Krugman On Mortgage Plans: Obama "Cautious," Clinton "Bold And Progressive"

New York Times columnist Paul Krugman writes on the presidential candidates' mortgage crisis proposals:

Barack Obama's speech on the economy on Thursday followed the cautious pattern of his earlier statements on economic issues.

I was pleased that Mr. Obama came out strongly for broader financial regulation, which might help avert future crises. But his proposals for aid to the victims of the current crisis, though significant, are less sweeping than Mrs. Clinton's: he wants to nudge private lenders into restructuring mortgages rather than having the government simply step in and get the job done.

Mr. Obama also continues to make permanent tax cuts -- middle-class tax cuts, to be sure -- a centerpiece of his economic plan. It's not clear how he would pay both for these tax cuts and for initiatives like health care reform, so his tax-cut promises raise questions about how determined he really is to pursue a strongly progressive agenda.

All in all, the candidates' positions on the mortgage crisis tell the same tale as their positions on health care: a tale that is seriously at odds with the way they're often portrayed. ...

Mrs. Clinton, we're assured by sources right and left, tortures puppies and eats babies. But her policy proposals continue to be surprisingly bold and progressive.

Finally, Mr. Obama is widely portrayed, not least by himself, as a transformational figure who will usher in a new era. But his actual policy proposals, though liberal, tend to be cautious and relatively orthodox.

Read the full column.

Comments

[awb]

PART 3:

is a realistic remedy for purely the housing part of the crisis. If you read Clinton's March 24 speech on the housing crisis and how to fix it -- supposedly more robust than Obama's remedy -- she offers the same Frank-Dodd bill. She does not locate the mortgage crisis in the deeper financial one. And her idea of turning, for wise men, to Robert Rubin and Alan Greenspan -- more than anyone the people who gave us this crisis -- is appalling.

The one slightly disappointing part of the Obama speech was his call for $30 billion more in "stimulus." It's not nearly enough. He -- and we -- should stop even using the word "stimulus." To dig out of this mess, at a time when we already have large deficits, the federal government will need to fund a multi-year, public investment-led recovery program well into the hundreds of billions. It will need to be funded by restoring taxes on rich people. But this is a topic for another day.

A real puzzle here is the repeated assertion by columnist Paul Krugman, in the face of mounting evidence to the contrary, that Clinton's views on economic policy are more progressive than Obama's. Indeed, Obama's stunning speech read as if it were informed by recent Krugman columns on the meltdown. Hillary has not said anything close to what Obama (or Krugman) has suggested.

[awb]

PART 2:

This is exactly what's needed to prevent the next meltdown, but if it were put to a vote now, it would be rejected by legislators from both parties because they are still in thrall to market fundamentalism and Wall Street. That's where presidential leadership comes in.

So the speech was courageous, in that it goes well beyond the current Democratic party consensus, and one can only wonder about the reaction of some of Obama's own financial backers. He also took on a couple of other sacred cows, such as electricity and telecom deregulation, proven failures to everyone but industry defenders and their allies in the economics profession.

We should not focus too much attention on the oblique dig at the Clinton presidency, which indeed fomented the pattern of excessive deregulation. Let's remember, Bill was president, she wasn't. This is a totally fair drawing of a distinction on the issues, and not a cheap shot or ad hominem attack.

The Clinton camp's rejoinder -- that Hillary is proposing to do more for the victims of the housing bust -- is totally unpersuasive. All along, she has treated the housing mess as its own self-contained scandal, rather than connecting it to the larger set of financial bubbles of which it is a part. The Frank-Dodd bill, which Obama is co-sponsoring,

[awb]

PART 1:

Obama v. Krugman

Obama's Cooper Union speech presages an FDR-like approach to our faltering economy. Why can't Paul Krugman see that?

Robert Kuttner | March 28, 2008 |


Barack Obama's speech on the financial crisis was a remarkable breakthrough.

First, he connected all the dots -- between the complete dismantling of financial regulation, the declining economic opportunity and security for ordinary people, the current financial meltdown, and the political influence of Wall Street as the driver of these changes. Astounding! I wish I had written the speech. It is this kind of leadership and truth-telling that is the predicate for the shift in public opinion required to produce legislative change. A radical, appropriately nuanced, and deeply public-minded description of what has occurred, the speech was Roosevelt quality: the president as teacher-in-chief. Those who felt that Obama was capable of real growth that will transcend the campaign's early and somewhat feeble domestic policy proposals should feel vindicated.

The speech also showed real understanding and subtlety in grasping how financial "innovation" had outrun regulation, as well as a historical sense of the abuses of the 1920s repeating themselves. Obama is one of the few mainstream leaders -- Barney Frank is another -- calling for capital requirements to be extended to every category of financial institution that creates credit.

[Impeachthechimp]

Krugman is right almost all the time. This is no exception.

[nogimmicks]

A dishonest underhanded spin like Mr Krugman's was the reason why I stopped buying the Time magazine. Hey, Paul, wouldn't it be better to just say that your owners and you want Clinton to win the nomination?

[cynicalismo]

I take it that you disagree with Paul Krugman. Next time try saying outright, "I strongly disagree with Paul Krugman," instead of impugning, without the slightest substantiation, one of the stalwarts of the progressive movement.
Did you say that you are really a Time subscriber. Wow! You must really be up on what's what in progressive politics.

[jhNY]

Nogimmicks, did you mean to type 'the New York Times', but wrote 'the Time magazine', or do you actually think they're the same thing?

[ProudLiberalDan]

Some of Obama's partisans are WAY too sensitive.

If they cannot handle Krugman's wonkish criticisms and analysis of the issues, what are they going to do when the Republicans start their Rovian criticism of Obama?

[riverhorse]

oh how funny you Obama people are when the experts pick Hillary's ideas as the real progressive ideas of our nation.

[BoredAtWork16]

So, if anyone says anything good about Hillary, they are shills and if anyone says something positive about Obama, it's just the truth.

This Obama fad will end badly

[mamazboy]

Bottom line: there is no hope of change with Hillary and slobbering Bill in charge. They are corporatists and careerists above all; and they lie with alarming ease. This is a quality they share with Bush. Obama may not ultimately deliver (especially if "blue dog" Dem trash and reactionary Rethugs put up all the expected roadblocks), but there is at least some possibility with Obama. Look at the simple fact of Obama's small-donor fundraising versus HRC's fatcat fundraising. Which is preferable, and what do this say about the candidates? Obama is a class act, humble, not blame-happy, and not a congenital liar like Clinton.

[mamazboy]

Why does everybody who touches the Clintons start to see their status (and legacy) plummet? I love Krugman, but good grief his constant attempts to praise a woman that even a child can see is a congenital liar, fake, phony, empty careerist, spoiler, etc. really makes me question his insights. He's always been a hero for his bracing attacks on the bastard Bush, the hateful "war" (aggression), the economic sleight-of-hand that's making the rich richer and everybody else royally fucked. But he needs to sit down and take a sober look at HRC and the godawful Bill and try to reach a conclusion that doesn't involve apologias and self-delusion. Do it NOW, Paul -- or you'll lose all respect, just as the Unambiguously Fake Duo have.

[WellbornBroad]

Krugman, Hillary's shill.

[cynicalismo]

A truly piercing analysis of Mr. Krugman's comments based upon nothing.
If you're going to criticize a columnist of Paul Krugman's stature, try to include some substance.

[adam56]

Dear Mr. Krugman,

Hillary may have bold, progressive ideas. But, she's making it harder for those ideas to see the light of day.

Any economist with a grip on mathematics and probability such as yourself, can surely see that the best hope for bold, progressive ideas to come to fruition; is for Hillary to drop out of the presidential race and endorse Obama.

You must see the damage that is being done to these ideas. Obama as president, Hillary as majority leader, Pelosi and Speaker. That's a progressive majority.

But, it seems he'd rather trumpet for Hillary than get these bold, progressive ideas into law.

[seejake]

I see nothing progressive in using tax payer dollars to bail out banks and lenders. progressive would be to suffer the consequences of all this unregulated activity, in hopes that the lesson learned will be so painful that it will never come close to being repeated.

[bobdob]

Krugman: When Hillary farts, I inhale.

[2008andbeyond]

That's funny.

[sk7326]

Krugman is wrong here. He was right about their relative stances on healthcare. He is right about Obama's frighteningly Republican-sounding alarmism on Social Security, which is not in any meaningful crisis. He is more progressive than either of these candidates, and if you read him, probably more of an Edwards person. And he was turned DOWN to work for the Clintons as you may know because of a disagreement on policy.

I voted for Obama, but I can't believe the shrillness of any reponse to criticism. At least the referenced rebuttal is based on reason.

[JohnTalbutt]

How did he feel about working for Enron? Any policy differences there.

[SCG]

Krugman writes for the Times. Did you think they found a conscious or a fad ?

[Dalpine]

As any good investor knows, when times are unstable bring caution to the table.