Paula Zahn Now, September 10, 2003

SYNOPSIS: An interview with Paul Zahn where Krugman discusses deficits, radical regressive revolutionaries in the White House, and The Great Unraveling

ZAHN: Welcome back. As we look ahead to the second anniversary of 9/11, the federal deficit is a half-trillion dollars. President Bush is asking Congress for $87 billion more for the war on terror. Joining us now economist and "New York Times" columnist Paul Krugman. In his new book, "The Great Unraveling: Losing Our Way in the New Century," he accuses President Bush of mismanaging the economy to promote a right-wing agenda. Welcome.


ZAHN: Let's start off by talking about deficits. What do you say to the folks who say you can absolutely justify having a deficit right now to help wage a winning war -- ultimately, what they say will be a winning war on terror?

KRUGMAN: Well, let's look at where the deficit comes from. We're looking at about $500 billion this year, probably more. Of that, about $300 billion is because of Bush's tax cuts. Only about -- well, until this latest number, it was really only about $80 billion that in any way, shape or form you could attribute to the war on terror. So they're really using this as an excuse. Let's remember that in May, you know, landing on the aircraft carrier, "mission accomplished," everything's fine, let's have tax cuts -- now he tells us, Oh, by the way, we're going to need another $87 billion, and just for starters. So we've been baited and switched into having all of these tax cuts, most of them for just a relatively few wealthy people, that we can't afford. You know, Bush knew about the war on terror when he pushed a lot of these things through.

ZAHN: Do you buy the argument that some of these expenses were very hard to predict? I mean, you talk to anybody in the Bush administration, they will tell you today that it was impossible to accurately determine what the infrastructure was like that was in place before this war started. And it was greatly depleted.

KRUGMAN: But here's the point. If you know that there's a large expense coming and you're not sure about how big it's going to be, do you then commit yourself to some other large expense, assuming that it's going to be zero? What happened with these people, again, is they had this agenda -- as I keep on talking about in the book, bait and switch. They have an agenda which is to starve the government of revenue. But in order to get it through, they keep on having to pretend that the tax cuts are affordable, and so they've been suppressing the likely cost of everything, including the war on terror. Let's remember that the former chief economic adviser was fired for suggesting that Iraq might cost between $100 billion and $200 billion. It now turns out that he was on the low end of the range of what it's actually going to cost.

ZAHN: And it also turns out there are probably some other reasons why that -- he's no longer with the administration.

KRUGMAN: Well, there are always. But the point is that, basically, anyone who told the truth was not welcome in that group.

ZAHN: Let's talk again about the central idea of your book. You're saying the American public doesn't understand that the radical right controls the Bush agenda. I want you point to evidence of that, and also help people understand (UNINTELLIGIBLE) who accused Clinton of being at the beck of call of the leftist agenda.

KRUGMAN: Oh, gosh! I don't think many people actually said that when Clinton was president, by the way. If anything -- remember, we had Ralph Nader running against Clinton because he claimed he was too friendly to business. That was -- you know, what we have now is -- first, if you look at the people behind the Bush administration, if you look at the lobbyists who wield an enormous amount of power, they are people who say quite openly -- Grover Norquist, the uber-lobbyist, says, I want to starve the government down, so that I can drown it in the bathtub. If you look at the Republican leadership in Congress, people like Tom DeLay, they are very, very hard-right-wing. Now, we've got an amiable guy sitting in the White House, who projects a moderate image, but the reality of the policies fits exactly the agenda of these very hard- line right-wingers who are really the power behind the throne.

ZAHN: And Clinton never fell prey to the left wing during his presidency? Oh!

KRUGMAN: Clinton -- no, look, the actual -- Clinton -- it was a very good time to be a rich businessman in the Clinton years. You call that a leftist?

ZAHN: I've got to leave that there this evening. We'll let everybody else answer that question. Paul Krugman, thank you for your time tonight.

KRUGMAN: Thank you.

ZAHN: Good luck with your new book. There is some big news tonight about the Jennifer Lopez/Ben Affleck wedding. (UNINTELLIGIBLE) going to tell you about today's dramatic announcement. Stay tuned.

Originally broadcast, 9.10.03