So Now The Deficit Is Not A Crisis?


Go figure. The federal budget deficit is not “the economic equivalent of a giant meteor hurtling toward America, about to hit any day,” says the Los Angeles Times.

“… the fight over deficits and spending has become a surrogate for battles over basic political and ideological disagreements over the role of government and, behind the scenes, over how the economic pie should be divided.”

Wow. It took how long to figure that out?

For years Paul Krugman has been dogging the austerians, those prophets of economic doom, over their deficit obsession. Today, Krugman goes looking for Mister Goodpain, some evidence of the austerians’ promised rewards from radical, contra-Keynesian belt-tightening. Their serial infatuations with austerity measures in Ireland and England proved fleeting, as growth flagged and those countries’ unemployment levels stagnated in the mid teens.

Recently, the austerians have looked to Latvia for signs that their austerity gospel is more canonical than the Book of Thomas and a slicker hustle than televangelism. While Latvia has experienced some growth and unemployment has come down, it is still at 14 percent, Krugman writes. And Iceland, the real economic miracle that took a radically different path, rejecting austerity, forgiving mortgage debt, letting its largest banks fail, and investigating and prosecuting its bankers? Iceland is recovering nicely, thank you, with unemployment about six percent. Iceland is still waiting by the phone for a the austerians to call. Krugman concludes,

So what do we learn from the rather pathetic search for austerity success stories? We learn that the doctrine that has dominated elite economic discourse for the past three years is wrong on all fronts. Not only have we been ruled by fear of nonexistent threats, we’ve been promised rewards that haven’t arrived and never will. It’s time to put the deficit obsession aside and get back to dealing with the real problem — namely, unacceptably high unemployment.

Maybe the L.A. Times piece is evidence that it is finally happening.


  1. Doug Gibson says:

    Because the worst impervious surface is the eardrum of a conservative economist. Talk about your runoff!

  2. Ascend of Asheville says:

    Krugman should have been asked to join the cabinet, but that is another impervious surface.

  3. Doug Gibson says:

    He actually said that he’d prefer not to be in government, as it gives him more freedom to be critical of it.

  4. TJ says:

    I’m having way too much fun surfing YouTube!: