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 maths, which debunks the claim that the $9 trillion debt is OK 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 made up a meager 5% of our total budget.
Just look at the composition of our spending, then vs. now:
Without painful adjustments to entitlements (mandatory) there’s just no way spending will shrink the way it did after 1945. What’s more, it seems far fetched to believe that America will enjoy the same kind of growth it did after WWII, when we stood alone in the world as an economic giant, and rode the wave of booming families, highways, cars and the suburbs.
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