Facts Revolt

Can a Democrat win the White House by promising to raise taxes? New York Times columnist Paul Krugman doesn't know, but he says raise taxes we must.

ONE OF THE FEW CONSOLATIONS left to us impotent, out-of-power (and likely to stay that way) liberals is opening up The New York Times editorial page to see how Paul Krugman is going to skewer our president in his biweekly column. Since being added to the paper's op-ed roster in 2000, the Princeton economist has been brutal, relentless, unsparing, savage, merciless, angry, ornery, contemptuousoh, the list of delicious adjectives goes on and onin his treatment of Bush. Mainly and most damningly, he considers the man a liaran elitist who lies about favoring rich cronies with tax cuts (masked by a populist charade of middle-class job growth and economic recovery); who lies about wanting to gut Social Security and disassemble the welfare state; and who lies about basic 2 + 2 = 4 arithmeticand nothing, you sense, makes Krugman more irate than that. If you want to revisit his greatest, most splenetic hits, The Great Unraveling: Losing Our Way in the New Century (W.W. Norton, $25.95) culls four years' worth of writing that lays out his argument against Bush.

Krugman seems perfectly calm over the phone when I ask what bitter medicine partisan Seattle needs to hear from both him and the Democratic mob of wanna-bes. In other words, get us beyond simple Bush bashingwhat should we do next? "On the fiscal side, which is where the politically hard stuff is . . . if we want to maintain existing programs, the legacy of Franklin Roosevelt and Lyndon Johnson, all the Bush tax cuts or their equivalents in revenue have to be rolled back. By the numbers, the federal government is 25 percent short of taking in enough revenue to pay for the government we now expect. If you're a Democrat, and you think that Social Security, Medicare, and Medicaid are very important to maintain . . . you have to be for rollbacks and quite possibly plus."

Plus? Meaning new taxes? And what was that number again25 percent? Yup. "So that's a bit tough," Krugman concedes. "I am not a political adviser. Obviously, I believe in being tough in confronting the lies and irresponsibility of what's going on in America. I don't know if that's 'bitter medicine' or what, but it's certainly not comfortable. Being comfortable is not good, not now."

Which leads the Democrats into an uncomfortable positionand right into the Republican "Gotcha!" trap: They are, in fact, going to raise taxes. Says Krugman, "When you ask people in polls, 'Would you be willing to forgo tax cuts in return for securing Social Security and Medicare?' they say 'Yes.' The trouble is to make the connection." Will the Dems be able to make that connection in blunt speech and remain electable? "It looks to me like the likely Democratic candidate, whoever it's going to be, [will be] saying most of what's true, but maybe not all of it. It sounds like the position of the party is almost certainly going to be to roll back all the upper brackets of the Bush tax cuts, but it may not be to take on the lowest bracketswhich is actually not all that much money. But all of that is going to leave us short of where we need to be." Shortas in plus.

OK, SO EVEN IF Seattle audiences are willing to hear such grim-but-prudent prescriptions (and, then, maybe even vote for the higher-tax candidate), this is still the town that bum-rushed the World Trade Organization in 1999, after which Krugman wrote a pro-trade, pro-globalization piece on Slate mocking the "urban legend" of the WTO's nefarious role. He ridiculed one "supercilious" anti-WTO organization: "Although they talk of freedom and democracy, their key demand is that individuals be prevented from getting what they wantthat governments be free, nay encouraged, to deny individuals the right to drive cars, work in offices, eat cheeseburgers, and watch satellite TV." Take that, Jose Bov顠Take that, Eugene anarchists! Take that, Boeing machinists' union members?

These are some of the problems I raise with Krugman as he prepares to preach to our liberal Seattle pews. Our trade-dependent state's unemployment rate is at about 7.5 percent (a point and one half above the national average). Boeing has shed 25,000 jobs since 9/11. Microsoft outsources more and more of its knowledge work to India and Asia. Regardless of what Bush or Democrats might say, are those jobs ever coming back?

Here, Krugman isn't quite so sanguine: "The trade issuethere's only so much you can do in the short run, responsibly. The current 'Let's get the Chinese to fix our problems by floating their currency' is pretty much a diversion. It's going to be stuff at the edges of trade, to be honest with you. There is going to be more globalization. The other side of it is that the U.S. has got to be developing new export markets of its own. We have to be developing new industries, new jobs, and things that other countries will buy.

"But what one has to believe is that, ultimately, if you have a strong economic boom, it will create new jobsand they won't all be hamburger flippers or cappuccino makers. We could sit down and talk about what would bring more good jobs back to America, but the truth is that so many things are going wrong in a shorter time horizon, that first you put out the fire, and then we talk about rebuilding the house."

Which returns us to the Arsonist in Chief. In his introduction to The Great Unraveling, Krugman writes of "the outrageous dishonesty of the Bush administration." In his long Sept. 14 New York Times Magazine tax feature, he wrote, "So what were the Bush tax cuts really about? The best answer seems to be that they were about securing a key part of the Republican base. Wealthy campaign contributors have a lot to gain from lower taxes, and since they aren't very likely to depend on Medicare, Social Security, or Medicaid, they won't suffer if the beast gets starved." (The "beast" is what antitax crusaders call the whole federal entitlements system.)

At the same time, the gulf between rich and poor doubled between 1979 and 2000, according to Congressional Budget Office data just analyzed by the Center for Budget and Policy Priorities. And people feel overtaxed because their incomes are flat, despite rising prices and property values. Salaries aren't keeping up. Our most recent King County census data (2001) show the first decline in real personal income in 20 years. So those of us who will depend on Medicare, Social Security, or Medicaid will need it even more in the deficit-clouded future. Can that gap somehow be reversed, our society be made more equitable?

Here Krugman offers a mixed forecast: "If you ask, 'How do we turn the economy back to a 1960s income distribution?' the answer is nobody knows how to do that. But you can at least mitigate some of these things." That means a reconsideration of tax policies (as he argued in his Times Magazine piece), an admission that Americans are actually undertaxed, not overtaxed, in comparison to other citizens of the world. It's a bold argument, one that Howard Dean or Wesley Clark might not be bold enough to make. (We can't all be tenured profs in ivory towers.)

FOR NOW, KRUGMAN remains characteristically pessimistic about the Dubya- sponsored divide between the haves and have-nots. "A significant part of that explosion [in wealth] at the very top is runaway compensation for executives and corporate insiders in general. Those incomes are still outpacing by a long shot what ordinary people are getting. Also, everything that's been done these past two and a half years . . . instead of leading against this growing inequality has actually reinforced it. It's the shifting the burden of taxation off the rich. By the time the last bit of the Bush program is in effect and the estate tax is gone, [the rich will] be paying lower taxes than [they] were paying at any time since Herbert Hoover was president. That's quite a commentary of how we're dealing with this stratification."

And are we in this economically slumping state ready to deal with tough Krugman-style economic remedies (regardless of whether the Democrats are willing to voice them)? "Well," he concludes, "I've got this great campaign line: Are you better off now than you were four years ago? Because very few people in the United States are."


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