Ferguson responds to Krugman saying he did read the CBO report and that it supports his argument. He also notes that the ACA’s will add $400 billion in taxes, violating Obama’s “no new taxes on middle class” pledge, and that the CBO uses assumptions about cost projections that are not realistic.
Paul Krugman reacts to Ferguson’s claim that the Congressional Budget Office had said that Obamacare would increase the deficit:
There are multiple errors and misrepresentations in Niall Ferguson’s cover story in Newsweek — I guess they don’t do fact-checking — but this is the one that jumped out at me. Ferguson says:
The president pledged that health-care reform would not add a cent to the deficit. But the CBO and the Joint Committee on Taxation now estimate that the insurance-coverage provisions of the ACA will have a net cost of close to $1.2 trillion over the 2012–22 period.
Readers are no doubt meant to interpret this as saying that CBO found that the Act will increase the deficit. But anyone who actually read, or even skimmed, the CBO report knows that it found that the ACA would reduce, not increase, the deficit — because the insurance subsidies were fully paid for.
We’re not talking about ideology or even economic analysis here — just a plain misrepresentation of the facts, with an august publication letting itself be used to misinform readers. The Times would require an abject correction if something like that slipped through. Will Newsweek?
Ferguson writes in The Daily Beast that Obama, while being a transformational figure, has not lived up to his promise and that while Mitt Romney is not the best candidate he has the business experience required to improve the country’s situation:
The question confronting the country nearly four years after Barack Obama’s election is not who was the better candidate four years ago. It is whether the winner has delivered on his promises. And the sad truth is that he has not.
Mitt Romney is not the best candidate for the presidency I can imagine. But he was clearly the best of the Republican contenders for the nomination. He brings to the presidency precisely the kind of experience—both in the business world and in executive office—that Barack Obama manifestly lacked four years ago.
The voters now face a stark choice. They can let Barack Obama’s rambling, solipsistic narrative continue until they find themselves living in some American version of Europe, with low growth, high unemployment, even higher debt—and real geopolitical decline. Or they can opt for real change: the kind of change that will end four years of economic underperformance, stop the terrifying accumulation of debt, and reestablish a secure fiscal foundation for American national security.
According to Slate, Ferguson and his allies believe that the rising bond yields prove that markets are worried about the inflation that will inevitably result from the fiscal policies of the Obama administration and the Fed. Given the large deficits and rising concerns about the viability of Social Security and Medicare, Ferguson writes, “It is hardly surprising, then, that the bond market is quailing. For only on Planet Econ-101 (the standard macroeconomics course drummed into every U.S. undergraduate) could such a tidal wave of debt issuance exert ‘no upward pressure on interest rates.
Krugman and his allies couldn’t disagree more. Far from being a sign of failure and impending disaster, they say, the rising bond yields actually signal success and impending improvement. Government bonds were so low last December because the world’s investors were totally freaked out about risk. They sold everything—U.S. stocks, emerging market government bonds, corporate bonds in Europe, Indian stocks—and parked their cash in the safest, most liquid investment around: U.S. government bonds. In the months since then, as the stimulus and bailouts have helped stabilize the economy, investors have started to relax.