Here's Why Krugman Should Be Worried About The Monster Deficit

08-28-2009 • The Business Insider

Paul Krugman is trying to have it both ways when it comes to the deficit. On the one hand, he says it isn't a big problem, and that we can afford a lot more spending. On the other hand, he says if there is a problem it's all Bush's fault -- which may be true, but that doesn't change the current reality. Either way, some are finding his reasoning to be lacking. James Hamilton at Econbrowser points to Political Math, which debunks the claim that the $9 trillion debt is okay because it's on par with where we were post WWII. ...implicit in his observation is the concept that since we did fine after WWII, we'll do fine now. But the years after WWII saw drastic reductions in the inflation-adjusted debt driven by drastic reductions in spending. Mr. Krugman points to no similar possibility in the post-Obama world.... Back in 1945, at the height of the spending that saw our national debt rise so dramatically, entitlement spending and interest on the national debt m