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Jewish World Review Feb. 11, 2010 / 27 Shevat 5770 Krugman: Bush's Deficit Bad, Obama's Deficit Good By Larry Elder http://www.JewishWorldReview.com | Left-wing economist, Nobel laureate and New York Times columnist Paul Krugman hates deficits in tough economic times -- when the president of the United States is named George W. Bush. Krugman, in a November 2004 interview, criticized the "enormous" Bush deficit. "We have a world-class budget deficit," he said, "not just as in absolute terms, of course -- it's the biggest budget deficit in the history of the world -- but it's a budget deficit that, as a share of GDP, is right up there." The numbers? The deficit in fiscal year 2004 -- $413 billion, 3.5 percent of the gross domestic product. Back then, a disapproving Krugman called the deficit "comparable to the worst we've ever seen in this country. … The only time postwar that the United States has had anything like these deficits is the middle Reagan years, and that was with unemployment close to 10 percent." Take away the Social Security surplus spent by the government, he said, and "we're running at a deficit of more than 6 percent of GDP, and that is unprecedented." He considered the Bush tax cuts irresponsible and a major contributor -- along with two wars -- to the deficit. But he also warned of the growing cost of autopilot entitlements: "We have the huge bulge in the population that starts to collect benefits. … If there isn't a clear path towards fiscal sanity well before (the next decade), then I think the financial markets are going to say, 'Well, gee, where is this going?'" Three months earlier, Krugman said, "Here we are more than 2 1/2 years after the official end of the recession, and we're still well below, of course, pre-Bush employment." In October 2004, unemployment was 5.5 percent and continued to slowly decline. At the time, Krugman described the economy as "weak," with "job creation … essentially nonexistent." How bad will it get? If we don't get our "financial house in order," he said, "I think we're looking for a collapse of confidence some time in the not-too-distant future." Fast-forward to 2010. The numbers: projected deficit for fiscal year 2010 -- over $1.5 trillion, more than 10 percent of GDP. This sets a post-WWII record in both absolute numbers and as a percentage of GDP. And if the Obama administration's optimistic projections of the economic growth fall short, things will get much worse. So what does Krugman say now? We must guard against "deficit hysteria." In "Fiscal Scare Tactics," his recent column, Krugman writes: "These days it's hard to pick up a newspaper or turn on a news program without encountering stern warnings about the federal budget deficit. The deficit threatens economic recovery, we're told; it puts American economic stability at risk; it will undermine our influence in the world. These claims generally aren't stated as opinions, as views held by some analysts but disputed by others. Instead, they're reported as if they were facts, plain and simple." He continues, "And fear-mongering on the deficit may end up doing as much harm as the fear-mongering on weapons of mass destruction." Krugman believes Bush lied us into the Iraq War. Just as people unreasonably feared Saddam Hussein, they now have an unwarranted fear of today's deficit. Questions: Didn't Krugman, less than six years ago, call the deficit "enormous"? Wouldn't he, therefore, consider a $1.5 trillion deficit at 10 percent of GDP mega-normous? Didn't he describe the economy with 5.5 percent unemployment as "weak"? Isn't the current economy, at 9.7 percent unemployment, even weaker? If the 2004 deficit was "comparable to the worst we've ever seen in this country," wouldn't today's much bigger deficit cause even more heartburn? Nope. Now a huge deficit is actually a good thing: "The point is that running big deficits in the face of the worst economic slump since the 1930s is actually the right thing to do. If anything, deficits should be bigger than they are because the government should be doing more than it is to create jobs." The deficit " should be bigger "?! Long term, Krugman says, we've got concerns about revenue and spending. But as for now? "There's no reason to panic about budget prospects for the next few years, or even for the next decade." In 2004, Krugman warned that without a "clear path towards fiscal sanity" before "the next decade," we faced a "crunch." Presumably, we now have this "clear path." Let's review. In 2004, an unhappy Krugman criticized Bush's "weak" economy and "miserable" job creation. Running an "enormous" deficit was a bad thing. Times were awful -- "by a large margin" the worst job crash and performance since Herbert Hoover. Today the deficit is four times as large in an even weaker economy with much higher unemployment. Times are awful. Now, though, the deficit is a good thing and should be even bigger. Krugman's flip-flop on the deficit demonstrates a modern economic equation. Hatred of Bush + love for Obama = intellectual dishonesty. Every weekday JewishWorldReview.com publishes what many in the media and Washington consider "must-reading". Sign up for the daily JWR update. It's free. Just click here. JWR contributor Larry Elder is the author of, most recently, "Stupid Black Men: How to Play the Race Card--and Lose." (Proceeds from sales help fund JWR) Let him know what you think of his column by clicking here. Larry Elder Archives © 2006, Creators Syndicate

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