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Paul Krugman: Take debt limit fight to default if necessary

Photo of Jeff Poor
Jeff Poor
Media Reporter

While Republicans have been chastised for their willingness to take the debt ceiling limit battle to the brink if necessary, there’s a similar view on the opposite side of the political spectrum on how far the fight should go as well.

Nobel Prize-winning Princeton University economist and New York Times columnist Paul Krugman said he believes his side should be willing to play chicken if necessary on this battle. On ABC’s “This Week” on Sunday, Krugman said the debt ceiling debate should be taken to the limit, including to the point of default when he was pressed by host Christiane Amanpour.

“I actually — I think it may be necessary to take this to the limit,” Krugman said. “[I]f we have demands for a large change in policy, under threats of debt limit, this has to be the point where we say we don’t believe in letting hostages being taken.”

Former Deputy Treasury Secretary Roger Altman, who served under President Bill Clinton, disagreed with Krugman’s suggestion and explained what it would mean if acted upon.

“No, I don’t [agree],” Altman said. “I respect Paul, but I don’t. I think default would be a profound and hugely negative step. It would be terribly destabilizing. I think it would reduce the amount of institutions around the world that would in the future buy Treasury debt and be a tremendous mistake.”

Krugman reiterated his argument and said if Democrats didn’t act like they were willing to be taken to that point their bargaining position would be weakened.

“Let me just say – we have an enormous budget dispute,” Krugman said. “We have vastly opposed poles of policy. That is not something we should resolve with – you know, with a bomb hanging over our head. It’s not something we should try and change. So, Democrats have to make clear they’re not going to let themselves be blackmailed in that way.”

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  • russ311

    Stand back everyone, the frother has a gun!

    Krugman is pleading with his fellow Democrat frothers to join with him in aiming a loaded gun at their own temples and threaten to pull the trigger unless the GOP relents to their demands.

    His compatriot frothers Obama and Geithner first thing this morning joined with Krugman by announcing that now that the country is operating without funded and budgeted tax dollars, they will carry on as usual by trading IOUs for investment deposits diverted from Benefits and Pensions Funds for Federal Employees and Veterans.

    Federal Employees are one of the lockstep groups that have supported Obama up to now. Gee, whoops, there they go…under the bus!

    Obama directed Geithner to take steps today to risk bankrupting Federal Employee and Verteran benefits and pension programs, as has similarly been done for 40 years with SSI, by pilfering funds in exchange for worthless IOUs that can only be repaid by borrowing more, increasing the deficit and thereby necessitating a never ending need for increasing the “ceiling” of federal debt.

    It’s a house party. Yowsah, they say let’s raise the roof!

    Or else they’ll pull the trigger. Oh my.

  • http://www.youtube.com/user/MrJeffreyNeal JTNeal in DC

    Krugman’s only correct statement was when he said that “Obama cares more about the economy than the GOP.” However, what he meant to say is that Obama cares more about the GOVERNMENT’S CONTROL OF THE ECONOMY than the GOP.

    Final Score:
    Government $3.6 Trillion – Freedom $0.
    Game over.

    See more @ > http://wp.me/s1jTK0-444

  • virginiagentleman

    Paul Krugman speaks for professional acadamedians and those who go to school all their lives( professional students), because they really don’t know what to do with their lives. But because they are so smart from all that indoctrination, (I mean schooling), they are self-acknowleded experts as to how we should live OUR lives, what we should think, and when we should think it. Plus, there is the added benefit that they’ll TELL us why we should stand aside while they think for us.(WHY? BECAUSE WE ARE STUPID AND DON’T KNOW WHAT’S BEST FOR US!)Krugman speaks from the point of view of one who has never led a company, a business, or even held a real job. He believes that brain power alone will cure all ills and, who needs real life experence if brainiacs can think their way thru all of our woes. In truth, he is nothing more than a leech. He and others of his ilk are failures in life, besotted by empty awards and degrees and craving the equally empty platitudes of other brainiacs,( read as maniacs). CRAVEN is the best description of Krugman and those like him.

    • bassboat

      virginiangentleman: well stated about Krugman. I liken him to the little nerd that we all knew in school that somewhere along the way he discovered that he was quick witted and could win debates. Then he would take on untenable positions jst to see if he could win those type arguments/debates. He eventually backs himself into a corner and is stuck with policies that go against human nature but cannot back down but has to plod onward. It is a shame to waste his talents. Try and imagine, this will be hard, just how much good Krugman could do if he were to admit the fallacies of his position and espouse free enterprise and capitalism.

      • virginiagentleman

        Therein lies the problem, Friend bassboat. He is incapable of admitting the fallacies of his position because, as you have pointed out, he has backed himself so far into the corner, there is no way out for him! As for wasting his talents, he did that to himself. Unfortunately, lot’s of people like Krugman have wasted their talents, while attempting to show how ‘quick-witted’ they are! Trouble always comes to one who tries hard to show how much smarter they are in relation to others! Maturity for Krugman and like minded folk comes even later! (If ever).

        • bassboat

          Sad but true.

          • oldguy5

            AMEN!!!!

  • WaltLinsley

    Let me get this straight:

    Liberals want to use the threat of going default so that they can conutue the status quo and take out more loans and keep spending money and make our debt and deficit worse

    Conservatives want to use the threat of going default so that they can force the spending cuts, reduce the deficit reduce the debt and not have to take out more loans.

  • bassboat

    Poor Paul, he has painted himself into a corner and he cannot get out. He knows at his core that the administration’s policies cannot work but his ditto-head status has backfired on him again. The Cloward/Piven strategy is a work in progress.

  • http://www.facebook.com/people/Drew-Kaplan/1109061562 Drew Kaplan

    Am I the only one that thinks this guy is scary?

  • GeniousIQ

    The fact that any of you think this debt ceiling “battle” is real goes to show you delusional you are. This is political posturing at its finest and the ceiling will be raised. What Krugman is saying is exactly that, so screw Boehner and his “pandering” to his “base”, because it’s a non-issue.