Paul Krugman: Hey, Let's Not Get "Hysterical" Over $9 Trillion Deficit
Columnist-economist-Obama-enabler Paul Krugman thinks the $9 trillion deficit the White House is projecting over the next 10 years (a figure worse than expected) is actually not so bad, at least in the context of World War II.
In a defensive Monday evening blog post, "How big is $9 trillion?" Krugman explained:
There's been some hysteria about the administration's new estimate that the cumulative deficit will be $9 trillion over the next decade. Don't get me wrong: this is bad. But it's being treated as an inconceivable sum, far beyond anything that could possibly be handled. And it isn't.
He engaged in some wishful thinking about growth under Obama:
What you have to bear in mind is that the economy - and hence the federal tax base - is enormous, too. Right now GDP is around $14 trillion. If economic growth averages 2.5% a year, which has been the norm, and inflation is 2% a year, which is the target (and which the bond market seems to believe), GDP will be around $22 trillion a decade from now. So we're talking about adding debt that's equal to around 40% of GDP.
Right now, federal debt is about 50% of GDP. So even if we do run these deficits, federal debt as a share of GDP will be substantially less than it was at the end of World War II.
Hmm. If you have to reach back to World War II to make your point that things are really not so grim, how "not so grim" could they really be?
Krugman's happy talk garnered some pushback inhis blog'snormally floridly praiseworthy comments section. "Drewfuss" cracked wise:
So this recession hasn't racked up as much debt as our huge participation in the biggest military conflict in history.
Excellent.
