Mo’ Money, Mo’ Money, Mo’ Money!


Paul Krugman:

Dwindling Deficit Disorder

For three years and more, policy debate in Washington has been dominated by warnings about the dangers of budget deficits. A few lonely economists have tried from the beginning to point out that this fixation is all wrong, that deficit spending is actually appropriate in a depressed economy. But even though the deficit scolds have been wrong about everything so far — where are the soaring interest rates we were promised? — protests that we are having the wrong conversation have consistently fallen on deaf ears.

What’s really remarkable at this point, however, is the persistence of the deficit fixation in the face of rapidly changing facts. People still talk as if the deficit were exploding, as if the United States budget were on an unsustainable path; in fact, the deficit is falling more rapidly than it has for generations, it is already down to sustainable levels, and it is too small given the state of the economy.

Start with the raw numbers. America’s budget deficit soared after the 2008 financial crisis and the recession that went with it, as revenue plunged and spending on unemployment benefits and other safety-net programs rose. And this rise in the deficit was a good thing! Federal spending helped sustain the economy at a time when the private sector was in panicked retreat; arguably, the stabilizing role of a large government was the main reason the Great Recession didn’t turn into a full replay of the Great Depression.

But after peaking in 2009 at $1.4 trillion, the deficit began coming down. The Congressional Budget Office expects the deficit for fiscal 2013 (which began in October and is almost half over) to be $845 billion. That may still sound like a big number, but given the state of the economy it really isn’t.

Bear in mind that the budget doesn’t have to be balanced to put us on a fiscally sustainable path; all we need is a deficit small enough that debt grows more slowly than the economy. To take the classic example, America never did pay off the debt from World War II — in fact, our debt doubled in the 30 years that followed the war. But debt as a percentage of G.D.P. fell by three-quarters over the same period.

Right now, a sustainable deficit would be around $460 billion. The actual deficit is bigger than that. But according to new estimates by the budget office, half of our current deficit reflects the effects of a still-depressed economy. The “cyclically adjusted” deficit — what the deficit would be if we were near full employment — is only about $423 billion, which puts it in the sustainable range; next year the budget office expects that number to fall to just $172 billion. And that’s why budget office projections show the nation’s debt position more or less stable over the next decade.

So we do not, repeat do not, face any kind of deficit crisis either now or for years to come.

There are, of course, longer-term fiscal issues: rising health costs and an aging population will put the budget under growing pressure over the course of the 2020s. But I have yet to see any coherent explanation of why these longer-run concerns should determine budget policy right now. And as I said, given the needs of the economy, the deficit is currently too small.

Put it this way: Smart fiscal policy involves having the government spend when the private sector won’t, supporting the economy when it is weak and reducing debt only when it is strong. Yet the cyclically adjusted deficit as a share of G.D.P. is currently about what it was in 2006, at the height of the housing boom — and it is headed down.

Yes, we’ll want to reduce deficits once the economy recovers, and there are gratifying signs that a solid recovery is finally under way. But unemployment, especially long-term unemployment, is still unacceptably high. “The boom, not the slump, is the time for austerity,” John Maynard Keynes declared many years ago. He was right — all you have to do is look at Europe to see the disastrous effects of austerity on weak economies. And this is still nothing like a boom.

Now, I’m aware that the facts about our dwindling deficit are unwelcome in many quarters. Fiscal fearmongering is a major industry inside the Beltway, especially among those looking for excuses to do what they really want, namely dismantle Medicare, Medicaid and Social Security. People whose careers are heavily invested in the deficit-scold industry don’t want to let evidence undermine their scare tactics; as the deficit dwindles, we’re sure to encounter a blizzard of bogus numbers purporting to show that we’re still in some kind of fiscal crisis.

But we aren’t. The deficit is indeed dwindling, and the case for making the deficit a central policy concern, which was never very strong given low borrowing costs and high unemployment, has now completely vanished.

That’s the whole article. That’s still fair use because I want you to understand I did not edit, distort or selectively quote Krugman’s words. That’s his full argument.

Allow me to rebut:

If you didn’t know any better you might get the impression from Mr. Krugman that we currently owe less than we did a couple years ago. That is because most people don’t understand the distinction between “deficit” and “debt”.

“Deficit” refers to the annual difference between government revenues and expenditures. Since we spend more than government takes in, we have a deficit. During the Clinton years we actually had a “surplus” but then George Bush blew that all to hell. Then Obama took office and made Bush look like a penny-pinching miser.

“Debt” (or “national debt”) is the total amount we owe. It’s like the difference between how much you spent on your credit cards this month and the total balance.

This is our national debt:

The Outstanding Public Debt as of 12 Mar 2013 at 12:49:01 PM GMT is:


The estimated population of the United States is 314,578,050 so each citizen’s share of this debt is $53,137.36

Some of you may recall that our national debt passed the $16 TRILLION mark about six months ago during the GOP convention. So everything after the first comma was added since then.

This is Connor:

Con man

Connor is my grandson. He will be 15 months old next Saturday. Connor owes $53,137.36 to America’s creditors. So does his sister Kate. And so do his cousins Ben and Tommy. So do your grandchildren.

They each owe $53,137.36 to pay for OUR spending.

That’s immoral.

About Myiq2xu - BA, JD, FJB

I was born and raised in a different country - America. I don't know what this place is.
This entry was posted in Federal Deficit, National Debt, Uncategorized and tagged , . Bookmark the permalink.

105 Responses to Mo’ Money, Mo’ Money, Mo’ Money!

  1. myiq2xu says:

    Not only did I oversleep this morning, I fell asleep at my desk last night!

    (I must say this new desk chair is quite comfy. It was a good investment)

  2. Krugman needs to STFU and come to grips with reality. Down here in lowly citizen land where I live, we have gone from being lower middle class under Clinton, to working class under Bush, to working poor under Obama.
    Granted, I had a major issue and went on disability. HOWEVER. I have been looking for full time work for almost two years now and it is nowhere to be found.
    One of my clients was recently hired at one of the big box home improvement stores. I overheard a conversation between the District and Store Manager. The DM was RIPPING the store manager for having made a part timer full time. The gist of the conversation is there will be NO hiring of full timers. NONE! ALL new hires are to be held to no more than 24 hrs a week.
    Reason? The costs associated with Obamacare. Keeping everyone under 24 hrs apparently keeps them from having to offer the insurance.
    People are working two and three minimum wage jobs to replace one full time job. And still not making what they made five yrs ago. And those jobs count as TWO jobs in the fake unemployment numbers.
    Average citizen does not understand deficit/debt. But they damn sure understand it gets harder by the day to make ends meet.
    Fuck Krugman. We, the People, know a depression when we see one. Recession my ass.

    • myiq2xu says:

      Maybe we should pass a law making all employees full time. Outlaw part time!

      • ROFL!
        No more laws please! At least not from this admin- they’ve done quite enough damage already!
        The whole don’t hire full timers thing comes under the law of unintended consequences. (Or maybe it WAS intended? More part time jobs sure makes those unemployment numbers look better.)

        • 49erDweet (D) says:

          What we may need is a law or amendment that makes all Administrative and Legislative jobs part time and ineligible for benefits. Right now they’re the US equivalent of Royalty. We need to change that to Commoner. And what’s more common these days than part time work?

        • votermom says:

          good idea, so I stole it

    • wmcb says:

      Both my middle sister and one of my sons got a job in the past 2 months. Both were told that almost all employees will remain part time. Not because they don’t need the help. but because of Obamacare. Target (where my sister got on) has hired 4 people, ALL at under 30 hours.

      Meanwhile, the unemployment rate amongst govt employees remains at 3.8%, almost all full time with benefits galore. The Machine preserves itself, no matter what.

    • votermom says:

      No one could have foreseen the unexpected results of a bill passed by lawmakers who did not read it.

      • wmcb says:

        Not only did they not read it, the real guts of the law were left entirely open-ended, to be decided later by a plethora of boards and commissions and the HHS head.

        They have started that process, and the NEW regulations for Obamacare are currently at 20,000 pages and climbing.

        The Democrats basically passed a sweeping law that said in essence: We can do whatever the fuck we want at some later date. It was a total blank check.

    • foxyladi14 says:

      I hope congress de funds this nightmare. 🙂

  3. Mary says:

    Thank you. It is absolutely stunning how many Americans do not understand the difference between the deficit and the debt.
    Or, how Obama’s spending in the last 4 years , because the annual deficit was huge, just got added to the total debt.

    Since Obama got elected, the annual cost of interest on the debt (the very first bill the government pays) has risen from $200 billion a year to $350 billion a year. And it just compounds and compounds and compounds.

    Don’t have to have an economics degree to understand that, ya know. Not much different, except that there are many more zeros, than only paying the minimum payment on a maxed out credit card. 🙂

    • Somebody says:


      As interest rates rise and they will eventually no matter how hard the fed fights to keep that from happening. When those rates rise payment of the debt will take an ever increasing bite out of our annual budget. People don’t seem to grasp that. Apparently not even nobel prize winning economists. What if rates go sky high during that time in the 2020’s that we’re not supposed to think about Paul? You know when costs for seniors are going to peak, what if interest rates peak then too……..oh wait…….I think I’m getting the picture.

      I’d just like to know what kind of drugs he takes. Is it a prescription or did he buy it on the streets? I could follow and even agree with a lot of what he was saying in the beginning of the article. BUT when he got off on the whole “cyclically adjusted” stuff……if we were at full employment, shoulda, woulda, coulda…..where’s my rainbow colored unicorn crap. He lost me…….Paul, just say no! This is your brain on koolaide Paul.

  4. yttik says:

    Krugman is so high on blue kool aid he can’t even function anymore.

    Kirsten Gilibrand was on TV talking about raising minimum wage because nobody could live off of it anymore. We’ve raised it from 2.35 and hour in my state, to nearly 10 bucks and people still can’t live off of it. Why? Mostly because all that Gov spending and borrowing has devalued the dollar and driven up the cost of goods and services. These congresscritters that allegedly care so much about the poor, are so near sighted, they can’t see the big picture and wind up doing more harm than good.

    • myiq2xu says:

      My standard response to raising the minimum wage is to agree and suggest it be raised to $50 hour. If $10 is good then $50 is better!

      That really flummoxes people because they realize instinctively that the idea is ridiculous and would never work but they can’t explain why because according to their theories it should work.

    • I can never get anyone to understand that raising minimum wage just causes the cost of everything else to rise, leaving min wage workers in the exact same place.

  5. myiq2xu says:

    The ‘Racist’ and the Unknown Man

    My friend Lars Hedegaard is a dapper, courtly publisher and editor just turned 70. Like many Scandinavians, he speaks very evenly modulated English, but, insofar as I can tell, his Danish is no more excitable. A cultured, civilized fellow, he was for most of his life a man of the left, as are the majority of his compatriots, alas. But, as an historian and a chap who takes the long view, he concluded that Islam posed a profound challenge to Scandinavian liberalism. And so at a stroke he was transformed into a “right-winger.”

    The other day in Copenhagen, he answered his doorbell and found a man in his early twenties who appeared to be “a typical Muslim immigrant” pointing a gun at him. He fired from a yard away, and, amazingly, missed. The bullet whistled past Lars’s ear, and the septuagenarian scholar then slugged his assailant. The man fired again, but the gun jammed, and, after some further tussling, the would-be assassin escaped. He has yet to be found.

    • 49erDweet (D) says:

      We must find this poor lad and give him the assassination training he so badly needs. This is his right in a dhimocratic society.

      • Erica says:

        The weird thing is, someone out there would not know you are kidding. And probably tweet it.

  6. wmcb says:

    Krugman can kiss my ass. He says Keynes theory says we should spend during the bust and cut back and reduce during the boom. Uh huh.

    And just WHERE the fuck does he get the STUPID idea that this is EVER going to actually happen? Please tell me, Paul, at what point our govt has gone back and eliminated or severely reduced ANY new spending program, once it’s started? WHEN THE FUCK HAS THAT HAPPENED? In reality, not in precious theory? Pretty much never, that’s when. Even Clinton never really did – just tinkered at the edges.

    Here’s my theory: the police should go away because if we just convince people not to rape and murder and assault, there is no crime. The fact that this is a “true” statement kind of overlooks that whole “ain’t gonna happen” factor. But in the real world, not on paper, that “ain’t gonna happen” thing is pretty damn important.

    Oh, but the deficit would be just fine if we ran the numbers “as if we had full employment!” No shit, Sherlock. And IF I was 40 pounds lighter, 30 years younger, and had better bone structure, I’d be a freaking super model. And?

    The interest rate excuse burns me up as well. Krugman is not stupid. He knows damn well that the ONLY reason interest rates aren’t soaring is because the Fed is propping up the market with GUSHERS of money. Borrowed money. More than at any time in history. It’s a fake, and he knows it. He’s not stupid. He’s just a fucking hack.

  7. Mary says:

    Paul Ryan explaining his budget on live streams now. Includes repeal of Obamacare. Well well well……

    • wmcb says:

      I had some real issues with Ryan’s budget that the House passed 2 and 3 years ago. But it was indeed a serious proposal, worthy of serious, adult debate. It was too harsh for me, but solid, fleshed out, grown-up, and a starting point.

      If the Dems had honest motives, they could have taken that budget, made one of their own, then gotten busy compromising and tweaking until we had something resembling sanity. Not perfect, but better.

      Instead, we’ve been treated to 4 years of non-stop demagoguing and posturing. Add that to the list of why, while I still do not trust the R’s, I view the Dems with utter contempt and disgust.

      • Mary says:

        That’s where I am, too. What I didn’t realize (Krugman neglects to tell his readers), is that the increase in the $800 billion stimulus just became part of the next-year-budget baseline, and the each following year was the same. That was part of why Dems didn’t do an annual budget–so it would do so.

        I admire Ryan for at least presenting a starting point. Had the Dems presented what they wanted, normal order could have continued in the budget committees. Dems didn’t want that.

        That choice, by the Dems, is what I despise.

        • wmcb says:

          It is much easier to hide the spending when you rely on continuing resolutions rather than a written budget.

          The entire Obama presidency has been all about hiding from accountability. All of it. It’s been about vague (and often contradictory) statements for the cameras, but nothing on paper they can be held to.

          My choices right now are somewhat responsible adults whom I don’t much care for, and petulant conniving blame-shifting children. Leave me that choice and I’ll back the adults, every time.

        • votermom says:

          Yup. Baseline budgeting is is grand larceny on a scale that leaves Bernie Madoff weeping with envy.

        • Mary says:

          Patty Murray/Democrats new budget: $1 TRILLION in new revenue. Details to follow.

      • Somebody says:

        wmcb, you encapsulated my sentiments exactly on the Ryan budget, the dems and all that jazz.

    • foxyladi14 says:

      Wonderful I hear Cruz added that to the Senate bill too. 🙂

  8. piper says:

    Krugman should talk about the economy from his lonely estate in Princeton, N.J. From what I have read his wealth comes from wife’s family.

  9. wmcb says:

  10. wmcb says:

    Ok, just had to rant on facebook today:

    For those who don’t know, the “one-time” 800 billion stimulus is being paid by us every year, and has been since 2007. It was not “one-time”, and was never intended to be. Pay attention, peeps, and I’ll explain the concept of Baseline Budgeting to you in plain English, and how the Obama administration has used it to screw you over. (And yes, other admins have done it in the past, but I’m concerned with the present.)

    In 1974, in something called The Congressional Budget Act, our govt encoded in law something euphemistically called baseline budgeting. What this means is that when a budget is made, that budget *plus a 6% annual increase* is considered the “baseline”. It matters not what the real needs are. It matters not if a program was a supposed one time deal, or an abject failure that ought to be scrapped. The money NEVER goes away – they get that plus 6% more. Every year. In any spending discussion, any amount that is less than a 6% INCREASE is referred to as a “cut”. Of course it is nothing of the sort, but that’s the power of language. There is no starting at square one every year and looking at what we need, like common sense would dictate. It’s all free money followed by 6% MOAAAR money! Every year like clockwork.

    The Democratic Senate has failed to pass a budget for 4 years now, despite it being required by law. Because, see, budgets get examined. Budgets get critiqued and pilloried. The GOP House has passed a budget every year. The Democratic Senate has passed zero. None. Zip. Nada. It is impossible to reconcile two sides and come up with a national compromise if ONE side completely refuses to put anything down on paper.

    Instead, what we have been doing is operating under things called Continuing Resolutions. Continuing Resolutions were created so that if something funky happened, say there were holidays, or Congress was a few days or weeks late getting their budget in, we didn’t have a shutdown. A CR allows things to keep running at the past year’s spending PLUS 6%, due to the baseline budgeting of the budget act. Got it? CR’s are supposed to be very short-term. They were never intended to replace the budget process. But that is precisely how they have been used by Democrats for the last 4 years.

    This brings me back to the “one-time” stimulus. Because we have been operating on CR’s, that 800 billion in spending has been baked into the cake, WITH a 6% increase, every year since 2007. Are you seeing now why there has been this avoidance of writing a budget? The press and human beings being what they are, old spending is old news. No one looks too closely at it. A new Budget, however, gets reported, picked apart, and *has to be justified* to the public.

    I am furious over this gross irresponsibility and playing games with the future of my grandchildren. I haven’t particularly liked the GOP budgets, the Ryan budgets. They have some serious problems. But guess what? The GOP did their damn jobs, like adults. They put a budget in writing and put it on the table to start the process, and took the hits and critique for it. It may have been a crappy budget, but it was there in black and white. The Democrats have completely usurped their duty to do any such thing. They have behaved like fucking children, demagoguing all the while. They took a “one-time” $800 BILLION stimulus expense, and have rolled it over with a 6% increase each year since 2007. God only knows what they are doing with it. But by avoiding the budget process for 4 years, they get away with it.

    And while I give the GOP House props for writing a budget, they don’t get off scot free. Because in our system, all spending bills must originate in the House. At any point, the House could simply refuse to vote on these continuing resolutions until the Senate gets their budget shit together. But they know there will be SCREAMS of the evil GOP shutting down govt and being “obstructionist” if they do. So they do the cowardly thing and move it along to avoid being demagogued.

    And people wonder why Americans are increasingly distrustful of our federal govt, and balk at giving them more money, more power? This is why. No. we are not paranoid reactionaries. It REALLY IS this bad. They are out of control. Utterly.

    So spare me the “you’re selfish” moaning. Spare me the “you don’t caaaaare!” accusations. Bullshit. I DO care. A very great deal. Guess who doesn’t? Congress. Go bitch at them, not me. I’m paying fucking attention to what is actually going on – not what the TV talking heads and various activist groups tell me. Are you?

  11. myiq2xu says:

    Dammit! I forgot to address this part:

    To take the classic example, America never did pay off the debt from World War II — in fact, our debt doubled in the 30 years that followed the war. But debt as a percentage of G.D.P. fell by three-quarters over the same period.

    30 years after the war: 1945-1975

    That encompasses the Cold War, Korea, Vietnam, The Marshall Project, the Interstate Highway Project, the space program, the Great Society, the G.I. Bill, Medicaid and Medicare. But debt as a percentage of G.D.P. did not “fall” – G.D.P. skyrocketed.

    That post-war era was a boom period in our history that was fairly unique. While the rest of the world was digging out of the ruins of a devastating world war, the U.S. came out of the war with our infrastructure and industrial capacity in better shape than when the war started.

    When the rest of the world recovered our booming economy began to level off.

  12. votermom says:

    I found the photos from season 2 of Borgia to tide me over. Drool.

    • myiq2xu says:

      I watched episode 2-1 last night to check it out.

      That’s what I was watching when I fell asleep in my chair.

    • votermom says:

      Btw, while googling, I found from 2011 which made me laugh – the series creator compared Rodrigo Borgia to Obama.

      Tom Fontana’s Borgia series being done for showing in Europe on Canal Plus is already planned to run for three seasons:

      The first season centers on Rodrigo Borgia’s rise to pope. He “strives very hard to change the way business in done in Rome but finds that corruption is so embedded in the day-to-day workings of government that it’s virtually impossible to make a huge difference,” Fontana says. “The circumstances President Obama finds himself in today are not very different.”

      The second season will focus on Cesare and the third largely on Lucrezia.

  13. SHV says:

    “Meanwhile, govt offering a $2000 Obamacare fine to anyone who hires her..”
    More “street theater”…$2k/year is dirt cheap for corporations to get rid of their crushing cost of health care. Also the $60 dollars a month tax (fine) for the young healthy adult is a good deal. Over the next ten years, several trillion dollars will be “laundered” through Obamacare to the healthcare industry and then will go belly up. The big question is what will come next?

  14. myiq2xu says:

    Ken Walsh:

    Obama Charm Offensive May Have Limited Effect

    President Obama’s new charm offensive is a step in the right direction, political strategists say, but it won’t mean much unless Obama continues his outreach with an intensity that he has never maintained before.

    Obama’s goal is apparently to bypass Republican leaders in the Senate and persuade individual GOP legislators to work with him on major issues, from the budget to immigration.


    And it will be difficult for Obama to drive a wedge between a handful of GOP senators, on the one hand, and their leaders and more conservative colleagues. That’s because there is a common fear among GOP legislators of being challenged from the right in a primary, and working too closely with Obama could endanger a Republican incumbent’s renomination.

    And many Republicans simply don’t trust Obama to bargain in good faith, GOP strategists say. Some Republicans are seething because the president and his allies have been attacking the GOP in recent weeks as obstructionist.

    And the Republicans think he might turn on them again at any moment if he concludes that renewing his attacks is a better tactic than conciliation for helping Democrats win a majority in the House and keep control of the Senate in the 2014 election.

    In the end, Republicans legislators argue that there is a limit to how far they can move toward Obama no matter how many dinners he buys them or how many lunches he provides at the White House.

    Funny quote:

    He had dinner with a dozen GOP senators Wednesday night at a fancy Washington restaurant, with the president picking up the tab.

    Yeah, I’m sure that money came right out of Obama’s pocket.

  15. myiq2xu says:

    Do you recall Coach Yoast’s daughter in Remember the Titans?

    She done growed up:

  16. votermom says:

    twitter seems to be down. Must be divine intervention
    Conclauis non erit tweeted

  17. votermom says:

    Missed .. by that much!

  18. votermom says:


  19. HELENK says:

    it is good to be king, you do things on your time and don’t need no stinkin laws

  20. myiq2xu says:

  21. myiq2xu says:

  22. myiq2xu says:

    Rant on/ When discussing spending and taxes, TALK IN TERMS OF SINGLE YEARS!

    A 10 year projection is meaningless. That’s 5 different congresses and at least two presidents down the road!

    /Rant off

  23. Somebody says:

    Another sink hole? Isn’t that really odd?

    A sinkhole in Florida is pretty common, but sucking the guy’s bedroom down the sinkhole was unusual. But are sinkholes common in PA and/or MO.

    I suppose none of them are related and it’s all just coincidence, but wow.

    Does anyone know if by chance there have ever been sinkholes in the DC area??? Just curious

  24. myiq2xu says:

  25. wmcb says:

    LMAO! So my longtime friend who is a transgendered club DJ/telecommunications worker and an Obama supporter is defending me from “you’re a bigot” assholes on my facebook wall.

    I keep telling her (oops, him) that he is ruining my uptight racist bigot cred, but he keeps on.

  26. votermom says:

    Conclave chimney has a twitter acct 😀

  27. myiq2xu says:

    Just got back from the supermarket. Here’s a Klown shopping tip: Go on Tuesday and wear a grey wig. They’ll give you the senior discount without checking your birthdate.

  28. swanspirit says:

  29. myiq2xu says:

    Jim Moran is a douchenozzle. I want DT to send me a voter registration form so I can vote against him.

  30. HELENK says:

    i liked this article. the way people can stay friends with different politics. that idea seems to be forgotten in today’s world

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