Paul Krugman and David Stockman battled it out Sunday morning during an appearance on “This Week with George Stephanopoulos.”
Though there was plenty for the two to spar over, one particularly heated exchange came during a discussion of the Federal Reserve’s policy of using super-low interest rates to boost the economy. Fed Chairman Ben Bernanke stood by the stimulus plan last month, saying that the Fed would keep interest rates at rock-bottom levels until unemployment dropped to at least 6.5 percent.
“The main thing we’re doing is not working, and that is the serial bubble machine coming out of the Federal Reserve,” Stockman, an ex-budget director for Ronald Reagan, said on “This Week,” arguing that the easy money policies are helping Wall Street at the expense of Main Street. “Zero interest rates are crucifying the savers of America.”
Krugman, a Nobel Prize-winning economist and New York Times columnist, responded by asking Stockman: “You really think we should be raising interest rates with high unemployment?”
The jobless rate fell to 7.6 percent in March as employers hired at the slowest pace in nearly a year, the Labor Department reported Friday.
The exchange was just the latest in a battle between the two that began last week after Stockman -- who resigned from Reagan’s administration in 1985 in protest over deficit policies -- published an op-ed in The NYT highlighting the themes of his new book “The Great Deformation: The Corruption Of Capitalism In America.” The controversial title argues that America’s ballooning debt as well as government monetary and fiscal policies are putting the nation in danger of another financial meltdown.
Krugman criticized the op-ed, calling Stockman a “cranky old man,” and referring to the piece as “just a series of gee-whiz, context- and model-free numbers embedded in a rant -- and not even an interesting rant.” Krugman wasn’t the only one to slam Stockman’s analysis, as he noted later in the week: “It turns out that I’ve actually been polite to David Stockman,” compared to other critics.