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Pau Krugman: Fraudulence of the Fiscal Hawks

Friday, February 9, 2018 15:43
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“…pretending to care about the deficit served several useful political purposes”:

Fraudulence of the Fiscal Hawks, by Paul Krugman, NY Times: In 2011, House Republicans, led by Paul Ryan, issued a report full of dire warnings about the dangers of budget deficits. … Citing the horrors of big deficits, Republicans refused to raise the federal debt ceiling, threatening to create financial turmoil and effectively blackmailing President Barack Obama into cutting spending on domestic programs.

How big were these horrifying deficits? In the 2012 fiscal year the federal deficit was $1.09 trillion. Much of this deficit, however, was a direct result of a depressed economy… The deficit fell rapidly over the next few years as the economy recovered.

This week Republicans, having just enacted a huge tax cut, cheerfully agreed to a budget deal that, according to independent experts, will push next year’s deficit up to around $1.15 trillion — bigger than in 2012…, but this time none of the deficit will be a result of a depressed economy.

Wait, it gets worse. In 2012 there were strong economic reasons to run budget deficits. The economy was still suffering the aftereffects of the 2008 financial crisis. … By contrast, there is no comparable case for deficits now, with the economy near full employment and the Fed raising interest rates to head off potential inflation. …

If anything, we should be using this time of relatively full employment to pay down debt, or at least reduce it relative to G.D.P. …Republicans … are providing more stimulus to an economy with 4 percent unemployment than they were willing to allow an economy with 8 percent unemployment.

There have been many “news analysis” pieces asking why Republicans have changed their views on deficit spending. But let’s be serious: Their views haven’t changed at all. They never really cared about debt and deficits; it was a fraud all along. …

 However, pretending to care about the deficit served several useful political purposes. It was a way to push for cuts in social programs. It was also a way to hobble Obama’s presidency.

And I don’t think it’s unfair to suggest that there was an element of deliberate economic sabotage. … Basically, they were against anything that might help the economy on President Obama’s watch.

Now Obama is gone, and suddenly deficits don’t matter. …

No, this is all about Republican bad faith. Everything they said about budgets, every step of the way, was fraudulent. And nobody should believe anything they say now.



Source: http://economistsview.typepad.com/economistsview/2018/02/pau-krugman-fraudulence-of-the-fiscal-hawks.html

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