Paul Krugman Divulges What the Fiscal Hysterics Don't Want You to Know


Paul Krugman asks in his Friday morning column: "What if they balanced the budget and nobody knew or cared?"

This is a close approximation to what is happening. While the federal budget has not quite been totally balanced, "the Congressional Budget Office has tallied up the totals for fiscal 2014, which ran through the end of September, and reports that the deficit plunge of the past several years continues," Krugman reports. 

Why aren't we dancing in the streets over this news? Two reasons: first the media does not really enjoy reporting good news. They would rather focus on problems. (Witness all the mostly-negative reporting on Obamacare, a program which is working.)

The second, even more insidious reason is that there are people who don't want you to know that the budget deficit crisis is over. These "fiscal scold think tanks, inside-the-Beltway pundits" pay plenty of attention to these numbers, and they are mostly annoyed. As Krugman writes,

And therein lies the truth. The real agenda for the deficit scolds is to cut social programs, and they love big deficits because that helps them feed the fear machine. "A few years ago they almost managed to bully the nation into cutting Social Security and/or raising the Medicare eligibility age; they even had hopes of turning Medicare into an underfinanced voucher program," Krugman points out. "Now that window of opportunity is closing fast."

Poor deficit scolds, not getting their way.

Krugman, as usual gives the devil his due, asking if there is any truth to the view that falling defcits are just a "short-term blip" in a dire long-term picture, then answering:

Actually, no. Falling deficits right now have a lot to do with a strengthening economy plus some of that “mindless austerity” the president condemned. But there has also been a dramatic slowdown in the growth of health spending — and if that continues, the long-run fiscal outlook is much better than anyone thought possible not long ago. Yes, current projections still show a rising ratio of debt to G.D.P. starting some years from now, and uncomfortable levels of debt a generation from now. But given all the clear and present dangers we face, it’s hard to see why dealing with that distant and uncertain prospect should be any kind of policy priority.

So let’s say goodbye to fiscal hysteria. I know that the deficit scolds are having a hard time letting go; they’re still trying to bring back the days when Bowles and Simpson bestrode the Beltway like colossi. But those days aren’t coming back, and we should be glad.

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