Corrections...

Opinion

A column by Paul Krugman in Friday’s paper incorrectly identified Senator Charles Schumer as the chairman of the Senate Finance Committee. Mr. Schumer is the chairman of the Joint Economic Committee. Senator Max Baucus is the chairman of the Finance Committee.

...while the federal bureaucracy has not been able to come up with astronomical sums of money to pay for health care and other needs, it seems prepared to do just that to alleviate a financial upheaval, especially since the tremors would otherwise be felt far from the canyons of Wall Street.

A Show of Hands

NEW YORK--The other night we attended the first-of-the-season Intelligence Squared debate. We've been going to these for a while and always find them interesting and stimulating. This week's topic was health-care policy, and one of the panelists arguing for more federal control was former Enron adviser Paul Krugman.

At one point, Krugman asked for a show of hands in order to prove a point, but it didn't turn out as he expected (see pages 43-44 of the transcript; ABC's John Donvan was the moderator):

Krugman: --and I wanted to ask, actually two questions, to the audience. First, how many Canadians, would Canadians in the room please raise your hands. [One person applauds, laughter]

Donvan: We have about seven hands going up—

Krugman: OK, not as many as I thought. OK, of those of you who are not on the panel who are Canadians, how many of you think you have a terrible health care system. [pause] One, two--

Donvan: We see—almost all of the same hands going up. [laughter]

Krugman: Bad move on my part [applause]. I've got a selected--all right, I won't try it. But I will say, that--

We never did find out what Krugman was going to say, though it appears he was alluding to a selection bias that affected the sample of Canadians in the audience. We don't usually agree with Krugman, but we have to admit, he had a point. The Canadians in the audience could not be representative of their countrymen. Just that they were in America meant that they were lucky enough to get out alive.

On the campaign trail Wednesday, Obama bemoaned "the most serious financial crisis in generations." He said the exact same words the day before...

"The most serious financial crisis in generations?"

Donald Luskin, a chief investment officer with the Menlo Park investment research firm TrendMacrolytics and an economic adviser to McCain - who tells me he has never talked to McCain - remarked that if Obama "had a little bit more experience," he would "put these things in more context." Luskin has lived through five or six recessions, and "this ain't one."

It isn't a recession because the U.S. economy has grown in both of the last two quarters. Read: It is not receding. And while Luskin sees the unemployment rate as "a little high," it is "not as high as it typically is in a recession." Yes, Luskin is concerned about inflation, now at 5.4 percent. The drop in oil prices may help...

Luskin questioned what has happened to politics, when a candidate "must pretend this is a recession or you're seen as hard-hearted." And: "What does it say when we can't be nuanced? And we can't say, 'Look, we're in a little bit of a slowdown, but the fundamentals are strong'?"

The answer, of course, is that Democrats can't win without trashing the economy. As Luskin pointed out in a piece in Sunday's Washington Post, in Obama's famed anti-Iraq war speech back in 2002, the then-Illinois state senator suggested the war was waged "to distract us from corporate scandals and a stock market that has just gone through the worst month since the Great Depression."

In fact, the stock market had four bigger one-month drops since the Great Depression, but facts don't matter. The winning candidate in 2008 may well be the man who can say the worst things about the American economy. That's how he shows he really cares.

Posted by Donald L. Luskin at 8:39 PM | link  

Posted by Donald L. Luskin at 12:08 PM | link  

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