This is no time for compromise, according to Paul Krugman.
The Nobel Prize-winning economist and New York Times columnist wrote a blog post Tuesday arguing that lawmakers shouldn’t be aspiring to a sweeping deal that makes everyone happy in an attempt to avoid sequester cuts on March 1.
“A grand bargain right now is a terrible idea,” he wrote. “Grand-bargain negotiations are, in practice, just an attempt to create facts on the ground for future confrontations, not a good-faith effort to secure the nation’s fiscal future.”
Krugman’s blog post came in response to a comment from Erskine Bowles that the notion of a grand bargain is “at best on life support.” Bowles is half of the superhero team President Obama appointed during his first term to reduce the deficit. In 2010, Bowles and his partner in deficit reduction, Alan Simpson, came out with a reduction proposal that never gained enough traction in Congress to pass.
Bowles and Simpson began a speaking tour today on an updated proposal that would cut the deficit by $2.4 trillion dollars through health care and tax reforms, as well as spending cuts.
The proposal comes as $1.2 trillion across-the-board spending cuts loom over lawmakers. If politicians can’t come to an agreement by March 1, the sequester will take effect, putting hundreds of thousands of jobs at risk. Still, Obama and Republican leaders are far from reaching a deal. On Tuesday, Obama urged Republicans to accept his proposal to avert the sequester. The president has offered a combination of spending cuts and tax boosts on the wealthy -- something Republicans have said repeatedly that they won’t authorize.
Krugman has long argued that lawmakers should accept the economic consequences of failing to make a deal. He said the fiscal cliff crisis was “created out of thin air” and slammed Obama for considering compromising instead of just going over the cliff. In addition, Krugman came out in mitigated support of minting a trillion-dollar coin to avoid the debt ceiling, arguing that it was a better solution to the crisis than allowing Republican “hostage-taking.”