Krugman on deficits | Arkansas Blog

Friday, February 5, 2010

Krugman on deficits

Posted By on Fri, Feb 5, 2010 at 7:03 AM

Just in time for my frustration at Republican talking points on increases in the debt ceiling and the federal deficit, first created by George W. Bush. Would they shut down government instead?

Here's Krugman on the hysteria:

And fear-mongering on the deficit may end up doing as much harm as the fear-mongering on weapons of mass destruction.

Let’s talk for a moment about budget reality. Contrary to what you often hear, the large deficit the federal government is running right now isn’t the result of runaway spending growth. Instead, well more than half of the deficit was caused by the ongoing economic crisis, which has led to a plunge in tax receipts, required federal bailouts of financial institutions, and been met — appropriately — with temporary measures to stimulate growth and support employment.

The point is that running big deficits in the face of the worst economic slump since the 1930s is actually the right thing to do. If anything, deficits should be bigger than they are because the government should be doing more than it is to create jobs.

True, there is a longer-term budget problem. Even a full economic recovery wouldn’t balance the budget, and it probably wouldn’t even reduce the deficit to a permanently sustainable level. So once the economic crisis is past, the U.S. government will have to increase its revenue and control its costs. And in the long run there’s no way to make the budget math work unless something is done about health care costs.

Health care? You know the Republican answer on that. No. Or make it harder for damaged people to sue over malpractice. That effort got a setback in Illinois yesterday.

 

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