The Great Unraveling | Paul Krugman

Summary of: The Great Unraveling: Losing Our Way in the New Century
By: Paul Krugman

Introduction

Dive into the interwoven world of politics and economics as explored in Paul Krugman’s ‘The Great Unraveling: Losing Our Way in the New Century.’ This book offers a critical analysis of the conservative fiscal policies implemented during the George W. Bush Administration, which focused on tax cuts for the wealthy and reduction of social programs. Krugman delves into the Administration’s strategies of clever messaging and manipulation of facts, applied to both the tax cut proposal and the Iraq war. Moreover, he investigates the connection between corporations and government, including the lack of transparency and accountability.

Bush Administration’s Radical Agenda

The Bush Administration implemented a radical agenda based on cutting taxes and eliminating social programs, using deceptive means to sell both the tax cut and the need to go to war in Iraq to the American public. This radicalism was driven by a conservative political agenda that shaped policies affecting the environment, energy, health care, education and the rationale for taxes and war. Moderates who questioned the need for these changes were quashed, and the Bush team persisted in achieving their goals despite opposition.

Greenspan, Bush and the U.S. Housing Bubble

This passage discusses the relationship between Federal Reserve Board Chairman Alan Greenspan and the Bush Administration. It highlights that Greenspan supported large tax cuts in 2000, but by 2001, the situation had changed, prompting the Treasury Secretary to request Congress to raise the debt ceiling. Additionally, Greenspan had to fight recessions in 2001 and 2002, which were caused by a housing bubble and overcapacity in the telecommunications industry. The passage notes that if the U.S. housing bubble is pierced, it could produce conditions that resemble Japan’s long deflation-induced recession. Finally, the passage argues that reducing interest rates may no longer be enough to stimulate the economy, and the U.S. could fund stimulus packages by eliminating the scheduled Bush tax cuts.

Corporate Favoritism in the Bush Administration

The Bush administration has been accused of using their positions in government to benefit their corporate associates and blocking reforms aimed at preventing corporate fraud. This is evident in several incidents involving key officials. George Bush received a $2 million bailout for his struggling energy company, Harken Energy, from the same company he later served on the board. He then sold a significant portion of his Harken stock before a negative SEC ruling was made public, which was considered an insider sale. Dick Cheney was allegedly involved in developing energy policy with Enron executives and pushed for dropping environmental regulations and giving subsidies to corporations. When this task force was investigated, key Republicans blocked the move. Similarly, Donald Rumsfeld awarded a defense contract to a company linked to the Carlyle Group, where his former wrestling partner and ex-President George H.W. Bush were employees. Finally, Thomas White, the Secretary of the U.S. Army, was involved in an Enron division that posted $500 million in fake profits and sold his stock before the company collapsed, earning $12 million. These incidents are among the various acts of corporate favoritism in the Bush administration.

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