Tags: Fiscal Cliff | Krugman | Schultz | confused

Paul Krugman: Starbucks CEO Confused About Fiscal Cliff

By Michael Kling   |   Monday, 31 Dec 2012 12:45 PM

In an open letter, Starbucks CEO Howard Schultz urged his employees in the Washington D.C. area to write "Come together" on coffee cups to encourage politicians to "fix the national debt."

What needs fixing is Schultz's understanding of economics, not the national debt, according to New York Times columnist Paul Krugman. Instead of energizing politicians, Schultz only brewed more confusion.

The Starbucks CEO calls fixing the national debt a "tremendously important, time-sensitive issue."

Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

The time-sensitive issue is not the national debt, but rather the fiscal cliff that could send the country into a recession with a combination of tax increases and spending cuts, Krugman writes. And an effort to fix the debt too fast — not the deficit itself — is causing the fiscal cliff crisis.

Schultz refers readers to the Fix the Debt organization's website. His problem was listening to that group in the first place, Krugman states, saying the Starbucks CEO fell for the Fix the Debt group's con.

Rather than a grassroots group of concerned citizens, Fix the Debt is another organization backed by billionaire Peter Peterson, Krugman asserts.

"Like all the Peterson-funded groups, Fix the Debt seems much more concerned with cutting Social Security and Medicare than with fighting deficits in general — and also not nearly as nonpartisan as it pretends to be."

The group calls for lower tax rates, a strange position for a group supposedly worried about the debt, the columnist writes. Instead, it advocates closing loopholes and broadening the tax base as the Republican Party does.

Fix the Debt is a front group for Peterson, agrees Peter Dreier, a professor of politics at Occidental College, writing for the Huffington Post.

The organization, dominated by Wall Street and corporate CEOs, is actually dedicated to cutting corporate taxes and personal income taxes, reducing government regulations on business and reducing entitlements, Dreier writes.

"What it really means is increased wealth and profits for corporate America and 'austerity' for everyone else."

Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

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