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June 01, 2005

Wait a Minute Here!

Fortune's Peronet Despeignes interviews Greg Mankiw:

Magazine - Economist Greg Mankiw Sounds Off on Karl Rove, Paul Krugman, and More - FORTUNE - Page 7: Q: So you often read the paper and slap your forehead?

A: Let me give you example. This is as I was arriving [as the new chair of the White House Council of Economic Advisers]. Glenn Hubbard, my predecessor, was leaving. I read one of Paul Krugman's New York Times' columns, and he said something like, 'Hubbard said he was leaving to be with his family, but you could see the knives sticking out of his back.' The suggestion was that he's being kicked out. I knew that wasn't true. I knew I got the job in large part because Glenn recommended me. So here we have Krugman sitting in some office in New Jersey making a supposition about what's going on in Washington and then writing for the New York Times, with readers presuming that he knew something...

Wait a minute. Stop right there. I understood that when Paul Krugman was writing, Glenn Hubbard had just played the up-or-out game--promote me to a job that has more power and prestige, or I'll head back to Columbia. Remember that in the winter of 2003 Glenn Hubbard was being described as one of the "four horsemen of Bush economic policy," the "most influential chairman of the Council of Economic Advisers in two decades," a man who has "stretched his role far beyond tinkering with the tax code and overhauling the pension system." The Washington gossip vine in the fall and winter of 2003 was singing that Glenn would stay--but only for the right job, with more influence.

When Glenn went back to Columbia in early 2003, I was told by not-very-senior administration officials that it was because some feared that Glenn was just a little *too* smart and too capable, and that he was not "safe."When the Treasury and NEC jobs were opened up, Glenn did not get either of them--that's what Paul Krugman was referring to. (I think that everyone in the White House now agrees that this was a bad mistake: that Glenn would have greatly strengthened the administration's economic policy team over the last two and a half years.)

Greg is telling the truth when he says that Glenn recommended him for the job, and Greg is telling the truth when he says that Glenn could surely have stayed in the CEA chair job if had wanted to. But Greg's claim that Krugman is wrong? The best you can say is that it is... "incomplete."

Read Greg's _Fortune_ interview with this in mind, particularly when you come to statements like:

There are three kinds of people in Washington when they look at this budget situation. There are conservatives—honest conservatives—who think we need to reduce the size of government. There are honest liberals who want to raise taxes to make government bigger. And then there are people who are putting their heads in the sand who do not want to do either. It's very clear that this administration is filled with conservatives who believe in smaller government, leaner government, and the tax cuts go hand in hand with that.

No Greg. That's not clear at all. Not clear to anyone.

Posted by DeLong at June 1, 2005 12:27 PM