Why Krugman Is Wrong

Paul Krugman is a brilliant Princeton economist and fine columnist for The New York Times who was far ahead of the pack in asserting that George W. Bush is a total disaster as president. His clarity in explaining what academics call "political economy" is without peer. But his attack on Barack Obama on December 17 was wrong on history, wrong on politics and wrong on what the future holds for Obama's "big table" idea.

Krugman calls Obama "naïve" and an "anti-change candidate" because he favors bringing all of the players in the health care debate around a "big table" and rejects the populist message of John Edwards, who is apparently Krugman's choice for president. "Anyone who thinks the next president can achieve real change without bitter confrontation is living in a fantasy world," Krugman writes, endorsing Edwards's view that the insurance and drug industries should be excluded from any talks on health care reform because they stand to lose profits.

The columnist and his candidate both believe that Franklin D. Roosevelt succeeded by being a polarizing figure. I studied FDR for four years while writing a book about him, and this is simply untrue. It's also untrue of other successful Democratic presidents and for a simple reason: "Bitter confrontation" simply doesn't work in policy-making.

Bear with me for a brief history lesson: The so-called "First New Deal" of 1933-34 came after Roosevelt won a landslide victory over Herbert Hoover in 1932 in a campaign devoid of any populist message despite an unemployment rate of at least 25 percent. First, FDR worked with Hoover treasury officials from the other party to rescue the banks under a conservative plan that included steep budget cuts. The rest of his famous "100 days" agenda-which included unprecedented jobs programs, agricultural reform, labor rights, and regulation of financial markets—was achieved with much more compromise than Krugman recognizes. Social Security came in 1935 after a big Democratic mandate in midterm elections and was enacted piecemeal and cooperatively (to the disappointment of many New Deal liberals) with everyone at the table.

During and after his 1936 reelection campaign, FDR—angry at the ingratitude of the rich Americans whose fortunes he had saved—adopted class-based politics. In 1937, with a big victory under his belt, he tried confrontation with his court-packing scheme. It failed badly. So did his effort to "purge" the opposition in 1938. The rest of his second-term was far less productive legislatively than his first. By the end of it, he turned to foreign policy. FDR's third-term success, dominated by World II, was dependent on his unifying the country.
Similarly, Woodrow Wilson's big legislative triumphs over entrenched interests in 1913 (for example, an income tax), Lyndon Johnson's in 1965 (Medicare and the Voting Rights Act) and Bill Clinton's in 1993 (painful tax increases) were achieved with legislative skill, not brute force and a populist message.

Krugman is a populist. He writes that if nominated, Obama would win, "but not as big as a candidate who ran on a more populist platform." This is facile and ahistorical. How many 20th Century American presidents have been elected on a populist platform?  That would be zero, Paul. You could even include Al Gore, who won the popular vote in 2000. Instead of exploiting the peace and prosperity of the 1990s, Gore ran on a "people vs. the powerful" message. It never ignited.