Paul Krugman on Bush Bashing

From his perch on the New York Times op-ed page, Paul Krugman, an eminent Princeton economist and sharp-elbowed polemicist, has expanded his portfolio from fiscal policy to foreign policy and electoral politics. In the process, he has become one of the most widely read Bush bashers.

In his new book, "The Conscience of a Liberal" (Norton), Krugman delves into American history to identify how and why income inequality has expanded so rapidly in the past 30 years. While nodding to the usual suspectsfree trade, the decline of unionsthe economist looks first and foremost to politics. The real culprit: a Republican Party, dominated by government-loathing "movement conservatives" who have used race-based electoral strategies to build a new Southern-based majority.

Today, Krugman, who has been extremely grumpy for much of this decade, is guardedly optimistic that the shifting poll numbers and sour national mood could translate into a Democratic resurgence. The issue to watch? Health care.

NEWSWEEK's Dan Gross talked to Krugman about his recently released book, the new Gilded Age and how Bush bashing can boost a journalist's career. Excerpts:

NEWSWEEK: You say we're in a new Gilded Age. What do you mean?
Paul Krugman: We are in a Second Gilded Age. The first continued right up until the Depression. Pretax and pre-transfer-income inequality in 2005 was exactly the same as it was in the 1920s. And a lot of [the hallmarks] are the same: the giant private philanthropies (which  mitigates economic inequality by giving away fortunes), the exhibitionist display of wealth and, of course, the malefactors of great wealth insisting that they're doing great things for us all.

You look back fondly on 1950s, the period known as the Great Compression, in which economic gains were more broadly shared. But at the time, many institutions were segregated and women were excluded from many professions. Does economic progress trump social progress?
If I had to choose between the America of 1995 and the America of 2007, I'd still choose the America of 2007. But the progress we've made on diminishing racism and diminishing sexism is marred by the fact that, along the way, we lost the middle-class society. And I don't think we had to do that. 

You argue that immigration contributes to inequality--but not because immigrants depress wages. How, then?
The initial impact is that a growing proportion of low-wage workers are disenfranchised, and that pushes politics to the right. But as [immigrants] naturalize and their children become part of the electorate, it's quite devastating for the prospects of the Republican Party as it exists. Twenty years from now, you will have a lot of voters who aren't going to vote in ways that the white Republican base does. George Allen's “macaca” moment, when the senator used an obscure racial epithet against a South Asian, was the quintessential sign of how politics had changed … Virginia would not stand for it. It looks as if that style of politics, which dominated the U.S. for these past 30 years, is now shrinking toward a kind of rumpjust the inner parts of the Old Confederacy. [Former Georgia governor] Zell Miller wrote a book entitled "A National Party No More." But he got the wrong party.

You're a trained academic economist. Did you have any qualms about delving more into areas in which you're not professionally trained, like history and foreign policy?
Not a day goes by when I think my life would be more comfortable if the Times hadn't offered me the job [of columnist]. This book started because I was trying to figure out what happened economically. I spent a lot of time trying to understand it. And I did run stuff by people to make sure I wasn't making any outrageous bloopers.

If Al Gore had been elected with a Republican Congress in 2000, would we be where we are in terms of health care and income inequality?
I'm kind of a fatalist. Gore would not have had enough political clout to really change the direction. In the 1990s, between the compression of costs and a booming job market, health-care anxiety was low enough that after the Clinton failure you couldn't get a reform effort started. The countertrends, the things that are making for this new progressive era, have only really started to come to fruition in the last few years.

You argue that so-called movement conservatives oppose programs like Social Security and universal health care because they're invested in the idea that government programs can't and shouldn't work for the middle class. Is this same impulse behind President Bush's veto of the bipartisan measure to expand the SCHIP program of Medicare?
The trouble with SCHIP from Bush's point of view is that it works too well. SCHIP, in providing necessary health care for kids, would lead people to say, why not more? We have Medicaid for the poorest kids. Why should any child in the U.S. be without health insurance? And you can see where that line goes. So he's chosen to make his fight over 12-year-old kids.

President Bush and modern Republicans have been good for you—providing you with endless column and book ideas. And yet the administration also makes you angry. What would you rather have: the material, or your pre-Bush peace of mind?
In some ways, Bush bashing draws less adulation than it did a few years ago, because he's on the ropes. I have to pinch myself sometimes, because it was just a little less than three years ago that everybody was explaining that liberalism was dead and we were bound to have a permanent Republican majority. But I'll take it. I'll be enormously relieved when this guy is no longer sitting in the White House.

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