Paul Krugman: ‘Counting Chickens Before They Hatch’

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The bulk of the accompanying article, “The ‘budget surplus’ and other misconceptions” was written in the month of July. Since then, the Republicans and Democrats had their national conventions and officially nominated their presidential slates. This has formally launched the political struggle between the two main factions of the capitalist class over which will become the main political servant of the financial and industrial corporate elite of U.S. capitalism.

Both the Democratic Party Gore-Lieberman and the Republican Party Bush-Cheney tickets support the budget surplus myth and favor a hefty tax cut for the rich. The only real difference between these two factions of the capitalist class is the time honored confidence game of “good” versus “bad” capitalist politicians:

Republicans say they want to give a $1.3 trillion tax cut to the rich and the Democrats promise to give less than half that-$500 billion-to the banking and industrial corporations that each and every capitalist politician faithfully serves.

But all capitalist politicians insist that a tax cut for the rich will be “good for the American economy”-and of course, all of them agree that “what’s good for capitalists is good for all the people.”

More recently, new voices have been raised in criticism of fantastic projections of a budget surplus bonanza on the one hand and cutbacks in Social Security entitlements on the other.

Paul Krugman, a prominent financial columnist for The New York Times, has found it necessary to help debunk the claims of a budget surplus that the mass media has been promoting for the last couple of years.

In his Aug. 23 column, titled, “Counting Chickens,” Krugman challenges the substance of the claimed trillions of dollars in budget surpluses expected over the next 10 years. He cites some figures refuting the premises of the mythological budget surplus bonanza and then writes:

“So our political debate [between Bush and Gore over the alleged surpluses] is based on projections saying that in the years ahead the federal government will run average annual surpluses about 10 times as big as this year’s actual surplus.

“Doesn’t that sound a bit like counting your chickens before they’ve hatched? Wouldn’t you at least want to take a very careful look at the eggs?

“A new analysis by Alan Auerbach and William Gale (of Berkeley and Brookings respectively) does just that. And its conclusion-that those projections are unreasonable, that the future surpluses we’ve been taking for granted are figments of our imagination-is already ruffling feathers.”

Krugman cites further facts in his column essentially repudiating virtually the entire budget bonanza myth. He ends by warning: “The most likely prospect is that those big surpluses won’t materialize. And when the chickens that didn’t hatch come home to roost, we will rue the days when, misled by sloppy accounting and rosy scenarios, we gave away the national nest egg.”-N.W.

Socialist Action News

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