Krugman argues that America’s long-term deficit is not the problem the American political class insists it is, but qualified this by saying “I’d like to see us paying down the debt but not at the cost of depressing the economy right now.”
Dumbfounded, Morning Joe co-host Joe Scarboroughresponded with an op-ed in Politico arguing that deficits and the debt actually are problems.
Krugman and other faithful Keynesians have had nearly a century to convince the public that spending money we haven’t yet made or saved can stimulate the economy, so far they have not yet proved successful.
Not only does the public believe the federal budget deficit needs to be addressed now rather than later, 57 percent believe that reducing government spending will mostly help the economy, only 21 percent think it would mostly harm the economy.
This suggests one reason the public wants to address the deficit now is that they are concerned it could be preventing the economy from recoverying faster. This is actually in line with what Harvard economist Alberto Alesina found in his research, reported in the Wall Street Journal.
Although most Americans agree on this issue, to the extent that they disagree is correlated with partisanship. Republicans believe the federal budget deficit must be addressed now rather than later by a margin of 87 to 10 percent, similarly Independents agree 80 to 15 percent.
This debate highlights a possible reason the national debt continues to grow andunfunded liabilities continue to skyrocket, the Keynesian adherents still aren’t convinced deficit spending and mounting public debt actually is a significant problem.
At this point, the burden of proof falls on the Keynesians to prove that spending money we haven’t yet made or saved does actually create healthy, meaningful, and sustainable growth.