Niall Ferguson fired back at Paul Krugman on Bloomberg TV on Tuesday while defending his Newsweek cover story, which claimed health care reform will increase the deficit.
Krugman, a Nobel Prize-winning Princeton economics professor, questioned the accuracy of the Newsweek story, writing in a New York Times blog post on Sunday that Ferguson, a Harvard history professor, had misrepresented a Congressional Budget Office report about health care reform in an "unethical" way. While Ferguson cited the report to claim that President Obama's health care law will cost a net $1.2 trillion over the next 10 years, Krugman pointed out that the CBO's report actually concluded that health care reform will reduce the deficit, not increase it.
But Ferguson stood firm on his claim that the Affordable Care Act would increase the U.S. deficit.
"The critics are the ones who are splitting hairs because it's absolutely clear what the CBO has said, is that the costs of the ACA [Affordable Care Act] will not be met by the new sources of revenue," Ferguson told Bloomberg TV's "Market Makers" anchor Erik Schatzker. "You have to distinguish here between the direct sources of revenue created by ACA and the indirect ways the CBO says it will not increase the deficit. ... Krugman is being disingenuous."
Several bloggers, including the Washington Post's Ezra Klein and the Atlantic's Matthew O'Brien, pointed out Ferguson's health care mistake as well as others in the story. Brad DeLong, an economics professor at the University of California at Berkeley, even called for Newsweek to fire Ferguson and for Harvard to consider revoking Ferguson's tenure.
"I don't think you can claim that this is in any way undermining my academic reputation because the facts are absolutely clear," Ferguson said on Bloomberg TV. "What we're dealing with here is a very carefully orchestrated campaign to try and discredit the piece by those who are ideologically loyal to the president."
Ferguson also took the opportunity to blame Obama for the possibility of tax increases or deficit increases long after the president will have left office. He said that since the CBO projects Medicare spending will rise from 3 percent of GDP today to roughly 13 percent in the 2080s, "either that is going to require a substantial commensurate increase in taxation, which of course is another thing that President Obama pledged would not happen, or it's going to increase the deficit."
"I really don't think there's any middle ground there," he concluded.
UPDATE: 2:05 p.m. -- Also on Tuesday, Ferguson published a response to bloggers' criticisms of his Newsweek story on The Daily Beast. He defended himself against Matthew O'Brien's fact-check, saying that O'Brien should read "a little more widely than just official statistics."
Ferguson wrote that the overall reaction to his piece "looks suspiciously like an orchestrated attempt to discredit me." Read his full response here.
UPDATE: 3:25 p.m. -- Paul Krugman published a New York Times blog post on Tuesday in which he called Ferguson's mistake the worst kind of "wrongness." From the post:
Matters are quite different when it comes to the third kind of wrongness: making or insinuating false claims about readily checkable facts. The case in point, of course, is Ferguson’s attempt to mislead readers into believing that the CBO had concluded that Obamacare increases the deficit. This was unethical on his part – but Newsweek is also at fault, because this is the sort of thing it could and should have refused to publish.
You can read the full blog post here.
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