Krugman Nails It, For The Millionth Time


Posted by Bob Lord

I really feel for Paul Krugman. He’s brilliant, and has precious few peers as an economist. He knows that what’s coming out of Washington, from both Democrats and Republicans, is crazy talk. Ditto for what’s coming out of Europe. So he tries, repeatedly, to use his op-ed column to move policy in a sane direction. Here’s his latest attempt, well worth the read:

He’s 100% right, of course, like he has been in perhaps fifty prior columns. But he’s a voice in the wilderness, and he undoubtedly knows it. Nonetheless, he soldiers on, hoping that somehow, if the argument is made in a different way, it will be heard.

Oh well. Hope springs eternal, I guess.


  1. FY 2012 spending accounts for about 24% of GDP.
    The all time high for federal spending is 44% of GDP set during WWII in 1944.
    During Reagan’s massive spending binges, the federal budget reached 23% of GDP. Slightly lower than it is today. Remember he was a “fiscal conservative” too.
    Social Security spending accounts for 19% of the federal budget.
    Military spending accounts for 19% of the federal budget.
    Medicare spending accounts for 12% of the federal budget.
    Financing the debt run up by the fiscally conservative Reagan accounts for 6% of the total budget, $242 billion in 2012.
    Fiscally conservative Reagan increased federal spending by 21.5% and increased the budget deficit by 89.2% in 8 years.
    Clinton increased federal spending by 12.4% and turned Reagan’s deficit into the largest budget surplus in history.
    Fiscally conservative George W. Bush increased federal spending by 32.2%. He wiped out the budget surplus he inherited and turned it into a whopping $1.5 trillion deficit in 8

    Concerned about the deficit? Then the best way to fix that, is to get it so that consumers have money to spend….and get rid of those budget busting Bush Tax Cuts!

    Barack Obama has increased spending by 8% in two years. The deficit has shrunk from $1.5 trillion when he entered office to $1.2 trillion for FY12.

  2. You are quite right. But some people live in a fantasy world. I was around in the 1950s, when taxation levels were much, much higher, as any educated person knows.

  3. Krugman lost his objectivity, if he ever had any, a while back. He is no longer a serious open minded economist but rather, sadly, a cheerleading political hack. Consider the effects, in Europe, of unquestioning belief in non stop Keynesian stimulus-let alone bloated and unproductive public sectors. . Unrestrained and unregulated spending and lending by the public, quasi-public and private sectors is what got us into our current mess. Reliance on debt as a way of living is an economic dead end. Enough “stimulus”. Government, business and citizens must live within their means and if they do, they will, in the end, be stronger more competitive and less vulnerable .

  4. HA! Except for one teeny tiny problem….WE DON’T HAVE RECORD HIGH TAXATION LEVELS!They are low, not high.One of the main reasons we have issues now, is LACK OF DEMAND..people can’t buy what companies sell if they don’t have the $$$$. Pretty simple.

  5. Hmmm? Record High Tax Levels. Taxation Burdens on “Job Creators.” I’m flattered that John Boehner is following me.

    I often hear from Conservatives that we need more business expertise applied to running government. If I had a business and the physical plant were dilapidated to the point it was impairing productivity, and the cost of labor and borrowing both were incredibly low, I’d obviously seize the moment to upgrade my physical plant. Yet, when Progressives apply that logic to argue for an investment in the country’s decaying infrastructure, Conservatives resist. Better, I suppose, to wait for a strong economy, with the accompanying tight labor market and higher borrowing rates, to address that problem.

  6. When it comes to economic cycles, Krugman is not a brilliant economist. His Nobel was for a theoretical dissertation on trade. We have some economists with actual Nobel prizes for business cycle work and they would not agree with Krugman at all. There have been many, many great depressions around the world over the last 100 years and no one has stimulated their way out of a great depression or a great recession. It is just a false mythology of the great depression. We just wasted a couple of trillion trying out Keynesian solutions. Now Krugman wants to double down.

    We now have a number of economists who have shown convincingly that our current crisis and that of Europe has been brought on by excess taxation beyond the point of positive returns. Krugman’s phrase “growing debt slower than tax base” is no longer possible at current taxation burdens on job creators. The tax base is collapsing despite record high taxation levels.