Paul Krugman: Obama Ad Distorts My Column, He Should Retract It

A few days ago, the Obama campaign released an ad defending his opposition to Hillary Clinton's gas tax holiday. The Clinton campaign immediately challenged the sourcing of one the ad's claims. ABC's Jake Tapper reported:

The quote in the ad says of Clinton's gas tax vacation proposal, "experts say it will boost oil industry profits," and it cites the New York Times on April 28, referring to a column by Paul Krugman -- generally a columnist supportive of Senator Clinton's plans.

But the column in question -- and the quote -- have nothing to do with Clinton. They have to do with Sen. John McCain's gas tax holiday proposal -- which Krugman refers to as "a measure that would, in fact, do little to help consumers, although it would boost oil industry profits." ...

Krugman says that the "McCain gas tax plan is a giveaway to oil companies, disguised as a gift to consumers. Is the supply of gasoline really fixed? For this coming summer, it is. Refineries normally run flat out in the summer, the season of peak driving. Any elasticity in the supply comes earlier in the year, when refiners decide how much to put in inventories. The McCain/Clinton gas tax proposal comes too late for that. So it's Econ 101: the tax cut really goes to the oil companies."

And then this key sentence: "The Clinton twist is that she proposes paying for the revenue loss with an excess profits tax on oil companies. In one pocket, out the other. So it's pointless, not evil. But it is pointless, and disappointing."

So he suggests that Clinton's gas tax proposal will give revenues to oil companies then take them away with her "windfall profits."

Now Paul Krugman is speaking out. In a blog entry posted Monday, he writes:

I did not say that the Clinton proposal would increase oil industry profits. If the ad implies that I did, it should be retracted.

The Clinton proposal is financed by an excess profits tax. At worst, it sends money in a circle. In practice, it would probably reduce oil industry profits at least slightly, since the rise in the pre-tax price of gasoline probably wouldn't wipe out all of the tax cut.

I was very clear when I wrote about the Clinton proposal that while I didn't think it was good policy, it was not the same as McCain's, and relatively harmless. If the Obama people are suggesting otherwise, they're being deliberately dishonest.

That said, this whole point may be moot. The current version of the ad already seems to have been changed to remove the reference to Krugman's piece. Watch it:

Comments

[SCG]

Hillary's campaign promises already running on empty, and she hasn't even finished the campaign. Must be a new record in broken campaign promises.

.... Meanwhile, Krugman, remains silent to his readers about the numerous "distortions" coming from the Clintons. I guess those colunms don't make it pass the editor, huh? Keep tryin' Krug.

[TheRealMacDaddy]

If Hillary Clinton is able to convince the people in Indiana and North Carolina to vote for her because she will get them $0.18 a gallon off of their gas, we need to start teaching Civics in the 9th Grade across the country again.

It is a damn shame that people will actually fall for such obvious pandering.

I want to know what just what Hillary Clinton's response will be to all those who vote for her because of this issue when she can deliver the goods. Oh, I know...she won't have one, because the Primary has all ready happened.

[TiffanyHusseinBanned]

Since Joe Scarborough is so inclined to have impartial analysts like Pat Buchanan on to commentate the progress of Obama’s campaign, can we assume that Sistah Souljah will be on tomorrow morning to “weigh” in on Hillary and McPain’s campaigns?

[zreeb]

Poor... poor... Clinton shill.

[GravitonX]

Krugman is in the pan for Hillary Clinton. While no reputable economist thinks that Hillary's proposal will have a significant economic impact, the reduction would almost invariably be eat up in the shortrun or be built back into prices in the long run, Krugman deliberate stays rather mum on the issue.

[rjean]

HEY KRUGMAN....SHUT THE HELL UP......................YOU WHINING LITTLE PANSY

[TiffanyHusseinBanned]

CNN asked this morning where the legislation for this very important issue was and none of the Clinton surrogates could verify.

Labor Day is around the corner, so where is the legislation?

Chop-chop It is so important for working class folks to have 30 bucks extra this summer, why isn’t legislation on the table right now?


Hello? Hillaryites why hasn’t Sen. Clinton taken time off the campaign trail to go to Washington to pass this matter of life and death issue?

I thought she cared about working class folks struggling to pay gas? I thought this was important? I thought America needed a president who will act now instead of give big speeches and hold big rallies?

[SCG]

* News Flash *

Bill and Hillary push their campaign to the pumps, her tank is empty.

[hank48188]

It's Obama thats running on empty, he looks tired and beat, thought he could skate around Rev. Wright, claims he went there for 20 years, never noticed the hate speech though but Obama gave Wright $20,000 last year, sounds like Obama is VERY SUPPORTIVE of Wright.

[SCG]

Good try.

Keep me updated on what's new from the Rush Limbaugh band wagon. Rush is VERY SUPPORTIVE of Billary.

[apoyo]

Do you mean that when you give to your church it goes straight into your pastor's pocket?
If that is so then your church must not do anything to help the disadvantaged. Too bad.

[abigail1]

What is up with people getting upset when they are quoted in advertising? First McCain complains that the DNC ad is misleading even though all it does is quote him and now Paul Krugman is doing the same. I never thought I'd see the day when McCain and Krugman had so much in common.

[RedDogBear]

Even if congress passed a wind fall profits tax president chimpy would veto it and there is no way anyone could get enough votes to over ride it. Case closed. Clinton isn't stupid she knows this. What she is doing is the most blatant type of pandering.

[klimtone]

I am for Obama, so make no mistake, but if his ad uses Krugman's name his quote should be accurate.

[HumeSkeptic]

Had you read the article, you would know that the ad has already been changed.

[wwja]

He is so full of ****.

[ConnieB]

Haha! Slick without being dirty.

[Testtubebaby]

Oh, stop whining either she'll win or she won't.
Did she promise you a post or something?

[HumeSkeptic]

"The Clinton twist is that she proposes paying for the revenue loss with an excess profits tax on oil companies. In one pocket, out the other. So it's pointless, not evil. But it is pointless, and disappointing."

-------------------
This is what Krugman said. Not exactly an endorsement of Hillary's gimmick.

"In one pocket, out the other" - what he seems to be implying is that oil companies would just raise the price to cover their extra (tax) expense.

What Krigman and many others are missing is how Hillary can get all this done before the summer. Were she a strong leader, she might have been able to convince Congressional leadership to get this done. But she is not a strong leader.

[lobo1939]

And Geogre Bush would sign a democratic proposal to increase taxes on the oil companies? Sure he would Hillary and Paul. Paul is so out to lunch with his infatuation with Hillary. I love his books and most of his columns, but he has to get over his school boy crush on Hillary.

[HumeSkeptic]

And even if Bush signed it, oil companies would just raise the price to cover the additional tax expense.

Most economists estimate about 30% of the current price of oil is because of speculation. The rest is because of increased demand, mainly driven by India and China. And, while OPEC can manipulate price, currently they are producing near full capacity. So, that is not part of the problem.

The problem is not high gas prices. The problem is that this should have been anticipated and steps should have been taken to minimize the pain. Those steps should have included stricter fuel efficiency standards, improved mass transportation, and serious alternative energy development programs. In other words, reduce demand for oil. It is not that Republicans failed to take these steps, it is that they didn't want to. Their goal was to help big oil companies. Higher demand means bigger profits for oil companies.

An additional problem, of course, is that high gas prices (and high food prices) are happening at a time when the Middle and Lower Middle classes are already strained because of stagnant or declining wages and job losses.

[nazardesign]

It's not surprising that Krugman takes Hillary at face value and assumes the absolute best when she says that she'll attached a wind fall profits tax to the this to pay for the lost revenue. Is he kidding? No gas tax might happen, though not likely, but passing a new tax on oil companies in the incredibly short time left for Congress. He may as well have lumped both McCain and Hillary's plan together. She's not going to get either of these.