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article imageOp-Ed: Paul Krugman — Republicans holding US hostage

By Ken Hanly     Jan 13, 2013 in Politics
New York - Paul Krugman complained that the Republican leadership is holding the country hostage on the debt-ceiling issue. He says that they are threatening to blow up the world economy, if they do not get their way in the debt-ceiling debate.
Paul Krugman is a well-known liberal economist and professor at Princeton University, who won a Nobel Prize in Economics. He also is a constant commentator on economic policies and has a blog at the New York Times. It is surprising that Krugman did not maintain that the Republicans are holding the whole world hostage, since he says they are threatening to blow up the world economy if they do not get their way.
Obama says that he will not negotiate over the debt ceiling. Will he not negotiate even if the Republicans will let the US default on payments if he does not? If that is the case, then Obama too is holding the US hostage to his own political aims.
The Republicans are simply using the debt ceiling issue as leverage to get deep spending cuts. Liberals may not like that but there is nothing surprising or particularly wicked about it. Unions threaten strikes and use the power to strike as leverage to press for wage gains etc. If they go on strike, it will hurt their company and the economy and often cause difficulties for people. If the strike did not cause effects such as these, the strike would make no sense.
On ABC's This Week Krugman said:"We should not allow this to become thought of as a legitimate or normal budget strategy. This is hostage taking.”
Krugman seems preoccupied with finding ways for the Obama administration to get around the debt ceiling issue being used as leverage for debt-reduction by the Republicans. He even defended the idea of a trillion-dollar platinum coin. The White House has ruled out minting the coin as a way out of the crisis. Krugman moves from the silly but benign coin move to scaring people to death:“The debt ceiling is a fundamentally stupid but dangerous thing... It’s incredibly scary, this is much scarier than the fiscal cliff,”
So now we have not only hostage taking by the Republicans but scare tactics by Krugman. There is precedent for this. Timothy Geithner said that the debt ceiling would be reached by the end of the year. This was meant to scare the politicians into negotiating a fiscal cliff deal and perhaps even tagging on to it a hike in the debt ceiling. Of course this latter did not happen. The Republicans want to save that issue to force Obama into further spending cuts.
Geithner has been taking extraordinary measures that are now said to extend the ability of the US to meet its obligations until around February 15. These dates seem to be subject to change by extraordinary measures as the deadlines approach. We are already continuing on since the earlier deadline passed at the end of 2012.
The White House had said that it does not have the constitutional authority to raise the ceiling on its own. The 14th amendment to the US constitution says in part that the "validity of the public debt of the United States ... shall not be questioned.". Some Democratic senators had suggested that the president could make use of this provision to continue borrowing above the limit.
In spite of Obama's desire not to negotiate on the debt limit, he may be forced to do so, or himself face the blame for any US default on its obligation. Or perhaps he could call on Krugman to see if he can create a goose to lay golden eggs.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com
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