Paul Krugman's Flight of Fantasy on the Deficit—Again

When then-Vice-President Dick Cheney made the astounding and confounding comment that “deficits don’t matter,” he was attacked by those on the opposite side of the aisle, and rightly so. I have not heard of any such left-wing challenges to liberal syndicated columnist Paul Krugman, who is now repeatedly making a similar argument to that put forward by “Vice,” asserting that the path to strengthening the economy and reducing the rate of unemployment is for the government to spend more, not less.

Krugman seeks to marginalize and diminish fiscal conservatives and deficit hawks by labeling them “deficit scolds,” and proudly proclaims that the country has not yet collapsed yet under the weight of trillion dollar plus annual deficits, touting that interest rates remain low, so in his view, we should continue along our merry way, living for today without giving a hoot about tomorrow, continuing to write checks with borrowed money. Krugman does not tell us that the sole reason interest rates are low is due to manipulation by the Federal Reserve Board nor does he note that interest rates cannot be kept at an artificially low level indefinitely, and that when interest rates rise, the nation’s interest obligations will become unmanageable. Low interest rates have served to remove the urgency for Congress to act to restrain federal spending.

I believe Professor Krugman could not be more wrong, but by the time realizes it, it will be too late.