Paul Krugman: Fiscal Cliff Is 'No Way To Run A Country'

A single word comes to Paul Krugman's mind when trying to describe the U.S. political system: "dysfunctional."

The Nobel Prize-winning economist expressed his frustration with the government's endless budget wrangling, especially over the so-called fiscal cliff, during a Wednesday interview with WNYC, a public radio station based in New York City. "It's no way to run a country," Krugman said, referring specifically to the prospect of going over the cliff, a decision that would trigger a series of tax hikes and spending cuts next year, which would probably slow the economy.

Given the options though, Krugman admits going over the cliff might be preferable to the likely alternatives.

"There is nothing in there [the fiscal cliff] that is going to cause the economy to implode," Krugman said. "Better to go a few months into this thing if necessary than to have a panicked response or to give in to blackmail, which is certainly the question that's facing President Obama."

In Krugman's view, the fiscal cliff "has nothing to do with the budget deficit," he added. "This is about a dysfunctional political process. It's about kind of a self-inflicted wound here."

Krugman's not alone in his view that jumping over the cliff may be preferable to giving in to Congressional Republicans' demands. Peter Orszag, a former economic adviser to President Barack Obama, and Robert Greenstein, president of the Center on Budget and Policy Priorities, have both said recently that the jumping off the cliff may end up the country's best option.

That's partly because Congressional Republican leaders, including House Speaker John Boehner, have been intransigent in their opposition to letting the Bush-era tax cuts expire on Jan. 1. Obama, meanwhile, has been pushing for those tax cuts to expire on high incomes.

It's not just taxes. Congressional Republicans also advocate cuts to Medicare and Medicaid, which Democrats said they will consider. Two areas Democrats say they won't give in to Republican demands: Social Security and Obamacare, neither of which are up for negotiation, Democrats say.