BUZZFLASH: Many of our readers don't realize that you are an economics
professor at Princeton. How did you come to write a column for The New
York Times op-ed page?

KRUGMAN: Well, they just called me out of the blue. Actually it was
Tom Friedman who acted as intermediary, because I'd met him. But it
was just out of the blue. It was 1999, and at the time, it seemed like
our problem was: "How do we deal with prosperity and all the
interesting things that were happening in the business world?" They
thought that they needed somebody to write about that, and somehow had
learned that in addition to regular professor-type stuff, I'd actually
been writing journalistic pieces for Fortune and for Slate, and they
asked me to come on. It seemed like it might be interesting and fun,
and of course we figured that the U.S. policy would be sensible and
reasonable, and I'd be writing mostly about disasters elsewhere of the
new economy. And what do you know? It turned out to be something
quite different from anything we imagined.BUZZFLASH: Your focus is often on international trade and
international monetary systems.

KRUGMAN: Yes, the professional work is basically about that.

BUZZFLASH: You're not a full-time journalist. Do you think that gives
you a bit of distance from both the media and from politics when you
write your columns?

KRUGMAN: What it means is that I don't have any of the usual
journalistic or the journalists' incentives. I'm not part of the
club. I'm not socially part of that world. I don't go to Washington
cocktail parties, so I don't get sucked into whatever kind of
group-think there may be, for better or for worse. I don't necessarily
hear all the latest rumors, but I also don't fold in with the latest
view on how you're supposed to think about things.

It also means that I'm moonlighting. This is not my career, or I
didn't think it is, anyway. And if it means that if I'm frozen out, if
the Times finally decides I'm too hot to handle and fires me or
whatever, that's no great loss. So I'm a lot more independent than
your ordinary average journalist would be.

BUZZFLASH: You make the case that a revolutionary, right wing movement
has set out to transform the United States, and they're succeeding. So
much of the print media and so many television broadcast journalists
have become more like stenographers for the official government spin
than probing journalists. What's your take on that?

KRUGMAN: Well, a couple of things. The first is that a good part of
the media are essentially part of the machine. If you work for any
Murdoch publication or network, or if you work for the Rev. Moon's
empire, you're really not a journalist in the way that we used to
think. You're basically just part of a propaganda machine. And that's
a pretty large segment of the media.

As for the rest, certainly being critical at the level I've been
critical -- basically saying that these guys are lying, even if it's
staring you in the face -- is a very unpleasant experience. You get a
lot of heat from people who should be on your side, because they
accuse you of being shrill, which is everybody's favorite word for
me. And you become a personal target. It can be quite
frightening. I've seen cases where a journalist starts to say
something less than reverential about Bush, and then catches himself
or herself, and says something like, "Oh, I better not say that, I'll
get 'mailed.'" And what they mean by "mail" is hate mail, and it also
means that somebody is going to try to see if there's anything in your
personal history that can be used to smear you.

It's like shock therapy, aversion therapy. If you touch these things,
you yourself are going to get an unpleasant, painful electric
shock. And most people in the media just back off as a result.

BUZZFLASH: Bottom line: It's just easier not to be critical.

KRUGMAN: Your personal life, your professional life, is much easier if
you oscillate between reverential pieces about the commander in chief
and cynical pieces which equate minor foibles on one side with
grotesque lies or deceptions on the other.

BUZZFLASH: Economic decisions are certainly politicized, but you do
have numbers -- you have the advantage of showing what works, what
doesn't, which numbers add up, and which don't. It seems like so much
of the criticism you get is sort of dismissive, but no one challenges
you on the substance of the arguments you're making.

KRUGMAN: Oh, I get challenged all the time on the substance, but
usually by people who have no clue, or who are just looking for
anything. So if I say the number is 2.15 and it's actually 2.143,
someone will come after me, saying: "Lie, lie - it's inaccurate!" So
that's what's going on. But the amazing thing about this is that we're
not talking about close calls here. When you talk about [Bush]
administration policy, it's not a case of, well, "OK, maybe I disagree
with your model, but according to your model, this policy will do what
you say it will." These guys are insisting all the time that two minus
one equals four. There isn't any reasonable argument in their favor,
but there's a lot of power in their favor.

BUZZFLASH: There's a wonderful chapter in the book of your collection
of columns on that theme. Let's focus on something specific -- the
unprecedented deficit. Last week, I think it was projected at nearly
$500 billion, staggering even beyond Bush Senior's records in the
early '90s. How is it that this has not become more of an issue, and
why don't more Americans see this as gross mismanagement of the
economy?

KRUGMAN: Well, for the general public, it's very abstract. It's very
hard to understand. Understandably, there are a very small number of
people who sit down and do the accounting, and say, "Gee, how are we
going to pay for Social Security in the next decade, given this?" It's
not quantum mechanics; it's not hard stuff, but it does take some
attention. The truth is, when I started doing this column, I wasn't a
U.S. budget expert at all, and I had to put in a lot of work learning
how to read those numbers. And you don't expect the guy in the street
to understand that.

As for the media, I guess the point is that not very many people
understand this stuff. And those who do -- the idea of saying, "My
god, these guys are looting the country" -- that's uncool. It's not
what you want to do. Right now there's a column in the latest Newsweek
entitled, "The Brainteaser of Deficit Math," which basically confirms
everything I've been saying all along, that this is wildly
irresponsible and it's actually unsustainable. But the tone is kind of
distant and cool. I don't know whether he actually doesn't feel any
outrage, or just feels he shouldn't do that.

BUZZFLASH: Two points to add to that is during the last press
conference that Bush held before he went off to Crawford, Texas, he
was asked once or twice about the deficit by a couple of
reporters. And he deflected the questions and kept talking about
jobs. You could tell there was a clear strategy to not talk about the
deficit. Instead, Bush talked about something tangible to make it
appear to the American public that Bush was concerned about creating
jobs.

Do you think part of the reason that people don't hold the Bush
administration more accountable is that they basically just give it
the benefit of doubt? As if to say, "Surely someone in power has to
know what they're doing; there has to be logic to the madness and
order in the chaos."

KRUGMAN: I waver on that. Sometimes I think that's what people
think. Certainly, I think that's the case with a lot of the media. The
concept that the president of the United States is flat-out lying
about the sustainability of his own economic policy -- that's too high
a hill for them to climb. And I guess the general public tends to give
him the benefit of the doubt.

But there's a definite tilt in the way these things are covered and
perceived. I think the average voter in California is feeling outraged
about the state's $38 billion deficit, and then you stop and think for
a second. You say, wait a second -- first of all, it's not $38
billion. It turns out that was a two-year number, and this year
they've closed the books. And it's only $8 billion for next year. And,
anyway, that number should be as abstract and remote from the ordinary
residents of California as the national budget deficit is from the
ordinary American.

But there's a machine that keeps on beating it out, saying Davis is
bad; Davis is irresponsible; the deficit -- he lied to us. And the
press picks it up, and, in turn, it makes its way to the public. So
you have a situation in which mainstream publications continue to
report and hammer on Davis' $38 billion deficit, which isn't even
remotely true, while Bush, for the most part, gets a free pass on the
$500 billion deficit which is absolutely real.

BUZZFLASH: In your book, you give special attention to the origins of
the California energy crisis. Who would you say is to blame for that?

KRUGMAN: What actually happened in California was that the system was
a little short on capacity -- not actually less capacity than demand,
but the usual margin wasn't there because of a drought and a couple of
other things. That created a situation in which energy companies could
game the system by strategically taking a plant offline or scheduling
a power transmission in such a way that it could be guaranteed to
create congestion on the transmission grid, and a whole bunch of other
strategies. Basically by pulling power off the market, they could
drive prices up.

So what you had was a basically normal, slightly tight power situation
that was transformed into a wild chaos of brownouts, blackouts, and
prices up to 50 times what's normal due to companies gaming the
system. It wasn't some vast conspiracy. It was mostly companies seeing
what they could do individually. And it was created by a badly
conceived deregulation scheme that set the system up for this to
happen. So that's the story, and if you have to say who's to blame,
well, companies were out there maximizing profits quite ruthlessly,
but that's to be expected. You want to blame Pete Wilson for setting
up the system where that could happen, and you want to blame the
energy regulators, which basically means the feds, for refusing to do
anything about it.

BUZZFLASH: You had a wonderful column on Arnold Schwarzenegger, "Conan
the Deceiver," and what little details he's revealed of his economic
plan. I think it must be maddening for you to actually understand what
the real-life consequences are of the empty rhetoric that politicians
make.

KRUGMAN: Well, I've given up a lot to do this column. My habitat
before was not just academics, but I was part of the sort of
high-level, very genteel policy circuit -- you know, finance
ministers, economists and big bankers, sitting around tables with
glasses of mineral water, and having high-minded discussions about
global policy. I'm very much part of that, or I was very much part of
that comfortable world where the working assumptions -- the pretense,
if you like -- is that we're all men of good will, and it's all
intelligent and that the issues are deep. And if there are divisions,
it's because there are really two sides.

And then here I am in the middle of this, trying desperately to get a
few more people to notice that we have wildly dishonest, irresponsible
people making policy in the world's greatest nation. And currents of
abuse are coming in the mail and over the e-mails, as we saw. There
are many mornings when I wake up and say, "Why am I doing this? But
you got to do it."

BUZZFLASH: Grover Norquist, head of Americans for Tax Reform and a
board member of the National Rifle Association and GOP advisor, made a
comment that he wants to shrink the size of the federal government so
small that he could drown it in a bathtub. When you look at the Bush
economic policy, are we dealing with an ideology to destroy social
programs and the federal government? Or is it mismanagement? Or both?

KRUGMAN: I think you have to think of this as there's more than one
player in this thing. If you ask Norquist or the Heritage Foundation
about where the economic and social policy intelligentsia really
stands, their aim is to roll us back to Herbert Hoover or
before. Norquist actually thinks that we've got to get back to before
the progressive movement -- before the McKinley era, which actually is
one of Karl Rove's guiding lights as well. So there's definitely an
important faction in the Bush administration and in the Republican
Party that really wants to unravel all of this stuff and basically
wants us to go back to a situation where, if you are unlucky, and you
don't have enough to eat, or you can't afford medical care, well,
that's just showing that you weren't sufficiently provident. And then,
for these people, there would be no social safety net whatsoever.

Other people in the party, and other people in the coalition, have
deluded themselves into thinking that somehow this is all going to be
painless, and we're going to grow our way out of the deficit. Other
people really don't care about any of that and are viewing their
alliance with these people as a way to achieve their social goals --
basically roll back the revolution in social mores over the past few
decades.

So there is a coalition, but there's no question that if you ask what
do the core ideologues want, the answer is they want to roll it all
back. If you looked at what the Heritage Foundation says, they use the
terms "New Deal" and "Great Society" as essentially curse
words. Everything Franklin Roosevelt or Lyndon Johnson did to provide
a little bit of a cushion for Americans having bad luck is a bad
thing, from their point of view.

BUZZFLASH: As a professor, if you were giving a lecture and you had to
define the economic policy of the Bush administration, could you get
your arms around it? How would you define it?

KRUGMAN: There is no economic policy. That's really important to
say. The general modus operandi of the Bushies is that they don't make
policies to deal with problems. They use problems to justify things
they wanted to do anyway. So there is no policy to deal with the lack
of jobs. There really isn't even a policy to deal with terrorism. It's
all about how can we spin what's happening out there to do what we
want to do.

Now if you ask what do the people who keep pushing for one tax cut
after another want to accomplish, the answer is they are basically
aiming to create a fiscal crisis which will provide the environment in
which they can basically eliminate the welfare state.

BUZZFLASH: Talking about perception, why is it, even after the
staggering deficits, and three million jobs lost, when you look at the
polls, ordinary people perceive Republicans as better at managing the
economy and the federal budget than Democrats. Even though we're just
starting to understand just how good the Clinton-Gore economic
policies were, the false perception still exists the Republicans can
handle the economy better.

KRUGMAN: Again, I think it comes back to press coverage. Just this
weekend, I was looking at something: There's an enormous scandal right
now involving Boeing and a federal contract, which appears to have
been overpaid by $4 billion. The Pentagon official who was
responsible for the contract has now left and has become a top
executive at Boeing. And it's been barely covered in the press -- a
couple of stories on inside pages. You compare that with the White
House travel office in 1993. There were accusations, later found to be
false, that the Clintons had intervened improperly to dismiss a couple
of employees in the White House travel office.

That was the subject, in the course of one month, of three front-page
stories in the Washington Post. So if people don't understand how
badly things are being managed now, and have an unduly negative sense
of how things were managed in the Clinton years, well, there in a
nutshell is your explanation.

BUZZFLASH: If you had to make a projection, do you think Clinton's
presidency -- specifically his economic policy and what he did in
terms of generating jobs and creating surpluses -- will survive as his
legacy, versus what happened afterwards with the Bush administration?

KRUGMAN: Well, I think Clinton's successes will be overshadowed by the
scale of the disaster that followed. Not that Clinton will be
blamed. I think historians will say, "Gee, there was a sensible,
basically well-intentioned government that dealt successfully with a
bunch of crazies."

A lot of good things happened in the 1920s, although there were a
couple of really bad presidents. But all of that now, in historical
memory, is colored by the realization of what followed afterwards.

I think that with the looming disasters of the budget on foreign
policy -- and the things that really scare me, which I know we're not
going to get into but let's just mention the erosion of civil
liberties at home -- I think that, in retrospect, this will be seen in
terms of how did the country head over this cliff. I hope I'm
wrong. If there's regime change in 2004, and the new man actually
manages to steer us away from the disasters I see in front of us, then
we'll probably be talking a lot about the long boom that was begun
during the Clinton years, and how it was resilient, even to an episode
of incredibly bad management.

But I don't think that's the way it's going to play out, to be
honest. Whatever happens in the election, I think that we've done an
extraordinary amount of damage in the last three years.

BUZZFLASH: Looking just at the economic impact of Iraq, how much of a
strain will that continue to be?

KRUGMAN: Well, there are levels and levels. I think Iraq is going to
cost us $100 billion a year for the indefinite future. Now at one
level, you can say, well, that's only about 20 percent of our budget
deficit, and it's only about 5 percent of the federal budget. But on
the other hand, it's being added onto a very nasty situation. It's a
little unpredictable. I don't know how much collateral damage Iraq is
going to inflict. At the rate we're going, it's clear that unless
something happens soon, we're going to have a much bigger Army. It may
seem like we have enough troops, but I've been talking to people,
including officers, who are just crying about what they see as the
degradation of the Army's quality because of all of this.

Right now, I'm trying to understand what a petroleum industry expert
is telling me, when he says that some of the market futures suggest
that the market is pricing in about a one-in-three chance that unrest
in Iraq spreads to Saudi Arabia. And if that happens, of course, then
we're talking about a mammoth disaster.

BUZZFLASH: I've got to say I don't know how you sleep at night.

KRUGMAN: I have a little trouble, to be honest. It's this funny thing:
I lived this very comfortable life in a very placid college town, with
nice people all around. And life is good. But some of us -- not just
me, but a fair number of people, including my friends -- we've looked
at the news, and we sort of extrapolate the lines forward. And there's
this feeling of creeping dread.

BUZZFLASH: James Carville, I think, called you courageous. Do you just
call it like you see it? Do you just look at the numbers and tell
people what the numbers tell you?

KRUGMAN: I could have made the decision to either not do this column
or to do it and to say, OK, my expertise is economics, and I'm going
to write this in a very cool fashion. And I'm going to write columns
praising something, anything about the Bushies, and make snide attacks
on the Democrats, just to keep an even-handed feel to it, so that
people won't get mad at me. And I decided not to do that. For whatever
the reason was -- pig-headedness or whatever -- I certainly stuck my
neck out quite a lot.