Paul Krugman: Alan Simpson Benefiting From Madoff-Like 'Affinity Fraud'

Ask Paul Krugman, and he'll tell you a former senator has a few things in common with one of the biggest con men in history.

The Pulitzer Prize-winning economist wrote in a blog post Thursday that like major Ponzi schemer Bernie Madoff, former Senator Alan Simpson is benefitting from “affinity fraud” -- a dynamic where people ignore evidence indicating someone is obviously wrong because they view them as “their kind of guy.” Simpson and former White House Chief of Staff Erskine Bowles make up the deficit fighting duo President Obama tasked in 2010 with coming up with a plan to reduce the nation's debt and they recently released the latest version of their proposal.

“Simpson is, demonstrably, grossly ignorant on precisely the subjects on which he is treated as a guru, not understanding the finances of Social Security, the truth about life expectancy, and much more,” Krugman wrote. “Yet he remains not only respectable among the Beltway crowd; as Ezra [Klein] says, he’s lionized in a way that looks from the outside like a clear violation of journalistic norms.”

Krugman has been critical of Simpson-Bowles in the past, calling their first plan “terrible” and quipping that Simpson-Bowles devotees are in a cult. But this most recent blog post riffs on a much longer piece by The Washington Post’s Ezra Klein called “The Problem With Alan Simpson.” Klein argues that reporters and politicians hang on Simpson's every word because they already think like he does. Specifically, they believe that cutting the deficit takes precedence over ensuring the nation’s most vulnerable have access to the social safety net.

The Obama administration didn’t fully embrace the first Simpson-Bowles proposal in 2010 in part because it cut Social Security benefits too much, then-Treasury Secretary Timothy Geithner said last year.

Simpson and Bowles recently released the latest iteration of their deficit-cutting proposal; the newest version would cut the deficit by $2.4 trillion through reforms in health care and the tax code as well as some spending cuts. The proposal comes as President Obama and lawmakers are wrangling over an agreement to avert $85 billion in across-the-board spending cuts, commonly known as the sequester.