Krugman: Speaker Boehner, Paul Ryan ‘completely deluded’

>>> the president and fellow heads of state have their work cut out for them as they meet in camp david in search of solutions in the ongoing challenges of afghanistan. it won't be easy. it's a lot more than you can say with those back in washington. our next guest is a new york times columnist who speaks out frequently against the austerity absolutionists. we're delighted to join paul krugman . his new book is called "end this depression now," and it's in stores now. thank you for joining us.

>> okay. thank you. interesting second string to my career there.

>> indeed, absolutely. now mitt romney and speaker boehner and paul ryan all say that all we need to do to get the economy growing again is to cut taxes and slash regulations. but in your book, you say that now is the time for government to spend. so i have to ask you, sir, are these politicians completely deluded or are you very badly wrong?

>> well, gee, let me think about which of those i wish to believe. no, they are deluded. we've had a mavis human experiment where we thought cutting spending was going to be good for the economy when the economy is deeply depressed. we put it into effect in large parts of europe and to a significant extent in the u.s. because we've had large cutbacks at the state and local level and the results have been what i said they would be. it's been a very depressing effect on the economy. where is the evidence that the other view is all right? where is that coming from? i thought we had a pretty good test and think my view has been confirmed.

>> i think europe has certain will i been the example. one of the central arguments of republicans is that they say they don't want to place increasing amounts of debt on future generations . and when they say it like that, it sounds like a responsible argument. but why does this not make sense when a nation is trying to come out of a recession?

>> the think you have to bear in mind is it is true. if you slash spending while the economy is deeply depressed. while interest rates are near zero and there's nothing to do to offset it with monetary policy . you make the economy more depressed. that means right away, even at the very beginning, whatever you do is paid for with a weaker economy which also means weaker revenues. so you don't get very much improvement in the budget deficit right up front and then if you play into an economy like we have now where we have almost 4 million people who have been out of work for more than a year and who the longer they're unemployed, the less likely it is that they'll ever get back to work, when you have an economy where college graduates can't find jobs or make use of any of their skills and end up being derailed from their entire future careers, you're hurting the future growth of the economy, the tax base as well. even if you don't care ought all about the people, which you should obviously, if all you care about is the budget, cutting spending right now is a way to make the budget worse too. i say it's like medieval doctors who thought if you were sick, they should bleed you. they say, hecht's bleed you even more. now is not the time to be cutting spending.

>> greece , very much in the news tore. i guess it won't be long before we start hearing things like this again. listen to this.

>> we will end up with a greece like situation on our hands. maybe even something worse than this.

>> there's paul ryan recommend as what's coming to america . i thought the president's action, though not as stimulative as you and others might have wished actually prevented the united states from following greece . is that all right?

>> let's put it this way. we're not greece . we have our own currency. we have a history of financial stability, which is good. you know, greece has been in arrears for half its modern history . so we have much, much more leeway where advanced countries in our position have much more leeway. also, greece 's error was running large budget deficits when times were good, which is a very bad thing which, of course, is not what obama did. he's running deficits aet the time of a zee pressed economy, which is necessary. running deficits when times are good is what his pred sez or did, that's president bush . about paul ryan , you should look at his budget and look at what it really proposes. his promise would increase the budget deaf sichlt he wants to slash tax ordinance the rich, cut benefits to the poor.

>> i've been saying this all year and the same goes for mitt romney .

>> y, right.

>> what are you thoughts on speaker boehner announcing he wants another fight of the debt ceiling. is this guy working to further undermine america 's standing given that the last time this happen happened america was downgraded.

>> there is this question a little bit. sometimes you wonder if they're moles, candidates for i don't know who, their real job to bring down america because they're really doing the best they can. look, this is the extremism of the current republican party . they've determined to become a party that has its own way. they never worry about the constitution passing legislation. what they will do is threat on the destroy the economy unless they get what they want. thing on this round. president obama finally has to say no. saying if you have do blackmail, we're going going to call your bluff. these guys will be hurt even worse than the rest of us if the economy tanks because the u.s. government goes into defauchlt let's yank their chain. this is economics by hostage taking.

>> you say the president should stand up to these individuals but there's not much he can do until after november.

>> number he can possibly force finally the housing agenties to do more debt refies. economic policy takes time to effect and he can't get legislation through in the face of people like boehner , so for the moment he has to make his case. he's not going to be able to change the kmuch manufacture before november.

>> indeed. his new book is entitled end this depression. sir, thank you so much for joining us today.