In the April 6 issue of Newsweek (on newsstands March 30), "Obama is Wrong," Newsweek's Evan Thomas profiles Paul Krugman, who, as the debate over the rescue of the financial system unfolds, has emerged as Obama's toughest liberal critic. Plus: Michael Hirsh on how Treasury Secretary Timothy Geithner appears to have settled into office; Dan Gross on financial linguistics; a profile of Peter Arnell; Newsweek's Business Roundtable; and the "diva-ization" of kids at a young age. (PRNewsFoto/Newsweek)
NEW YORK, NY UNITED STATES
Paul Krugman Has Emerged as Obama's Toughest Liberal Critic
What if Krugman's Criticism May be Right?
NEW YORK, March 29 /PRNewswire/ -- As the debate over the rescue of the
financial system - which is crucial in stabilizing the economy and returning
the country to prosperity - unfolds, Paul Krugman has emerged as President
Barack Obama's toughest liberal critic, writes Newsweek Editor-at-Large Evan
Thomas in his profile of Krugman in the current issue. Krugman, a columnist
for The New York Times, a professor at Princeton and a Nobel Prize winner in
economics, was a scourge of the Bush administration, but has been critical, if
not hostile, to the Obama White House, skeptical of the bank bailout and
pessimistic about the economy. As the debate continues, there are worries
among the establishment that his "despair" over the administration's bailout
plan might be right. "Krugman may be exaggerating the decay of the financial
system or the devotion of Obama's team to preserving it. But what if he's
right, or part right?," Thomas writes. "What if President Obama is
squandering his only chance to step in and nationalize...the banks before they
collapse altogether?," he writes in the April 6 Newsweek cover, "Obama Is
Wrong" (on newsstands Monday, March 30).
There is little doubt that Krugman has become the voice of the loyal
opposition, taking on the president from the left. In his twice-a-week column
and his blog, Conscience of a Liberal, Krugman criticizes the Obamaites for
trying to prop up a flawed financial system and he portrays Treasury Secretary
Tim Geithner and other top officials as tools of Wall Street. The day
Geithner announced the details of the administration's bank-rescue plan,
Krugman described his "despair" that Obama "has apparently settled on a
financial plan that, in essence, assumes that banks are fundamentally sound
and that bankers know what they're doing." The administration, naturally does
not share Krugman's view, but the Obama White House is also careful not to
provoke his wrath any more than necessary.
"Ideologically, Krugman is a European Social Democrat," Thomas writes.
"In his published opinions, and perhaps his very being, Paul Krugman is anti-
establishment." He hungers for what he calls "a new New Deal," and prides
himself on his status as an outsider. Krugman generally applauds Obama's
efforts to tax the rich in his budget and try for massive health-care reform.
However, on the all-important questions of the financial system, he says he
has not given up on the White House's seeing the merits of his argument - that
the government must guarantee the liabilities of all the nation's banks and
nationalize the big "zombie" banks - and do it fast. "The public wants to
trust Obama," Krugman says. "This is still Bush's crisis. But if they wait,
Obama will be blamed for a fair share of the problem." The question remains as
to whether Krugman is right, which we won't know for a while to come.
