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The Deficit Ruse

November 30, 2009

Republicans have been talking a lot about deficits lately, and presumably with good reason. If George Will is correct, the US debt will be an astonishing 700 billion dollars in 2019. Now that’s a lot of money. Right?

Turns out it’s not—or, at least for the US economy, it’s not. As Paul Krugman explains, Will’s estimated figure is “roughly comparable to that under the first President Bush.” If anything, Krugman argues, the deficits incurred under Bush should have been more worrying than today’s numbers:

And bear in mind my point about causes of deficits: the deficits of the Reagan-Bush years were essentially gratuitous, the result of a desire to cut taxes while increasing military spending, rather than a response to a temporary emergency. So that debt burden should have been more worrying than what we’re facing now.

The problem with Krugman’s view is that the line between gratuitous spending and emergency spending is not always clear. Krugman and I may agree that tax cuts and military spending in the Reagan-Bush years were gratuitous, but Republicans certainly don’t. To take a current example, it is possible to acknowledge that some form of stimulus was necessary last fall to prevent a Great Depression II, while at the same time disagreeing over the appropriate amount. (Was 787 billion dollars too small, too large, or just right?) And then there is the question of what to spend the stimulus money on. One politician’s pork is another’s bread-and-butter.

So ideology plays an important role in all of this: whether to spend money in the first place, what to spend it on, and when to stop spending. The reality is that, once in power, neither party tends to worry about deficits too much — whether its war or social welfare, Democrats and Republicans deem their respective agendas essential and worthwhile. If you favor small government, vote Libertarian. Otherwise, lets hope for less obstructionism from the Right, and more discussion of the real questions at hand: Would another stimulus package help create jobs? Is guaranteed access to health care morally necessary for an advanced society? Is Afghanistan a worthy cause?

These are the important concerns right now, not deficits.

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