Tags: Krugman | deal | fiscal | cliff

Paul Krugman: ‘Let’s Not Make a Deal’ on the Fiscal Cliff

By Michael Kling   |   Friday, 09 Nov 2012 11:21 AM

Pundits everywhere are urging Congress to reach a deal to stop massive tax hikes and spending cuts from sending us over a fiscal cliff and into a recession next year.

Yet New York Times columnist Paul Krugman says, "Let's not make a deal."

Even if the fiscal cliff sends us crashing into a recession as expected, let it happen, Krugman writes.

Editor's Note: The Final Turning Predicted for America. See Proof.

President Barack Obama must stick to his guns and demand tax increases on the wealthy, which Republicans, who control the House, adamantly oppose, argues Krugman, a Nobel Prize winning economist.

By blocking any deal that doesn't extend the Bush tax cuts, Republicans are threatening to let the country fall into a recession unless they get their way. Krugman calls it economic blackmail.

The country cannot afford to make those tax cuts permanent, and the public agrees taxes on the wealthy should increase, he argues. With their election win, Democrats can claim that Republicans are defying the will of the people.

Krugman agrees the fiscal cliff, including the end of Obama's payroll tax cut and automatic spending cuts in defense and other areas, can push the economy back into a recession. But Obama must be willing to let it happen in order to control the growing national deficit.

Obama surrendered to House Republican blackmail twice before, at the end of 2010 then again in 2011 when Republicans refused to raise the debt ceiling, he says.

"Well, this has to stop - unless we want hostage taking, the threat of making the nation ungovernable, to become a standard part of our political process."

Republican corporate donors will suffer just as much as others if a deal is not reached. And Republicans, Krugman predicts, will come under pressure to reach a deal as economic damage grows.

House Speaker John Boehner tells ABC News that raising taxes is unacceptable, but adds that he'd put new tax revenue on the table.

"I would do that if the president was serious about solving our spending problem and trying to secure our entitlement programs," he says. "If you're increasing taxes on small-business people, it's the wrong approach."

Boehner tells ABC News that he's willing to listen to Obama's proposals. "He knows that he and I can work together. The election's over. Now it's time to get to work."

Editor's Note: The Final Turning Predicted for America. See Proof.

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