We Are the 99.9% By PAUL KRUGMAN

November 24, 2011 “We are the 99 percent” is a great slogan. It correctly defines the issue as being the middle class versus the elite (as opposed to the middle class versus the poor). And it also gets past the common but wrong establishment notion that rising inequality is mainly about the well educated doing better than the less educated; the big winners in this new Gilded Age have been a handful of very wealthy people, not college graduates in general. If anything, however, the 99 percent slogan aims too low. A large fraction of the top 1 percent’s gains have actually gone to an even smaller group, the top 0.1 percent — the richest one-thousandth of the population. And while Democrats, by and large, want that super-elite to make at least some contribution to long-term deficit reduction, Republicans want to cut the super-elite’s taxes even as they slash Social Security, Medicare and Medicaid in the name of fiscal discipline. Before I get to those policy disputes, here are a few numbers. The recent Congressional Budget Office report on inequality didn’t look inside the top 1 percent, but an earlier report, which only went up to 2005, did. According to that report, between 1979 and 2005 the inflation-adjusted, after-tax income of Americans in the middle of the income distribution rose 21 percent. The equivalent number for the richest 0.1 percent rose 400 percent. For the most part, these huge gains reflected a dramatic rise in the super-elite’s share of pretax income. But there were also large tax cuts favoring the wealthy. In particular, taxes on capital gains are much lower than they were in 1979 — and the richest one-thousandth of Americans account for half of all income from capital gains. Given this history, why do Republicans advocate further tax cuts for the very rich even as they warn about deficits and demand drastic cuts in social insurance programs? Well, aside from shouts of “class warfare!” whenever such questions are raised, the usual answer is that the super-elite are “job creators” — that is, that they make a special contribution to the economy. So what you need to know is that this is bad economics. In fact, it would be bad economics even if America had the idealized, perfect market economy of conservative fantasies. After all, in an idealized market economy each worker would be paid exactly what he or she contributes to the economy by choosing to work, no more and no less. And this would be equally true for workers making $30,000 a year and executives making $30 million a year. There would be no reason to consider the contributions of the $30 million folks as deserving of special treatment. But, you say, the rich pay taxes! Indeed, they do. And they could — and should, from the point of view of the 99.9 percent — be paying substantially more in taxes, not offered even more tax breaks, despite the alleged budget crisis, because of the wonderful things they supposedly do. Still, don’t some of the very rich get that way by producing innovations that are worth far more to the world than the income they receive? Sure, but if you look at who really makes up the 0.1 percent, it’s hard to avoid the conclusion that, by and large, the members of the super-elite are overpaid, not underpaid, for what they do. For who are the 0.1 percent? Very few of them are Steve Jobs-type innovators; most of them are corporate bigwigs and financial wheeler-dealers. One recent analysis found that 43 percent of the super-elite are executives at nonfinancial companies, 18 percent are in finance and another 12 percent are lawyers or in real estate. And these are not, to put it mildly, professions in which there is a clear relationship between someone’s income and his economic contribution. Executive pay, which has skyrocketed over the past generation, is famously set by boards of directors appointed by the very people whose pay they determine; poorly performing C.E.O.’s still get lavish paychecks, and even failed and fired executives often receive millions as they go out the door. Meanwhile, the economic crisis showed that much of the apparent value created by modern finance was a mirage. As the Bank of England’s director for financial stability recently put it, seemingly high returns before the crisis simply reflected increased risk-taking — risk that was mostly borne not by the wheeler-dealers themselves but either by naïve investors or by taxpayers, who ended up holding the bag when it all went wrong. And as he waspishly noted, “If risk-making were a value-adding activity, Russian roulette players would contribute disproportionately to global welfare.” So should the 99.9 percent hate the 0.1 percent? No, not at all. But they should ignore all the propaganda about “job creators” and demand that the super-elite pay substantially more in taxes.

Things to Tax By PAUL KRUGMAN

November 27, 2011 The supercommittee was a superdud — and we should be glad. Nonetheless, at some point we’ll have to rein in budget deficits. And when we do, here’s a thought: How about making increased revenue an important part of the deal? And I don’t just mean a return to Clinton-era tax rates. Why should 1990s taxes be considered the outer limit of revenue collection? Think about it: The long-run budget outlook has darkened, which means that some hard choices must be made. Why should those choices only involve spending cuts? Why not also push some taxes above their levels in the 1990s? Let me suggest two areas in which it would make a lot of sense to raise taxes in earnest, not just return them to pre-Bush levels: taxes on very high incomes and taxes on financial transactions. About those high incomes: In my last column I suggested that the very rich, who have had huge income gains over the last 30 years, should pay more in taxes. I got many responses from readers, with a common theme being that this was silly, that even confiscatory taxes on the wealthy couldn’t possibly raise enough money to matter. Folks, you’re living in the past. Once upon a time America was a middle-class nation, in which the super-elite’s income was no big deal. But that was another country. The I.R.S. reports that in 2007, that is, before the economic crisis, the top 0.1 percent of taxpayers — roughly speaking, people with annual incomes over $2 million — had a combined income of more than a trillion dollars. That’s a lot of money, and it wouldn’t be hard to devise taxes that would raise a significant amount of revenue from those super-high-income individuals. For example, a recent report by the nonpartisan Tax Policy Center points out that before 1980 very-high-income individuals fell into tax brackets well above the 35 percent top rate that applies today. According to the center’s analysis, restoring those high-income brackets would have raised $78 billion in 2007, or more than half a percent of G.D.P. I’ve extrapolated that number using Congressional Budget Office projections, and what I get for the next decade is that high-income taxation could shave more than $1 trillion off the deficit. It’s instructive to compare that estimate with the savings from the kinds of proposals that are actually circulating in Washington these days. Consider, for example, proposals to raise the age of Medicare eligibility to 67, dealing a major blow to millions of Americans. How much money would that save? Well, none from the point of view of the nation as a whole, since we would be pushing seniors out of Medicare and into private insurance, which has substantially higher costs. True, it would reduce federal spending — but not by much. The budget office estimates that outlays would fall by only $125 billion over the next decade, as the age increase phased in. And even when fully phased in, this partial dismantling of Medicare would reduce the deficit only about a third as much as could be achieved with higher taxes on the very rich. So raising taxes on the very rich could make a serious contribution to deficit reduction. Don’t believe anyone who claims otherwise. And then there’s the idea of taxing financial transactions, which have exploded in recent decades. The economic value of all this trading is dubious at best. In fact, there’s considerable evidence suggesting that too much trading is going on. Still, nobody is proposing a punitive tax. On the table, instead, are proposals like the one recently made by Senator Tom Harkin and Representative Peter DeFazio for a tiny fee on financial transactions. And here’s the thing: Because there are so many transactions, such a fee could yield several hundred billion dollars in revenue over the next decade. Again, this compares favorably with the savings from many of the harsh spending cuts being proposed in the name of fiscal responsibility. But wouldn’t such a tax hurt economic growth? As I said, the evidence suggests not — if anything, it suggests that to the extent that taxing financial transactions reduces the volume of wheeling and dealing, that would be a good thing. And it’s instructive, too, to note that some economies already have financial transactions taxes — and that among those who do are Hong Kong and Singapore. If some conservative starts claiming that such taxes are an unwarranted government intrusion, you might want to ask him why such taxes are imposed by the two countries that score highest on the Heritage Foundation’s Index of Economic Freedom. Now, the tax ideas I’ve just mentioned wouldn’t be enough, by themselves, to fix our deficit. But the same is true of proposals for spending cuts. The point I’m making here isn’t that taxes are all we need; it is that they could and should be a significant part of the solution. This article has been revised to reflect the following correction: Correction: November 28, 2011 An earlier version of this column referred incorrectly to Hong Kong’s political status. It is one of China’s special administrative regions, not an independent country.

Send in the Clueless By PAUL KRUGMAN

December 4, 2011 There are two crucial things you need to understand about the current state of American politics. First, given the still dire economic situation, 2012 should be a year of Republican triumph. Second, the G.O.P. may nonetheless snatch defeat from the jaws of victory — because Herman Cain was not an accident. Think about what it takes to be a viable Republican candidate today. You have to denounce Big Government and high taxes without alienating the older voters who were the key to G.O.P. victories last year — and who, even as they declare their hatred of government, will balk at any hint of cuts to Social Security and Medicare (death panels!). And you also have to denounce President Obama, who enacted a Republican-designed health reform and killed Osama bin Laden, as a radical socialist who is undermining American security. So what kind of politician can meet these basic G.O.P. requirements? There are only two ways to make the cut: to be totally cynical or totally clueless. Mitt Romney embodies the first option. He’s not a stupid man; he knows perfectly well, to take a not incidental example, that the Obama health reform is identical in all important respects to the reform he himself introduced in Massachusetts — but that doesn’t stop him from denouncing the Obama plan as a vast government takeover that is nothing like what he did. He presumably knows how to read a budget, which means that he must know that defense spending has continued to rise under the current administration, but this doesn’t stop him from pledging to reverse Mr. Obama’s “massive defense cuts.” Mr. Romney’s strategy, in short, is to pretend that he shares the ignorance and misconceptions of the Republican base. He isn’t a stupid man — but he seems to play one on TV. Unfortunately from his point of view, however, his acting skills leave something to be desired, and his insincerity shines through. So the base still hungers for someone who really, truly believes what every candidate for the party’s nomination must pretend to believe. Yet as I said, the only way to actually believe the modern G.O.P. catechism is to be completely clueless. And that’s why the Republican primary has taken the form it has, in which a candidate nobody likes and nobody trusts has faced a series of clueless challengers, each of whom has briefly soared before imploding under the pressure of his or her own cluelessness. Think in particular of Rick Perry, a conservative true believer who seemingly had everything it took to clinch the nomination — until he opened his mouth. So will Newt Gingrich suffer the same fate? Not necessarily. Many observers seem surprised that Mr. Gingrich’s, well, colorful personal history isn’t causing him more problems, but they shouldn’t be. If hypocrisy is the tribute vice pays to virtue, conservatives often seem inclined to accept that tribute, voting for candidates who publicly espouse conservative moral principles whatever their personal behavior. Did I mention that David Vitter is still in the Senate? And Mr. Gingrich has some advantages none of the previous challengers had. He is by no means the deep thinker he imagines himself to be, but he’s a glib speaker, even when he has no idea what he’s talking about. And my sense is that he’s also very good at doublethink — that even when he knows what he’s saying isn’t true, he manages to believe it while he’s saying it. So he may not implode like his predecessors. The larger point, however, is that whoever finally gets the Republican nomination will be a deeply flawed candidate. And these flaws won’t be an accident, the result of bad luck regarding who chose to make a run this time around; the fact that the party is committed to demonstrably false beliefs means that only fakers or the befuddled can get through the selection process. Of course, given the terrible economic picture and the tendency of voters to blame whoever holds the White House for bad times, even a deeply flawed G.O.P. nominee might very well win the presidency. But then what? The Washington Post quotes an unnamed Republican adviser who compared what happened to Mr. Cain, when he suddenly found himself leading in the polls, to the proverbial tale of the dog who had better not catch that car he’s chasing. “Something great and awful happened, the dog caught the car. And of course, dogs don’t know how to drive cars. So he had no idea what to do with it.” The same metaphor, it seems to me, might apply to the G.O.P. pursuit of the White House next year. If the dog actually catches the car — the actual job of running the U.S. government — it will have no idea what to do, because the realities of government in the 21st century bear no resemblance to the mythology all ambitious Republican politicians must pretend to believe. And what will happen then?

All the G.O.P.’s Gekkos By PAUL KRUGMAN

December 8, 2011 Almost a quarter of a century has passed since the release of the movie “Wall Street,” and the film seems more relevant than ever. The self-righteous screeds of financial tycoons denouncing President Obama all read like variations on Gordon Gekko’s famous “greed is good” speech, while the complaints of Occupy Wall Street sound just like what Gekko says in private: “I create nothing. I own,” he declares at one point; at another, he asks his protégé, “Now you’re not naïve enough to think we’re living in a democracy, are you, buddy?” Yet, with the benefit of hindsight, we can see that the movie went a little off at the end. It closes with Gekko getting his comeuppance, and justice served thanks to the diligence of the Securities and Exchange Commission. In reality, the financial industry just kept getting more and more powerful, and the regulators were neutered. And, according to the prediction market Intrade, there’s a 45 percent chance that a real-life Gordon Gekko will be the next Republican presidential nominee. I am not, of course, the first person to notice the similarity between Mitt Romney’s business career and the fictional exploits of Oliver Stone’s antihero. In fact, the labor-backed group Americans United for Change is using “Romney-Gekko” as the basis for an ad campaign. But there’s an issue here that runs deeper than potshots against Mr. Romney. For the current orthodoxy among Republicans is that we mustn’t even criticize the wealthy, let alone demand that they pay higher taxes, because they’re “job creators.” Yet the fact is that quite a few of today’s wealthy got that way by destroying jobs rather than creating them. And Mr. Romney’s business history offers a very good illustration of that fact. The Los Angeles Times recently surveyed the record of Bain Capital, the private equity firm that Mr. Romney ran from 1984 to 1999. As the report notes, Mr. Romney made a lot of money over those years, both for himself and for his investors. But he did so in ways that often hurt ordinary workers. Bain specialized in leveraged buyouts, buying control of companies with borrowed money, pledged against those companies’ earnings or assets. The idea was to increase the acquired companies’ profits, then resell them. But how were profits to be increased? The popular image — shaped in part by Oliver Stone — is that buyouts were followed by ruthless cost-cutting, largely at the expense of workers who either lost their jobs or found their wages and benefits cut. And while reality is more complex than this image — some companies have expanded and added workers after a leveraged buyout — it contains more than a grain of truth. One recent analysis of “private equity transactions” — the kind of buyouts and takeovers Bain specialized in — noted that business in general is always both creating and destroying jobs, and that this is also true of companies that were buyout or takeover targets. However, job creation at the target firms is no greater than in similar firms that aren’t targets, while “gross job destruction is substantially higher.” So Mr. Romney made his fortune in a business that is, on balance, about job destruction rather than job creation. And because job destruction hurts workers even as it increases profits and the incomes of top executives, leveraged buyout firms have contributed to the combination of stagnant wages and soaring incomes at the top that has characterized America since 1980. Now I’ve just said that the leveraged buyout industry as a whole has been a job destroyer, but what about Bain in particular? Well, by at least one criterion, Bain during the Romney years seems to have been especially hard on workers, since four of its top 10 targets by dollar value ended up going bankrupt. (Bain, nonetheless, made money on three of those deals.) That’s a much higher rate of failure than is typical even of companies going through leveraged buyouts — and when the companies went under, many workers ended up losing their jobs, their pensions, or both. So what do we learn from this story? Not that Mitt Romney the businessman was a villain. Contrary to conservative claims, liberals aren’t out to demonize or punish the rich. But they do object to the attempts of the right to do the opposite, to canonize the wealthy and exempt them from the sacrifices everyone else is expected to make because of the wonderful things they supposedly do for the rest of us. The truth is that what’s good for the 1 percent, or even better the 0.1 percent, isn’t necessarily good for the rest of America — and Mr. Romney’s career illustrates that point perfectly. There’s no need, and no reason, to hate Mr. Romney and others like him. We do, however, need to get such people paying more in taxes — and we shouldn’t let myths about “job creators” get in the way.

Depression and Democracy By PAUL KRUGMAN

December 11, 2011 It’s time to start calling the current situation what it is: a depression. True, it’s not a full replay of the Great Depression, but that’s cold comfort. Unemployment in both America and Europe remains disastrously high. Leaders and institutions are increasingly discredited. And democratic values are under siege. On that last point, I am not being alarmist. On the political as on the economic front it’s important not to fall into the “not as bad as” trap. High unemployment isn’t O.K. just because it hasn’t hit 1933 levels; ominous political trends shouldn’t be dismissed just because there’s no Hitler in sight. Let’s talk, in particular, about what’s happening in Europe — not because all is well with America, but because the gravity of European political developments isn’t widely understood. First of all, the crisis of the euro is killing the European dream. The shared currency, which was supposed to bind nations together, has instead created an atmosphere of bitter acrimony. Specifically, demands for ever-harsher austerity, with no offsetting effort to foster growth, have done double damage. They have failed as economic policy, worsening unemployment without restoring confidence; a Europe-wide recession now looks likely even if the immediate threat of financial crisis is contained. And they have created immense anger, with many Europeans furious at what is perceived, fairly or unfairly (or actually a bit of both), as a heavy-handed exercise of German power. Nobody familiar with Europe’s history can look at this resurgence of hostility without feeling a shiver. Yet there may be worse things happening. Right-wing populists are on the rise from Austria, where the Freedom Party (whose leader used to have neo-Nazi connections) runs neck-and-neck in the polls with established parties, to Finland, where the anti-immigrant True Finns party had a strong electoral showing last April. And these are rich countries whose economies have held up fairly well. Matters look even more ominous in the poorer nations of Central and Eastern Europe. Last month the European Bank for Reconstruction and Development documented a sharp drop in public support for democracy in the “new E.U.” countries, the nations that joined the European Union after the fall of the Berlin Wall. Not surprisingly, the loss of faith in democracy has been greatest in the countries that suffered the deepest economic slumps. And in at least one nation, Hungary, democratic institutions are being undermined as we speak. One of Hungary’s major parties, Jobbik, is a nightmare out of the 1930s: it’s anti-Roma (Gypsy), it’s anti-Semitic, and it even had a paramilitary arm. But the immediate threat comes from Fidesz, the governing center-right party. Fidesz won an overwhelming Parliamentary majority last year, at least partly for economic reasons; Hungary isn’t on the euro, but it suffered severely because of large-scale borrowing in foreign currencies and also, to be frank, thanks to mismanagement and corruption on the part of the then-governing left-liberal parties. Now Fidesz, which rammed through a new Constitution last spring on a party-line vote, seems bent on establishing a permanent hold on power. The details are complex. Kim Lane Scheppele, who is the director of Princeton’s Law and Public Affairs program — and has been following the Hungarian situation closely — tells me that Fidesz is relying on overlapping measures to suppress opposition. A proposed election law creates gerrymandered districts designed to make it almost impossible for other parties to form a government; judicial independence has been compromised, and the courts packed with party loyalists; state-run media have been converted into party organs, and there’s a crackdown on independent media; and a proposed constitutional addendum would effectively criminalize the leading leftist party. Taken together, all this amounts to the re-establishment of authoritarian rule, under a paper-thin veneer of democracy, in the heart of Europe. And it’s a sample of what may happen much more widely if this depression continues. It’s not clear what can be done about Hungary’s authoritarian slide. The U.S. State Department, to its credit, has been very much on the case, but this is essentially a European matter. The European Union missed the chance to head off the power grab at the start — in part because the new Constitution was rammed through while Hungary held the Union’s rotating presidency. It will be much harder to reverse the slide now. Yet Europe’s leaders had better try, or risk losing everything they stand for. And they also need to rethink their failing economic policies. If they don’t, there will be more backsliding on democracy — and the breakup of the euro may be the least of their worries.

G.O.P. Monetary Madness By PAUL KRUGMAN

December 15, 2011 Apparently the desperate search of Republicans for someone they can nominate not named Willard M. Romney continues. New polls suggest that in Iowa, at least, we have already passed peak Gingrich. Next up: Representative Ron Paul. In a way, that makes sense. Mr. Romney isn’t trusted because he’s seen as someone who cynically takes whatever positions he thinks will advance his career — a charge that sticks because it’s true. Mr. Paul, by contrast, has been highly consistent. I bet you won’t find video clips from a few years back in which he says the opposite of what he’s saying now. Unfortunately, Mr. Paul has maintained his consistency by ignoring reality, clinging to his ideology even as the facts have demonstrated that ideology’s wrongness. And, even more unfortunately, Paulist ideology now dominates a Republican Party that used to know better. I’m not talking here about Mr. Paul’s antiwar views or his less well-known views on civil and reproductive rights, which would horrify liberals who think of him as a good guy. I’m talking, instead, about his views on economics. Mr. Paul identifies himself as a believer in “Austrian” economics — a doctrine that it goes without saying rejects John Maynard Keynes but is almost equally vehement in rejecting the ideas of Milton Friedman. For Austrians see “fiat money,” money that is just printed without being backed by gold, as the root of all economic evil, which means that they fiercely oppose the kind of monetary expansion Friedman claimed could have prevented the Great Depression — and which was actually carried out by Ben Bernanke this time around. O.K., a brief digression: the Federal Reserve doesn’t actually print money (the Treasury does that). But the Fed does control the “monetary base,” the sum of bank reserves and currency in circulation. So when people talk about Mr. Bernanke printing money, what they really mean is that the Fed expanded the monetary base. And there has, indeed, been a huge expansion of the monetary base. After Lehman Brothers fell, the Fed began lending large sums to banks as well as buying a wide range of other assets, in a (successful) attempt to stabilize financial markets, in the process adding large amounts to bank reserves. In the fall of 2010, the Fed began another round of purchases, in a less successful attempt to boost economic growth. The combined effect of these actions was that the monetary base more than tripled in size. Austrians, and for that matter many right-leaning economists, were sure about what would happen as a result: There would be devastating inflation. One popular Austrian commentator who has advised Mr. Paul, Peter Schiff, even warned (on Glenn Beck’s TV show) of the possibility of Zimbabwe-style hyperinflation in the near future. So here we are, three years later. How’s it going? Inflation has fluctuated, but, at the end of the day, consumer prices have risen just 4.5 percent, meaning an average annual inflation rate of only 1.5 percent. Who could have predicted that printing so much money would cause so little inflation? Well, I could. And did. And so did others who understood the Keynesian economics Mr. Paul reviles. But Mr. Paul’s supporters continue to claim, somehow, that he has been right about everything. Still, while the original proponents of the doctrine won’t ever admit that they were wrong — my experience is that nobody in the political world ever admits to having been wrong about anything — you might think that having been so completely off-base about something so central to their belief system would have caused the Austrians to lose popularity, even within the G.O.P. After all, as recently as the Bush years, many Republicans were all for printing money when the economy slumps. “Aggressive monetary policy can reduce the depth of a recession,” declared the 2004 Economic Report of the President. What has happened instead, however, is that hard-money doctrine and paranoia about inflation have taken over the party, even as the predicted inflation keeps failing to materialize. For example, in February, Representative Paul Ryan, who is somewhat inexplicably regarded as the party’s deep thinker on matters economic, harangued Mr. Bernanke on how terrible it is to “debase” a currency and pointed to a rise in commodity prices in late 2010 and early 2011 as evidence that inflation was finally coming. Commodity prices have plunged since then, but there is no sign that Mr. Ryan or anyone else is having second thoughts. Now, it’s still very unlikely that Ron Paul will become president. But, as I said, his economic doctrine has, in effect, become the official G.O.P. line, despite having been proved utterly wrong by events. And what will happen if that doctrine actually ends up being put into action? Great Depression, here we come. David Brooks is off today.

The Post-Truth Campaign By PAUL KRUGMAN

December 22, 2011 Suppose that President Obama were to say the following: “Mitt Romney believes that corporations are people, and he believes that only corporations and the wealthy should have any rights. He wants to reduce middle-class Americans to serfs, forced to accept whatever wages corporations choose to pay, no matter how low.” How would this statement be received? I believe, and hope, that it would be almost universally condemned, by liberals as well as conservatives. Mr. Romney did once say that corporations are people, but he didn’t mean it literally; he supports policies that would be good for corporations and the wealthy and bad for the middle class, but that’s a long way from saying that he wants to introduce feudalism. But now consider what Mr. Romney actually said on Tuesday: “President Obama believes that government should create equal outcomes. In an entitlement society, everyone receives the same or similar rewards, regardless of education, effort, and willingness to take risk. That which is earned by some is redistributed to the others.” And in an interview the same day, Mr. Romney declared that the president “is going to put free enterprise on trial.” This is every bit as bad as my imaginary Obama statement. Mr. Obama has never said anything suggesting that he holds such views, and, in fact, he goes out of his way to praise free enterprise and say that there’s nothing wrong with getting rich. His actual policy proposals do involve a rise in taxes on high-income Americans, but only back to their levels of the 1990s. And no matter how much the former Massachusetts governor may deny it, the Affordable Care Act established a national health system essentially identical to the one he himself established at a state level in 2006. Over all, Mr. Obama’s positions on economic policy resemble those that moderate Republicans used to espouse. Yet Mr. Romney portrays the president as the second coming of Fidel Castro and seems confident that he will pay no price for making stuff up. Welcome to post-truth politics. Why does Mr. Romney think he can get away with this kind of thing? Well, he has already gotten away with a series of equally fraudulent attacks. In fact, he has based pretty much his whole campaign around a strategy of attacking Mr. Obama for doing things that the president hasn’t done and believing things he doesn’t believe. For example, in October Mr. Romney pledged that as president, “I will reverse President Obama’s massive defense cuts.” That line presumably plays well with Republican audiences, but what is he talking about? The defense budget has continued to grow steadily since Mr. Obama took office. Then there’s Mr. Romney’s frequent suggestion that the president has gone around the world “apologizing for America.” This is a popular theme on the right — but the so-called Obama apology tour is a complete fabrication, assembled by taking quotes out of context. As Greg Sargent of The Washington Post has pointed out, there’s a common theme to these whoppers and a number of other things Mr. Romney has said: the strategy is clearly to portray the president as a suspect character, someone who doesn’t share American values. And since Mr. Obama has done and said nothing to justify this portrait, Mr. Romney just invents stuff to make his case. But won’t there be some blowback? Won’t Mr. Romney pay a price for running a campaign based entirely on falsehoods? He obviously thinks not, and I’m afraid he may be right. Oh, Mr. Romney will probably be called on some falsehoods. But, if past experience is any guide, most of the news media will feel as though their reporting must be “balanced,” which means that every time they point out that a Republican lied they have to match it with a comparable accusation against a Democrat — even if what the Democrat said was actually true or, at worst, a minor misstatement. This isn’t an abstract speculation. Politifact, the project that is supposed to enforce truth in politics, has declared Democratic claims that Republicans voted to end Medicare its “Lie of the Year.” It did so even though Republicans did indeed vote to dismantle Medicare as we know it and replace it with a voucher scheme that would still be called “Medicare,” but would look nothing like the current program — and would no longer guarantee affordable care. So here’s my forecast for next year: If Mr. Romney is in fact the Republican presidential nominee, he will make wildly false claims about Mr. Obama and, occasionally, get some flack for doing so. But news organizations will compensate by treating it as a comparable offense when, say, the president misstates the income share of the top 1 percent by a percentage point or two. The end result will be no real penalty for running an utterly fraudulent campaign. As I said, welcome to post-truth politics.

Springtime for Toxics By PAUL KRUGMAN

December 25, 2011 Here’s what I wanted for Christmas: something that would make us both healthier and richer. And since I was just making a wish, why not ask that Americans get smarter, too? Surprise: I got my wish, in the form of new Environmental Protection Agency standards on mercury and air toxics for power plants. These rules are long overdue: we were supposed to start regulating mercury more than 20 years ago. But the rules are finally here, and will deliver huge benefits at only modest cost. So, naturally, Republicans are furious. But before I get to the politics, let’s talk about what a good thing the E.P.A. just did. As far as I can tell, even opponents of environmental regulation admit that mercury is nasty stuff. It’s a potent neurotoxicant: the expression “mad as a hatter” emerged in the 19th century because hat makers of the time treated fur with mercury compounds, and often suffered nerve and mental damage as a result. Hat makers no longer use mercury (and who wears hats these days?), but a lot of mercury gets into the atmosphere from old coal-burning power plants that lack modern pollution controls. From there it gets into the water, where microbes turn it into methylmercury, which builds up in fish. And what happens then? The E.P.A. explains: “Methylmercury exposure is a particular concern for women of childbearing age, unborn babies and young children, because studies have linked high levels of methylmercury to damage to the developing nervous system, which can impair children’s ability to think and learn.” That sort of sounds like something we should regulate, doesn’t it? The new rules would also have the effect of reducing fine particle pollution, which is a known source of many health problems, from asthma to heart attacks. In fact, the benefits of reduced fine particle pollution account for most of the quantifiable gains from the new rules. The key word here is “quantifiable”: E.P.A.’s cost-benefit analysis only considers one benefit of mercury regulation, the reduced loss in future wages for children whose I.Q.’s are damaged by eating fish caught by freshwater anglers. There are without doubt many other benefits to cutting mercury emissions, but at this point the agency doesn’t know how to put a dollar figure on those benefits. Even so, the payoff to the new rules is huge: up to $90 billion a year in benefits compared with around $10 billion a year of costs in the form of slightly higher electricity prices. This is, as David Roberts of Grist says, a very big deal. And it’s a deal Republicans very much want to kill. With everything else that has been going on in U.S. politics recently, the G.O.P.’s radical anti-environmental turn hasn’t gotten the attention it deserves. But something remarkable has happened on this front. Only a few years ago, it seemed possible to be both a Republican in good standing and a serious environmentalist; during the 2008 campaign John McCain warned of the dangers of global warming and proposed a cap-and-trade system for carbon emissions. Today, however, the party line is that we must not only avoid any new environmental regulations but roll back the protection we already have. And I’m not exaggerating: during the fight over the debt ceiling, Republicans tried to attach riders that, as Time magazine put it, would essentially have blocked the E.P.A. and the Interior Department from doing their jobs. Oh, by the way, you may have heard reports to the effect that Jon Huntsman is different. And he did indeed once say: “Conservation is conservative. I’m not ashamed to be a conservationist.” Never mind: he, too, has been assimilated by the anti-environmental Borg, denouncing the E.P.A.’s “regulatory reign of terror,” and predicting that the new rules will cause blackouts by next summer, which would be a neat trick considering that the rules won’t even have taken effect yet. More generally, whenever you hear dire predictions about the effects of pollution regulation, you should know that special interests always make such predictions, and are always wrong. For example, power companies claimed that rules on acid rain would disrupt electricity supply and lead to soaring rates; none of that happened, and the acid rain program has become a shining example of how environmentalism and economic growth can go hand in hand. But again, never mind: mindless opposition to “job killing” regulations is now part of what it means to be a Republican. And I have to admit that this puts something of a damper on my mood: the E.P.A. has just done a very good thing, but if a Republican — any Republican — wins next year’s election, he or she will surely try to undo this good work. Still, for now at least, those who care about the health of their fellow citizens, and especially of the nation’s children, have something to celebrate.

Keynes Was Right By PAUL KRUGMAN

December 29, 2011 “The boom, not the slump, is the right time for austerity at the Treasury.” So declared John Maynard Keynes in 1937, even as F.D.R. was about to prove him right by trying to balance the budget too soon, sending the United States economy — which had been steadily recovering up to that point — into a severe recession. Slashing government spending in a depressed economy depresses the economy further; austerity should wait until a strong recovery is well under way. Unfortunately, in late 2010 and early 2011, politicians and policy makers in much of the Western world believed that they knew better, that we should focus on deficits, not jobs, even though our economies had barely begun to recover from the slump that followed the financial crisis. And by acting on that anti-Keynesian belief, they ended up proving Keynes right all over again. In declaring Keynesian economics vindicated I am, of course, at odds with conventional wisdom. In Washington, in particular, the failure of the Obama stimulus package to produce an employment boom is generally seen as having proved that government spending can’t create jobs. But those of us who did the math realized, right from the beginning, that the Recovery and Reinvestment Act of 2009 (more than a third of which, by the way, took the relatively ineffective form of tax cuts) was much too small given the depth of the slump. And we also predicted the resulting political backlash. So the real test of Keynesian economics hasn’t come from the half-hearted efforts of the U.S. federal government to boost the economy, which were largely offset by cuts at the state and local levels. It has, instead, come from European nations like Greece and Ireland that had to impose savage fiscal austerity as a condition for receiving emergency loans — and have suffered Depression-level economic slumps, with real G.D.P. in both countries down by double digits. This wasn’t supposed to happen, according to the ideology that dominates much of our political discourse. In March 2011, the Republican staff of Congress’s Joint Economic Committee released a report titled “Spend Less, Owe Less, Grow the Economy.” It ridiculed concerns that cutting spending in a slump would worsen that slump, arguing that spending cuts would improve consumer and business confidence, and that this might well lead to faster, not slower, growth. They should have known better even at the time: the alleged historical examples of “expansionary austerity” they used to make their case had already been thoroughly debunked. And there was also the embarrassing fact that many on the right had prematurely declared Ireland a success story, demonstrating the virtues of spending cuts, in mid-2010, only to see the Irish slump deepen and whatever confidence investors might have felt evaporate. Amazingly, by the way, it happened all over again this year. There were widespread proclamations that Ireland had turned the corner, proving that austerity works — and then the numbers came in, and they were as dismal as before. Yet the insistence on immediate spending cuts continued to dominate the political landscape, with malign effects on the U.S. economy. True, there weren’t major new austerity measures at the federal level, but there was a lot of “passive” austerity as the Obama stimulus faded out and cash-strapped state and local governments continued to cut. Now, you could argue that Greece and Ireland had no choice about imposing austerity, or, at any rate, no choices other than defaulting on their debts and leaving the euro. But another lesson of 2011 was that America did and does have a choice; Washington may be obsessed with the deficit, but financial markets are, if anything, signaling that we should borrow more. Again, this wasn’t supposed to happen. We entered 2011 amid dire warnings about a Greek-style debt crisis that would happen as soon as the Federal Reserve stopped buying bonds, or the rating agencies ended our triple-A status, or the superdupercommittee failed to reach a deal, or something. But the Fed ended its bond-purchase program in June; Standard & Poor’s downgraded America in August; the supercommittee deadlocked in November; and U.S. borrowing costs just kept falling. In fact, at this point, inflation-protected U.S. bonds pay negative interest: investors are willing to pay America to hold their money. The bottom line is that 2011 was a year in which our political elite obsessed over short-term deficits that aren’t actually a problem and, in the process, made the real problem — a depressed economy and mass unemployment — worse. The good news, such as it is, is that President Obama has finally gone back to fighting against premature austerity — and he seems to be winning the political battle. And one of these years we might actually end up taking Keynes’s advice, which is every bit as valid now as it was 75 years ago.

When Norman Finkelstein writes, we ought to read!

DECEMBER 22, 2011 Atheist Found Dead in Fox Hole Hitchens vs. Higher Power? by NORMAN FINKELSTEIN Even some of the critical commentary on Hitchens’s passing pays tribute to his atheism, which no doubt shocked readers of Vanity Fair. But the ultimate irony seems to have gone over everyone’s head. When I first learned that Hitchens was diagnosed with an excruciating and terminal cancer, it caused me to doubt my atheism. Could it be merely chance? The news came just as Hitchens was about to go on a book tour for his memoir. It was as if he was setting out on his victory lap when the adulating crowds were supposed to fawn over him and—wham!—his legs were lopped off at the kneecaps. Could it be the hidden hand of a Jehovah? If I still had doubts, the events of the past week dispelled them. First Hitchens passed. If that wasn’t burden enough to bear, the next day Vaclav Havel imploded. The deep thinkers among us were now beside themselves with grief. But then, on the third day, Kim Jong-il kicked the bucket. Was this a practical joke, and who was the joker? Biblical scholars report that divine interventions usually come in threes. Moe, Larry, Curly. Christopher, Vaclav, Kim. I cannot help but see in this otherwise improbable sequence a divine intelligence at play. The irony could not be more perfect: the god that the vindictive but witty Mr. Hitchens made a career scoffing at turns out to be…vindictive but witty. But I will leave the last word to a close buddy of Hitchens’ who is himself a true believer. When Saddam Hussein was executed, Tony Blair remarked: “I do not believe in capital punishment, but I think the world is a better place without him.” When I heard that Hitchens was dead, I took a deep breath. The air felt cleaner, as if after a 40-day and 40-night downpour. *** I get no satisfaction from Hitchens’s passing. Although he was the last to know it, every death is a tragedy, if only for the bereft child—or, as in the case of Cindy Sheehan, bereft parent—left behind. But, still, life is full of surprises. No one should be too smug in his certitudes. And if you’ve made a career of pissing on other people’s mostly innocuous beliefs, should it surprise that outside the tiny tent called Vanity Fair, your memory stinks of urine?

NORMAN FINKELSTEIN is author of five books, including Image and Reality of the Israel-Palestine Conflict, Beyond Chutzpah and The Holocaust Industry, which have been translated into more than 40 foreign editions. He is the son of Holocaust survivors. His website is www.NormanFinkelstein.com

Newt the Impaler By Jeff Huber

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Mom sent me this letter from heaven:

Dear Mark, I have much to apologize to you for, most specifically, and significantly, for having taken the easy way out, and bought into the fiction of your mental illness. What I have come to learn up here in heaven is just how sane you are, and have always been, save for the times you were on anti-depressants, which so limited the range of your emotional responses that you experienced neither joy, nor sorrow, that you could not even cry, and now, even on the mood stabilizers, how you can't cry. My bad. Think of it, ME, the all-time follower of rules - first thing I wanted to do after each of my depressions was, after the veil of depression was lifted, was to go off meds. Which I did, but always with disastrous results. That was not, however, because I permanently needed to take anti-depressants, but because I never dealt with the root underlying causes of my depression, so much of which was invested in you, and trying to get you well, and seeing you as well, especially during those three years when you were diligently taking your meds, most recently, and we were all so happy, as you gained 100 pounds in three years, got out of bed twice a week to shower and shave, and never once returned to a church, the mosque, Rainbow Records, or even the Barrington Area Library. But, at least you were docile, not angry, not giving away all your money to strangers (okay, I only fronted you the $10 / week, and you spent half of that getting your hair cut at the Hometown Barber Shop, from which you were ultimately banned, because the customers were talking about you. Again, it was your behavior that so upsets people. Your sudden shifts to anger, yelling at me, cursing me ... it just hurt so much. What had I ever done to you? All I ever wanted to do, once John died, was to save you from death itself, even if it cost you life itself. Surprising, and ironic, isn't it - I could see how there are things worse than death (we discussed this with regards to Jimmy Hockett), and yet, I never saw how that applied to you and your life too. I was blinded; they call it the mote in one's eye. It was just so much more convenient to assume you were sick, and that your sickness made you do it (all those things that so upset, startled and frightened me), and so convenient too, since that assumption meant I never had to look in the mirror, or to try to walk in your shoes, or view the world as you view it, to see my own culpability in thwarting your plans, your dreams, your ambitions, none of which were part of what I saw and chose to mis-remember about you. I was so proud of you working as an actuary - you always dressed so nice (well, not so much when you were living with Linda - PLEASE, whatever you do, avoid her like the plague, famine, and pestilence - she is toxic for you), and you dated our beloved Susan B Gillies, who was always such a blessing in our lives, and in yours, and all those wonderful actuary friends who thought so highly of you. And I never saw how ashamed you were to be a member of the white race that has inflicted so much pain / suffering / violence / death all over the globe, to be a member of the Christian faith community in whose name all these national sins have been committed, to be a citizen of the United States - the greatest purveyor of misery and destruction known to human kind. That explains to me your goofy hair cuts and your dying your hair all those ridiculous colors, using the most insane household items for dye - shoe polish? REALLY? Mark, nobody does that, so, of course, you MUST be sick. Well, no, not really. You are the most moral, righteous man I ever knew - kind and giving to strangers, all those homeless people you brought home, and all of them, so accomplished. I am ashamed now that we weren't more generous with Marla; oh how my heart aches for that poor woman, beset upon worse than Job, and young Bradley - he of the kindest, biggest heart - a wild child, but god-loving, so loyal to his grand mother, and wanting only a better life for his daughter ... but they so frightened me, and your association with them so burdened me, plus, I was dying all the time anyway, not seeing the doctor about my congenitive heart failure was pretty careless; somehow, I just never thought I'd die. And then things seemed to suddenly get better - we had the great shopping adventure to Aldi's, that was so much fun; and when I had the stroke, you were like a guardian angel, doing everything that could be done in an attempt to save my life, which was gone, save for the final gasp after the life support was pulled. It was your behavior, Mark, that so upset me, and it is your behavior that all the fancy schmancy smart folk use to diagnose you as mentally ill, when, if any of us had wanted, we could have simply asked you to stop misbehaving - but then, you would have said, "Just lay down the law - tell me what you don't want me to do, and I will never do it (so as we would ever find out), but MARK - had we done that, you'd have come up with even more outrageous ways to upset us; we knew that about you then, and we know that about you still. What is the point in laying down the law for you if you are never going to behave or conform to our expectations and standards? Do you really thing you are a law unto your own self, answerable only to your God? Well, yes, I know you do, it's just that I would never have been comfortable knowing that, or at least having heard you say that to me -- I had my own idea about God, and yours was so radically different. How is one to resolve such dichotomies? (Yes, I know, you are thinking, "but, of course, dear mother, with lobotomies, and now whose lobotomy shall it be? Mine, or yours?") I guess the only way they'll ever get you to conform is to either crucify you, or lobotomitize you, and based on your inability to get yourself committed to a mental hospital last Saturday night, neither of those seems likely. So, sad to say, keep on doing what you do, God and the Angels and the Saints and the Prophets are with you 100%, and i'm maybe even starting to come around, to about 15%. I've always loved you. But you never used to be so difficult to like. It does seem, however, since your loss inventory epiphany that you are far more calm, far less angry, than in what we once called your most “man-icky moments,” which cannot be a bad thing, although, you REALLY don't care if you live or die, where you live, what you do, or any of that. It's a ZEN-thing, I understand, in principle. I'm just not happy about it in fact, and I rather doubt any of our family is either. But you've made it clear you simply don't give a damn about what they think, you don't need them, and you don't even want them in your life. They had their chances and they all deserted you. Who wouldn't have? You just seemed so out of control. Why'd you have to change? Love, Sam Beardsley's mom