Paul Krugman explains how anti-progressive activists 'are revealing their own biases and ignorance'

Centrist politics haven’t disappeared from the Democratic Party by any means, but it is safe to say that liberal and progressive ideas are enjoying a larger seat at the Democratic table in 2019. And in his latest column for the New York Times, veteran economist Paul Krugman examines progressive proposals and possible ways to pay for them.


Krugman explains that there are “three broad categories of progressive expenditure: investment, benefits enhancement and major system overhaul, which need to be thought about differently from a fiscal point of view.”

By “investment,” Krugman is referring to “spending on infrastructure or research”—and “benefits,” he writes, includes programs like Social Security, Medicare, Medicaid and the Affordable Care Act of 2010, a.k.a. Obamacare. The ACA, according to Krugman, was an example of benefits enhancement in that it “expanded Medicaid while using a combination of regulation and subsidies to make private insurance more available to families above the new Medicaid line.”

Krugman includes most Green New Deal proposals in the “investment” category, saying that “investment” and “benefits” programs can be paid for by “fairly narrow-gauge taxes—in particular, taxes that hit only high-income Americans. That is, in fact, how Obamacare was financed: the revenue component came almost entirely from taxes on high incomes.”

The economist notes that the most complicated of the three categories, from a taxation standpoint, is the “major system overhaul” category—and Krugman includes “the purist version of Medicare for all” in that category.

Krugman acknowledges, “You don’t have to be a neoliberal tool to wonder whether major system overhaul should be part of the Democratic platform right now, even if it’s something many progressives aspire to.”

Krugman stresses that while “investment” and “benefits” programs could be financed by taxes on wealthy Americans, implementing full-fledged Medicare for all and other examples of “major system overhaul” would be much more challenging both economically and politically.

“Proposals in this category are literally an order of magnitude more expensive than benefit enhancements: private health insurance currently amounts to 6% of GDP,” Krugman observes. “To implement these proposals, then, we’d need a lot more revenue, which would have to come from things like payroll taxes and/or a value-added tax that hit the middle class.”

Krugman continues, “You can argue that most middle-class families would be better off in the end, that the extra benefits would more than compensate for the higher taxes. And you’d probably be right. But this would be a much heavier political lift.”

Krugman speaks highly of Sen. Elizabeth Warren of Massachusetts in his column, although he indicates that he prefers her as a U.S. senator and economic theorist than as a 2020 Democratic presidential candidate.

“I don’t know whether Warren will or even should get the nomination,” Krugman writes. “But she’s a major intellectual figure and is pushing her party toward serious policy discussion in a way that will have huge influence whatever her personal trajectory.”

Krugman concludes his column by taking a swipe at former Starbucks CEO Howard Schultz, who is considering running for president as an independent.

“When people ridicule progressive proposals as silly and unaffordable, they’re basically revealing their own biases and ignorance,” Krugman asserts. “Investment can and should be debt-financed; benefit enhancements can be largely paid for with high-end taxes. Howard Schultz won’t like it, but that’s his problem.”

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