A Glimmer of Hope

I have always been a real admirer of Paul Krugman, Op-Ed Columnist for the NYT, and I pay attention to what he says in his columns. I don’t always like what I read because it’s not what I want to hear, but I do trust his judgment – he didn't win the Nobel prize in Economics for being dumb. Today though he gave me a real glimmer of hope with the first paragraph in his column in which he said, “Elections have consequences. President Obama’s new budget represents a huge break, not just with the policies of the past eight years, but with policy trends over the past 30 years. If he can get anything like the plan he announced on Thursday through Congress, he will set America on a fundamentally new course.”

He goes on to say that Democrats were starting to feel postpartisan depression. The stimulus bill seems too weak, too focused on tax cuts. The administration’s refusal to get tough on the banks has been disappointing. But fears that President Obama would sacrifice progressive priorities in his budget plans and satisfy himself with fiddling around the edges of the tax system, have now been banished. I don’t know what all this is going to mean in the long run, but I don’t want to believe the nay sayers, I want to believe that we can rebuild this country’s financial structure, it’s infrastructure and take on climate change as well – after years of denial and delay by the Bush administration, the Obama administration is signaling that it’s ready to take on climate change.

Can Obama actually pull off the deficit reduction he promises? Can he actually reduce the red ink from $1.75 trillion this year to less than a third as much in 2013? Yes, he can, according to Krugman.

There are still a lot of “ifs” and we’ve a long way to go. Furthermore, the Obama budget only tells us about the next ten years. That’s an improvement on Bush-era budgets, which looked only five years ahead. But America’s really big fiscal problems lurk over that budget horizon: sooner or later we’re going to have to come to grips with the forces driving up long-run spending – and above all, the ever-rising cost of health care. And even if fundamental health care reform brings cost under control, Krugman finds it hard to see how the federal government can meet its long-term obligations without some tax increases on the middle class. So, whatever the politicians may say now, there’s probably a value-added tax in our future.

But Krugman doesn’t blame Mr. Obama for leaving some big questions unanswered in this budget. There’s only so much long-run thinking the political system can handle in the midst of a severe crisis; he has probably taken on all he can, for now. And in Krugtman's words "this budget looks very, very good".

Krugman doesn’t pass out compliments that easily, he’s quick to question, but if he says that Obama’s budget looks not just good, but very, very good, then I’m ready to let out a big sigh of relief and then take a deep breath while we wait to see what happens next.