Legal Commentary

The Coming Catastrophe

By Big Tent Democrat

Will Republican control of th House (and maybe the Senate) lead to catastrophe? Paul Krugman says yes:

[The] era of partial cooperation in the 1990s came only after Republicans had tried all-out confrontation, actually shutting down the federal government in an effort to force President Bill Clinton to give in to their demands for big cuts in Medicare. [. . . T]he lesson current Republicans seem to have drawn from 1995 isn’t that they were too confrontational, it’s that they weren’t confrontational enough.

Will President Obama show the same resolve? It's an open question I think. This is crucial for, as Krugman points out, the policy challenges, especially on the economy, are much more daunting now:

[T]he crucial difference between the 1990s and now is the state of the economy. [. . .] Today’s situation is completely different. The economy, weighed down by the debt that households ran up during the Bush-era bubble, is in dire straits; deflation, not inflation, is the clear and present danger. And it’s not at all clear that the Fed has the tools to head off this danger. Right now we very much need active policies on the part of the federal government to get us out of our economic trap. But we won’t get those policies if Republicans control the House.

(Emphasis supplied.) The problem with Krugman's formulation is that the current Democratic Congress was not doing what was necessary either. It seems to me the catastrophe cake has already been baked. That said, Republican control does threaten further erosion on tax policy, a very much underrated issue among progressive pundits:

[I]f [Republicans] get their way, we’ll get the worst of both worlds: They’ll refuse to do anything to boost the economy now, claiming to be worried about the deficit, while simultaneously increasing long-run deficits with irresponsible tax cuts — cuts they have already announced won’t have to be offset with spending cuts.

Indeed, here is where a failure by President Obama to emulate President Clinton, who raised taxes on the wealthy, will be catastrophic. President Obama must stand firm on reinstituting the Clinton tax rates on the rich.

Speaking for me only

Full post as published by TalkLeft on October 29, 2010 (boomark / email).