Among the many, many invocations of purported "smackdowns" detailed by NewsBusters' Noel Sheppard over the past month, the most recent was an Oct. 10 post headlined "George Will Smacks Down Paul Krugman With Simple Reaganomics." In it, Sheppard gloated over how "Will smacked a monster drive down the middle of the fairway that would make Tiger Woods proud" in responding to Krugman's assertion that claims that no further stimulus is needed "which bears no relationship to what's actually happening" by asserting that "when the Reagan tax cuts kicked in, we had a booming job creation which, relative to the size of this economy, would translate to 7 million new jobs."
When Krugman responded to that by saying, "that boom in federal spending never happened. Once you take out the stuff -- the special emergency spending, it just never happened. And, you know, Reagan had the help of a huge cut in interest rates," Sheppard himself went off:
The ignorance and/or dishonesty on display here was astonishing. To claim there has been no boom in federal spending in the past two years requires what Hillary Clinton would call a willing suspension of disbelief.
George W. Bush's fiscal ’09 budget originally called for outlays of $3.1 trillion. This indeed ballooned to $3.52 trillion.
However, if such an increase was just “special emergency spending” as Krugman claimed, we should have seen a decrease in expenditures after the financial crisis ended.
As for Reagan having “the help of a huge cut in interest rates,” Krugman just moments before said, “Interest rates are at near record lows in all of the G-7 countries.”
Indeed. The current federal funds rate is basically zero, and is therefore far lower than when Reagan was president making it quite fascinating to see a Nobel Prize winner in economics contradict himself in roughly sixty seconds.
Sheppard manages to misfire on both of his attacks. As to the first, Krugman clarified himself in a column the next day:
Here’s the narrative you hear everywhere: President Obama has presided over a huge expansion of government, but unemployment has remained high. And this proves that government spending can’t create jobs.
Here’s what you need to know: The whole story is a myth. There never was a big expansion of government spending. In fact, that has been the key problem with economic policy in the Obama years: we never had the kind of fiscal expansion that might have created the millions of jobs we need.
Ask yourself: What major new federal programs have started up since Mr. Obama took office? Health care reform, for the most part, hasn’t kicked in yet, so that can’t be it. So are there giant infrastructure projects under way? No. Are there huge new benefits for low-income workers or the poor? No. Where’s all that spending we keep hearing about? It never happened.
Of the roughly $600 billion cost of the Recovery Act in 2009 and 2010, more than 40 percent came from tax cuts, while another large chunk consisted of aid to state and local governments. Only the remainder involved direct federal spending.
So, contrary to what Sheppard claimed, Krugman was not denying that increased federal spending occured; he was trying to point out that it resulted in a larger federal government.
As for Sheppard's other attack: Media Matters states that economists generally attribute the "Reagan recovery" to the lowering of interest rates from 13 percent to 7 percent. Since interest rates are already near zero, Obama does not have that available to him for a stimulus tool, as Reagan did.
it seems that the smackdowner has become the smackdowned.