Krugman Schools Noonan On Default: ‘Nothing Like This Has Ever Happened Before’ (Video)

| by Sarah Fruchtnicht

Nobel Prize-winning economist Paul Krugman schooled Peggy Noonan of the Wall Street Journal Sunday explaining that the government shutdown and impending default are unprecedented and "all the alleged former examples" are false.

Krugman and Noonan appeared on a panel on ABC’s “This Week,” during which Noonan suggested that the shutdown and failure to raise the debt ceiling are both “business as usual.”

“Republicans made a mistake, they picked a fight, they had no strategy, they had no endgame, they had no plan,” Noonan said. “That having been said, I think the president has made counter mistakes, not only in the famous stories of the things that were forcibly shut down in the shutdown and all that stuff, but his — the sense he has communicated that, ‘Hey, I’m not having a conversation, we’re not having negotiations.’ Presidents have to negotiate on debt limits. They have to own it.”

“You can call what the other side does to you extortion. What it really is, is an argument and a deal. And at the end, you trade some horses and do your best,” she added.

“That never happened,” Krugman argued. “Nothing like this has ever happened before. All of the alleged former examples, if you actually look at them, they turn out to be either — there was a budget deal that included a debt ceiling raise but the debt ceiling was not a hostage. Or once — once — [former Speaker] Tip O’Neill held up the debt ceiling for one day more as symbolism.”

“There was never before a case where one party pushed the U.S. government to the edge of default demanding concessions in return,” the New York Times columnist insisted. “So, every attempt to make this sound like business as usual, it’s not. This is something completely out of the previous experience.”

“It is more heightened, but it is still part of business as usual,” Noonan disagreed. “Because it takes place within a context of an American president having to deal with the reality around him and the opposite party having to deal with the fact that he has the presidency, he has the executive. Make a deal.”

Sources: Orlando Sentinel, Raw Story