Paul Krugman explained to Peggy Noonan on This Week why the president can’t negotiate with Republicans.
“We should not allow this to become or be thought of as a legitimate budget strategy,” Krugman warned. “This is hostage taking, this is walking into a room and saying, ‘I’ve got a bomb, give me what I want or I’ll blow up this room.’ This has never happened before and should not be allowed to happen.”
“This is much scarier that the fiscal cliff because we don’t know what it does,” he continued. “What we do know is that U.S. government debt is the global safe asset. It is what every financial transaction relies on as the ultimate, this is what value consists of — and better than gold, better than anything. U.S. Treasury bills are the thing. If they are called into question, nobody knows what happens.”
Noonan, however, insisted that the president “should be sitting down and talking with those who would attempt to move forward on spending.”
“I consider it unusual that this president can never make a deal with those folks,” she opined.
“This is not something you negotiate over,” Krugman shot back. “You do not negotiate with hostage takers. That’s the White House position. They’re right about that. You just don’t negotiate on this. You can negotiate on the sequester, you can negotiate on taxes, but not on someone who is threatening to blow up the world economy if he doesn’t get his way.”