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Paul Krugman Talks to Bill Moyers About How to Speed Recovery -- And Why He Doesn't Want to Run the Treasury

"I probably have more influence doing what I do now than I would if I were inside trying to do the court power games that come with any White House...," Krugman said on "Moyers & Company."

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I'm a lot more afraid, actually, of the great -- the entire southwest of the United States turning into a dustbowl because of climate change, right? So sure, by all means, let's think about it. But it should not be dominating our policy discussion now.

BILL MOYERS: As you know, we're heading toward another knockdown, drag out, shoot it out at the O.K. Corral fight over raising the debt ceiling in a few weeks. President Obama has already said he will not negotiate on raising the debt ceiling. Here's what he said.

BARACK OBAMA: I will not have another debate with this Congress over whether or not they should pay the bills that they’ve already racked up through the laws that they passed. Let me repeat. We can’t not pay bills that we’ve already incurred.

BILL MOYERS: And here's the response he got the next day from Republican Senator Pat Toomey of Pennsylvania.

PAT TOOMEY: Our opportunity here is on the debt ceiling. The president's made it very clear; he doesn't even want to have a discussion about it, because he knows this is where we have leverage. We Republicans need to be willing to tolerate a temporary partial government shutdown, which is what that could mean, and insist that we get off the road to Greece, because that's the road we're on right now. We only can solve this problem by getting spending under control and restructuring the entitlement programs. There is no tax solution to this; it's a spending solution. And if this president doesn't want to go there, we're going to have to force it and we're going to have to force it over the debt ceiling.

PAUL KRUGMAN: This is a guy walking into a crowded room and saying, "I have a bomb strapped to my chest, and if you don't give me what I want, I'm going to blow up everybody, including myself." And is that a credible threat? Well, there're some pretty crazy people there. And it might be that they're willing to do it.

But by the same token, Obama cannot get into this because then you have government in the hands of -- never mind the Constitution, the government is run by whoever is most willing to wreak havoc with our whole system of -- with the nation. We cannot allow ourselves to be blackmailed into spending cuts, partly because blackmail should not be part of how the U.S. operates, and partly because spending cuts would be disastrous right now. So Obama's right to say he doesn't negotiate. I'd like to know exactly what he will do if it turns out that there is not a quorum of sane people in the Republican party.

BILL MOYERS: If you were Secretary of the Treasury, what would you recommend he do?

PAUL KRUGMAN: I'm for whatever gimmick works. So the most dignified is to say, "Look, this is ridiculous. You are giving the president -- effectively Congress is giving the president inconsistent instructions. It's passed bills mandating spending. It's passed bills that give us inadequate revenue to cover that spending which requires that we borrow. And then you're saying, 'I can't borrow.' Well, you know.

And my reading of the Constitution is I have to obey the due legislative process and go ahead and do this borrowing to meet the bills that we've already incurred, as the president said." That's sort of what people are calling the Fourteenth Amendment solution, that basically it's unconstitutional to give into this debt limit thing. I guess that's your best solution. They don't think that that's workable then you go for anything at hand. And there is this wonderful bit about the platinum coin.

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