Krug’s last column of the year and it’s not really that interesting. I do, however, like this paragraph:
Second, a combination of rising tax receipts and falling spending has caused federal borrowing to plunge. This is actually a bad thing, because premature deficit-cutting damages our still-weak economy — in fact, we’d probably be close to full employment now but for the unprecedented fiscal austerity of the past three years. But a falling deficit has undermined the scare tactics so central to the “centrist” cause. Even longer-term projections of federal debt no longer look at all alarming.
And the reason I like this paragraph is because it illustrates how far PK is beyond help. First, no link, no reference, no nothing by way of reason to believe that the claim “we’d probably be close to full employment now but for…” is in any way related to reality or based on anything like a testable and proven theory*. Nope, he just throws it out there. I am PK. I am God. This is true. End.
Second, the link “unprecedented fiscal austerity” goes to a nice graph on PK’s own blog showing 3 year changes in government spending. Apparently, for PK, a 0% change (or slightly negative change) is unprecedented austerity. Never mind that the government in these flat or negative years is still spending a ton!
Here is PK’s argument reinterpreted as a family vacation conversation:
Father: Son, we’re cutting back this year and our Christmas Vacation is going to be to the San Diego Zoo and Aquarium.
Child: But Dad, last year we went to Disney World so this year we should go to the Moon!
* – and really, in a way, that’s OK since there isn’t a testable or proven theory owing to the fact that macroeconomics isn’t science. My point is that PK makes the statement as if there is a (correct) theory out there somewhere and that he’s got it.