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COLUMN EIGHTY-FIVE, FEBRUARY 15, 2003
(Copyright © 2003 The Blacklisted Journalist)

BY PAUL KRUGMAN
1. THE SONS ALSO RISE

Subject: NYTimes.com Article: The Sons Also Rise
Date: Fri, 22 Nov 2002 23:19:47 -0500 (EST)
From: info@blacklistedjournalist.com
To: info@blacklistedjournalist.com

November 22, 2002

The Sons Also Rise

By PAUL KRUGMAN

America, we all know, is the land of opportunity. Your success in life depends on your ability and drive, not on who your father was.

Just ask the Bush brothers. Talk to Elizabeth Cheney, who holds a specially created State Department job, or her husband, chief counsel of the Office of Management and Budget. Interview Eugene Scalia, the top lawyer at the Labor Department, and Janet Rehnquist, inspector general at the Department of Health and Human Services. And don't forget to check in with William Kristol, editor of The Weekly Standard, and the conservative commentator John Podhoretz.

What's interesting is how little comment, let alone criticism, this roll call has occasioned. It might be just another case of kid-gloves treatment by the media, but I think it's a symptom of a broader phenomenon: inherited status is making a comeback.

It has always been good to have a rich or powerful father. Last week my Princeton colleague Alan Krueger wrote a column for The Times surveying statistical studies that debunk the mythology of American social mobility. "If the United States stands out in comparison with other countries," he wrote, "it is in having a more static distribution of income across generations with fewer opportunities for advancement." And Kevin Phillips, in his book "Wealth and Democracy," shows that robber-baron fortunes have been far more persistent than legend would have it.

But the past is only prologue. According to one study cited by Mr. Krueger, the heritability of status has been increasing in recent decades. And that's just the beginning. Underlying economic, social and political trends will give the children of today's wealthy a huge advantage over those who chose the wrong parents.

For one thing, there's more privilege to pass on. Thirty years ago the C.E.O. of a major company was a bureaucrat " well paid, but not truly wealthy. He couldn't give either his position or a large fortune to his heirs. Today's imperial C.E.O.'s, by contrast, will leave vast estates behind " and they are often able to give their children lucrative jobs, too. More broadly, the spectacular increase in American inequality has made the gap between the rich and the middle class wider, and hence more difficult to cross, than it was in the past.

Meanwhile, one key doorway to upward mobility " a good education system, available to all " has been closing. More and more, ambitious parents feel that a public school education is a dead end. It's telling that Jack Grubman, the former Salomon Smith Barney analyst, apparently sold his soul not for personal wealth but for two places in the right nursery school. Alas, most American souls aren't worth enough to get the kids into the 92nd Street Y.

Also, the heritability of status will be mightily reinforced by the repeal of the estate tax " a prime example of the odd way in which public policy and public opinion have shifted in favor of measures that benefit the wealthy, even as our society becomes increasingly class-ridden.

It wasn't always thus. The influential dynasties of the 20th century, like the Kennedys, the Rockefellers and, yes, the Sulzbergers, faced a public suspicious of inherited position; they overcame that suspicion by demonstrating a strong sense of noblesse oblige, justifying their existence by standing for high principles. Indeed, the Kennedy legend has a whiff of Bonnie Prince Charlie about it; the rightful heirs were also perceived as defenders of the downtrodden against the powerful.

But today's heirs feel no need to demonstrate concern for those less fortunate. On the contrary, they are often avid defenders of the powerful against the downtrodden. Mr. Scalia's principal personal claim to fame is his crusade against regulations that protect workers from ergonomic hazards, while Ms. Rehnquist has attracted controversy because of her efforts to weaken the punishment of health-care companies found to have committed fraud.

The official ideology of America's elite remains one of meritocracy, just as our political leadership pretends to be populist. But that won't last. Soon enough, our society will rediscover the importance of good breeding, and the vulgarity of talented upstarts.

For years, opinion leaders have told us that it's all about family values. And it is " but it will take a while before most people realize that they meant the value of coming from the right family.

Copyright The New York Times Company ##

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2. PUNISH THE POOR!

Subject: NYTimes.com Article: Hey, Lucky Duckies!
Date: Tue, 3 Dec 2002 23:19:47 -0500 (EST)
From: info@blacklistedjournalist.com
To: info@blacklistedjournalist.com

December 3, 2002

Hey, Lucky Duckies!

By PAUL KRUGMAN

Harping critics of the conservative movement have been known to say that its economic program consists of little more than tax cuts, tax cuts and more tax cuts. I may even have said that myself. If so, I apologize. Emboldened by the midterm election, key conservative ideologues have now declared their support for tax increases " but only for people with low incomes.

The public debut of this idea came, as such things often do, on the editorial page of The Wall Street Journal. The page's editors, it seems, are upset that some low-income people pay little or nothing in income taxes. Not, mind you, because of the lost revenue, but because these "lucky duckies" " The Journal's term, not mine " might not be feeling a proper hatred for the government.

The Journal considers a hypothetical ducky who earns only $12,000 a year " some guys have all the luck! " and therefore, according to the editorial, "pays a little less than 4% of income in taxes." Not surprisingly, that statement is a deliberate misrepresentation; the calculation refers only to income taxes. If you include payroll and sales taxes, a worker earning $12,000 probably pays well over 20 percent of income in taxes. But who's counting?

What's interesting, however, is what The Journal finds wrong with this picture: The worker's taxes aren't "enough to get his or her blood boiling with rage."

In case you're wondering what this is about, it's an internal squabble of the right. The Journal is terrified that future tax cuts might include token concessions to ordinary families; it wants to ensure that everything goes to corporations and the wealthy. But the political theory revealed by the editorial " policy should be nasty to people with low incomes, lest they have any good feelings about government " may explain a lot of what has been happening lately.

For example, House Republicans recently refused to extend unemployment insurance. Their inaction means that later this month more than 800,000 workers will receive Merry Christmas letters from the government, telling them that their benefits have been cut off. This would have been a harsh decision under any circumstances. At a time when the administration says we need further tax cuts to stimulate demand, slashing the incomes of the very households most likely to cut their spending sounds like a lose-lose proposition. But once you realize that pain is good because it makes citizens hate their government, it all makes sense.

An even better example is the failure of Congress to provide adequate funds for the State Children's Health Insurance Program. The details of the legislative maneuvering are complex, but what it comes down to is that conservatives showed no interest in maintaining adequate funding for this highly successful program. The sums involved are not large, by Washington standards. But the results will be dramatic: according to Office of Management and Budget estimates, 900,000 children will lose health insurance over the next three years.

We are, of course, now living in what George W. Bush has called the "era of personal responsibility": if a child chooses to have parents who can't afford health care, that child will have to accept the consequences. But there may also be political calculation involved. Again, the government mustn't do anything good, because then people might not realize that government is bad. Understand?

What do we learn from this catalog of cruelties? We learn that "compassionate conservatism" and "leave no child behind" were empty slogans " but while this may have come as a surprise to the faith-based John J. DiIulio, some of us thought it was obvious all along. More important, we learn how relentless and extremist today's conservative movement really is.

Some people " moderate Republicans who aren't ready to admit what has happened to their party, and Democrats who think their party can appease the right by making its own promises of smaller government " still don't get it. They imagine that at some point the right will decide that it has gotten what it wants.

But the right's ambitions have no limits, and nothing moderates can offer will appease it. Eventually the public, which actually benefits from most of the programs the right is determined to abolish, will figure that out. But how fast voters figure it out depends a lot on whether moderate politicians clearly articulate the issues, or try to escape detection by sounding like conservatives.

Copyright The New York Times Company ##

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3. BUSH'S STYLE OF FISCAL RESPONSIBILITY

Subject: NYTimes.com Article: Off the Wagon
Date: Fri, 17 Jan 2003 14:23:22 -0500 (EST)
From: info@blacklistedjournalist.com
To: info@blacklistedjournalist.com

January 17, 2003

Off the Wagon

By PAUL KRUGMAN

Picture a recovering alcoholic falling off the wagon. First he says he can handle a few drinks. Then, when his inebriation can't be denied, he insists it's only a temporary lapse. But eventually he turns mean. "What's so great about being sober?" he growls, reaching for another bottle.

As a drunk is to alcohol, the Bush administration is to budget deficits.

During the 2000 campaign George W. Bush often pledged to maintain fiscal responsibility. Right up to the passage of the 2001 tax cut his people said they could cut taxes, pay for new programs like prescription drug coverage, and still pay off most of the federal government's debt.

As soon as the bill passed, those rosy budget projections fell apart. Then came Sept. 11. "Lucky me, I hit the trifecta," declared Mr. Bush, claiming " falsely " to have said during the campaign that his budget promises didn't apply in the event of recession, war or national emergency. But until this week officials insisted the deficit was temporary.

Now the budget director, Mitch Daniels, has admitted the obvious: The federal government faces the prospect of large deficits as far as the eye can see. And sure enough, the drunk has turned mean. As the administration reaches for another bottle " another long-term tax cut for the affluent " its officials sullenly denounce the "fixation" on budget deficits, dismissing it as nonsensical "Rubinomics." (So much, by the way, for the war on terror as an excuse for deficits. "What did you do in the war, daddy?" asks Ronald Brownstein in The Los Angeles Times. "I got a big tax cut, and passed the bill on to you.")

Economics aside, the administration's ever-changing rationale for tax cuts says a lot about its character. If the Bush team never cared about deficits, Mr. Bush's promises of fiscal responsibility were dishonest. On the other hand, if administration officials didn't decide that deficits are O.K. until that belief became convenient, that suggests that they're tough talkers who make excuses when confronted with real problems. That's a scary thought; is this the kind of administration that would, say, call North Korea names and talk about pre-emptive war, but back down and offer aid when the country actually threatens to restart its nuclear program? Nah, couldn't happen.

The administration's top economist certainly changed his mind about deficits very late in the game. Glenn Hubbard, chairman of the Council of Economic Advisers, recently denied that deficits raise interest rates and depress private investments. Yet Mr. Hubbard is also the author of an economics textbook; as Berkeley's J. Bradford DeLong points out on his influential Web site, the 2002 edition of that textbook explains how, yes, deficits raise interest rates and depress private investment.

There's a reason Mr. Hubbard said what he did in his textbook. When the government sells bonds it competes with private borrowers. By the usual rules of economics, this competition should, other things equal, drive interest rates higher and investment lower. There are exceptions to economic rules, but someone who suddenly discovers such an exception at the precise moment his political masters need a cover story isn't credible.

Will this alcoholic eventually go back on the wagon? Not for a while; he has too many enablers. The Congressional Budget Office will soon start using "dynamic scoring" to assess proposed tax cuts " that is, it will build in the supply-side assumption that tax cuts raise the economy's growth rate, and therefore generate indirect revenue gains that offset the direct revenue losses. In the past, budget officials have opposed this practice, because it's so easy to slide from objective analysis into wishful thinking. With Republicans controlling both the White House and Congress, does anyone doubt that future C.B.O. analyses will take a very favorable view of big tax cuts for rich people?

It's O.K. to run a deficit during a recession, as long as the deficit is clearly temporary. But both the numbers and the administration's search for excuses tell us that there's nothing temporary about the red ink. On the contrary, we'll probably be on a deficit bender until the baby boomers retire " and then it will get much worse.

Trust me: we're going to miss Rubinomics. Maybe not today, and maybe not tomorrow, but soon, and for the rest of our lives.

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