Every Monday and Friday morning when I pick up the New York Times, I immediately turn to the OP-ED page to see what liberal icon Paul Krugman is saying. In his most recent column, “Debt Is Good,” he says that “what ails the world economy right now is that governments aren’t deep enough in debt.”
Here is my response to his argument:
- “The federal government can (now) borrow at historically low interest rates. So this is a very good time to be borrowing and investing in the future.” Our public debt (on which we pay interest) is now $13 trillion or 74% of GDP, the highest since the end of WWII, as shown in the above chart from the Congressional Budget Office. It is likely that interest rates will soon begin to go up. Every 1% rise will increase interest payments on our already existing debt by $130 billion per year. Where are the hundreds of billions of new dollars for debt service going to come from in an already tight budget? The more we add to the debt, the worse this problem will become.
- “Having at least some government debt helps the economy function better.” I agree! But $13 trillion is way beyond what is needed for this. It is outrageously excessive!
- “What we need are policies that would permit higher (interest) rates in good times without causing a slump. And one such policy would be targeting a higher level of debt.” The problem here is the conceit of Keynesians, like Mr. Krugman, that monetary policy alone can restore us to economic and fiscal health. Rather than accepting that the economy has entered a “new normal” with a permanently slow growth rate of about 2% (as has been the case since the end of the Great Recession in June 2009), we need policy changes such as individual and corporate tax reform (revenue neutral to be sure) and changes in the Affordable Care Act and Dodd-Frank Act to remove their job killing features.
Anybody with an ounce of common sense knows that excessive borrowing will eventually lead to disaster. Mr. Krugman seems to think that by constantly ridiculing his opponents, he can get away with denying this simple truth.
Good morning Jack,
For sure, I know we have one thing in common, that is, we both read Paul Krugman on Mondays and Fridays. But I must confess I don’t always read him for I find him to be a liberal apologist for the capitalist. The conservatives pursue an ideal of the past that also disappoints me. Still, I read them as well. But again, not anymore often than the liberals. As you know, I am neither liberal nor conservative. I place myself in the radical camp which I define as getting to the radius or the center, i.e. core of the matter. That is two individuals trying to find a way to exchange what they have to offer one another. I think of exchanging basic matters of food, clothing and shelter in light of the “Gift”, which means to me the common love of one another. Oh, I know that it is ‘pie in the sky’. But it was what I learned in Sunday School some 65 or 70 years ago. Conservatives and liberals see themselves as capturing reality, I view them as seeing only the present system and assume it is the highest peak humans can reach. I say, “Pshaw!” By the way, I also have great difficulty finding any precise meaning of the term ‘common sense’.
So, we struggle.
You talk about exchanging food, clothing and shelter. Isn’t this the purpose of the safety net which I would say works quite well.
I agree that neither liberals nor conservatives have a monopoly on the truth. In fact, it is the continual tug-of-war between the two camps which leads to social progress. But I doubt that humans can reach a higher peak than this.
After all, considering that homo sapiens are just the current state of animal evolution, I think it is amazing how advanced human civilization actually is at the present time.
But these are lofty thoughts which I don’t dwell on very often. I’m really more focused on trying to improve American life through fiscal and economic policy.
To me common sense is something that a large majority of people are likely to agree on and could thus be taken as a starting point for figuring out how to move forward.