Paul Krugman warns that the ascent of the Democratic Party could be short-lived if they betray their base.
"The Democrats now look like the natural party of government," the Nobel Prize-winning economist wrote in a New York Times blog post on Sunday. "We're a diverse nation, ethnically and otherwise, in which a lot of liberal ideas have become perfectly mainstream."
But, he added, Democrats could waste this opportunity by caving to the Republican agenda in negotiations with Congress.
"This newly effective coalition could be shattered if taken for granted," Krugman wrote. "If, say, Obama raises the retirement age in return for vague promises on revenue (promises that would be betrayed at the first opportunity); if he appoints a deficit scold to a major economic post; it could all fall apart."
The fiscal cliff will be the first major post-election test of whether President Barack Obama will stand firm or cave. The fiscal cliff is a set of $1.2 trillion in spending cuts and tax hikes that are scheduled to take place on Jan. 1 if Congress does not agree on a plan to reduce the deficit. It is likely to cause a recession, according to economists.
Congressional Republicans are trying to reach a deficit reduction deal to avert the fiscal cliff with mostly spending cuts and little new tax revenue. Unlike Obama, they don't want to let the Bush tax cuts on income above $250,000 expire. Krugman wrote in a New York Times column on Friday that Obama should go over the fiscal cliff if necessary to get his way.
But Obama may already be giving in. He is proposing a deficit reduction deal that would cut $3 in spending for every $1 in new tax revenue. These spending cuts are likely to hit the poor, middle class, and elderly.
Earlier on HuffPost:
Krugman has <a href="http://www.nytimes.com/2012/08/27/opinion/krugman-the-comeback-skid.html?_r=1" target="_hplink">slammed Christie</a> for touting a New Jersey comeback, even when the state still faces a 9.8 percent unemployment rate. He's also criticized the governor for his decision to raise taxes on low-income New Jersey residents, while vetoing a temporary tax boost for millionaires.
Krugman hasn't been shy about criticizing Ron Paul's economic theories, particularly his dislike of the Federal Reserve. Krugman said of Paul's interest in keeping the government out of monetary policy during a <a href="http://www.huffingtonpost.com/2012/04/30/paul-krugman-ron-paul_n_1465870.html" target="_hplink">debate on Bloomberg TV</a>: "If you think that you can avoid that you're living in the world that was 150 years ago." Krugman's also called <a href="http://www.huffingtonpost.com/2012/08/27/paul-krugman-gold-standard_n_1832767.html" target="_hplink">returning to the Gold Standard</a> -- a view Paul's touted for years -- "an almost comically (and cosmically) bad idea."
After presumptive Republican presidential nominee Mitt Romney announced that Paul Ryan would be his running mate, Krugman wasted little time deriding the Wisconsin Republican's views on the economy and budget. <a href="http://www.nytimes.com/2012/08/24/opinion/krugman-galt-gold-and-god.html?_r=1&hp" target="_hplink">Krugman wrote of Ryan</a> that he "evidently gets his ideas largely from deeply unrealistic fantasy novels."
After Harvard professor Niall Ferguson (left) penned a <em>Newsweek</em> cover story arguing President Obama doesn't deserve a second term, Krugman demanded that <a href="http://www.huffingtonpost.com/2012/08/20/paul-krugman-niall-ferguson-newsweek_n_1810136.html" target="_hplink">the magazine issue a correction</a>, starting a bit of a spat with the <em>Newsweek</em> columnist and historian. Krugman said of the cover story on his blog: "There are multiple errors and misrepresentations in Niall Ferguson's cover story in Newsweek -- I guess they don't do fact-checking." <a href="http://www.theatlantic.com/business/archive/2012/08/a-full-fact-check-of-niall-fergusons-very-bad-argument-against-obama/261306/" target="_hplink">The Atlantic's Matthew O'Brien did a full fact-check of Ferguson's piece</a>, which <a href="http://www.thedailybeast.com/articles/2012/08/21/niall-ferguson-defends-newsweek-cover-correct-this-bloggers.html" target="_hplink">Ferguson defended himself against</a>.
Estonian President Toomas Hendrik Ilves
Krugman argued that perhaps Estonia <a href="http://www.huffingtonpost.com/2012/06/06/estonia-krugman-toomas-hendrik-ilves_n_1575937.html" target="_hplink">shouldn't be held up as a model</a> for successful austerity measures in a 67-word blog post in June. The country's president Toomas Hendrik Ilves took to Twitter to slam Krugman, calling him "smug, overbearing & patronizing."
Andrew Ross Sorkin, "Squawk Box"
Krugman appeared on "Squawk Box" in July to discuss his book, but was upset to find out that they "never actually got there." Instead, <a href="http://www.huffingtonpost.com/2012/07/11/paul-krugman-cnbc_n_1664771.html" target="_hplink">Krugman wrote on his blog</a> that the appearance consisted of "one zombie idea after another -- Europe is collapsing because of big government, health care is terribly rationed in France, we can save lots of money by denying Medicare to billionaires, on and on," adding that people counting on the shows for sound information are getting "terrible advice."
Krugman hasn't been shy about criticizing Mitt Romney's plans for America's budget and economy, and he's taken the former CEO of Bain Capital to task for <a href="http://www.nytimes.com/2012/07/06/opinion/off-and-out-with-mitt-romney.html" target="_hplink">touting his business career</a>. In a column titled "Off and Out with Mitt Romney," Krugman wrote, "the truth is that even if Mr. Romney had been a classic captain of industry, a present-day Andrew Carnegie, his career wouldn't have prepared him to manage the economy."
Krugman has argued that the rich embrace Republican economic policies both because they want more money and simply because they're more inclined to buy into theories that justify their wealth. In a May <a href="http://www.huffingtonpost.com/2012/05/08/paul-krugman-rich-people-want-to-buy-praise-as-the-salvation-of-the-rest-of-us_n_1499679.html" target="_hplink">interview with Reuters</a>, Krugman said that rich people "want the world to praise them for their wealth, so they want economic theories that praise rich people as the salvation of the rest of us."
Krugman has been critical both of Wall Street's current practices and of the industry's ability to escape punishment for its role in the financial crisis. In a <a href="http://www.huffingtonpost.com/2012/02/17/paul-krugman-playboy-interview_n_1284417.html" target="_hplink">February interview with Playboy</a>, Krugman said "It's hard for me to believe there were no crimes. Given the scale of [the financial crisis], given how many corners were being cut, some people must have violated laws. I think people should be in jail."