put us here there, we cut off any chance to learn from the crisis. We need to place the blame where it belongs, to chasten our policy elites. Otherwise, they’ll do even more damage in the years ahead.
The title of Krugman's op-ed is very telling: "The Unwisdom of Elites". Yes, elites are ultimately stupid because they create the conditions of their own demise. Rather than milk the cow and live well, they want to squeeze the cow for more until the cow kicks up its heels and flees.