The Accidental Theorist and Other Dispatches from the Dismal Science

The Accidental Theorist brings together the best of Paul Krugman’s 1996-1999 online Slate columns into a highly intelligent collection, one that exposes the economic fallacies of politicians and political analysts across the political spectrum. The blog/column format works especially well for Krugman’s writings; his style is conversational and witty, but well-argued and analytical — and deadly serious about the importance of the issues at hand. Here for example he exposes the dishonesty of Bob Dole’s economic rhetoric during the 1996 campaign:

"You now work from the first of January to May just to pay your taxes so that the party of government can satisfy its priorities with the sweat of your brow because they think that what you would do with your own money would be morally and practically less admirable than what they would do with it. … Somewhere, a grandmother couldn’t afford to call her granddaughter, or a child went without a book, or a family couldn’t afford that first home because there was just not enough money. … Why? Because some genius in the Clinton administration took the money to fund yet another theory, yet another program, and yet another bureaucracy.”

The words are Bob Dole’s (actually, they’re Mark Halperin’s, but Dole said them in his acceptance speech in San Diego). They are the key to understanding why the Republican Revolution, which seemed so unstoppable only a year ago, has stopped.

Dole’s speech tried to put over, one more time, the fiction that the federal government takes away your hard-earned money and spends most of it on things that only social workers want. Supply-side economics, with its promise that tax cuts would pay for themselves, may have given conservatives the courage to be irresponsible. But what sold the public on conservatism was the images of vast armies of bureaucrats and of welfare queens driving Cadillacs.

Conservatives were able to get away with such stories for one main reason: They could always blame their failure to slay Big Government on the Democrats who controlled Congress…
To get an idea of the gap between conservative mythology and reality, let’s look at the best book published in America. It’s called The Statistical Abstract of the United States, and if more people would get into the habit of checking it, our politics would be utterly transformed.

The Statistical Abstract makes it quite easy to get a realistic picture of where your tax dollar goes. For example, here is a list of 10 major federal programs. The number after the colon indicates each program’s percentage of fiscal 1994 spending:

-- Social Security: 21.6%

-- Defense: 18.9%

-- Interest on the debt: 13.7%

-- Medicare: 9.7%

-- Medicaid: 5.8%

-- Pensions for federal workers: 4.2%

-- Veterans’ benefits: 2.6%

-- Transportation (mainly highways, air traffic, etc.): 2.6%

-- Unemployment insurance: 2.0%

-- Administration of justice (courts, law enforcement, etc.): 1.1%

There are three important things to say about this list. The first is that it encompasses the bulk of government spending–82.2 percent, to be precise. Anyone who proposes a radical downsizing of the federal government must mean to slash this list.

The second is that with one possible exception, these are programs that the public likes–they are not at all what people object to when they rail against Big Government. We believe in honoring our debts. We like our strong military; indeed, Bob Dole wants it stronger. We like our highways. We want strong law enforcement. The only possibly unpopular item on the list is Medicaid, which is the only “poverty” program. But Medicaid is increasingly a program of aid not for the poor per se, but rather, for the old. More and more of it pays for nursing-home care–and many of those patients have middle-class children.

And that brings us to the third point: Aside from defense and interest payments, the U.S. government is now mainly–yes, mainly–in the business of taxing the young and giving money to the old. Look at that list, and consider how utterly shameless Dole was in imagining a grandmother who couldn’t afford to call her granddaughter because she pays too much in taxes. That grandmother almost surely lives better than people of her age ever lived before, supported by Social Security checks that will greatly exceed the value of the contributions she and her husband paid into the system. And her children could easily have sent her the money for phone calls, except that their Medicare contributions had to cover her hip replacement.

The topics may be dated at this point, but this is a superb work of economic analysis.