Here we are, right back where we started from oh so many years ago – Republicans stand in the pulpit complaining that every dollar that Democrats want to spend is somehow wasted, that somehow Republicans would never spend money when in office (even though recent history – and deficits – prove otherwise) and that somehow putting Americans back to work, providing access to health care for everyone, and cleaning up our air and water are all wasted when compared to the incessant need for bombs and guns – which to be clear, is all the Republicans really spent money on when in office, aside from their own interests, friends, and failed programs.

Paul Krugman, in an op-ed for the New York Times, quite accurately takes on the problem of deficit fear-mongering, which has always been one of the Republican party’s staple tactics. Lately the right-wing has been drumming up the media with “doom and gloom” scenarios of massive deficits and budget gaps, which they conveniently blame on the President’s domestic priorities and not at all on the massive escalation of overseas conflicts caused by the previous Republican administration and its majority in Congress.

Even so, Krugman points out that this fear-mongering is ultimately pointless and is designed to make more of a political point than it does an economic point:

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.

Yet they aren’t facts. Many economists take a much calmer view of budget deficits than anything you’ll see on TV. Nor do investors seem unduly concerned: U.S. government bonds continue to find ready buyers, even at historically low interest rates. The long-run budget outlook is problematic, but short-term deficits aren’t — and even the long-term outlook is much less frightening than the public is being led to believe.

…

Let’s talk for a moment about budget reality. Contrary to what you often hear, the large deficit the federal government is running right now isn’t the result of runaway spending growth. Instead, well more than half of the deficit was caused by the ongoing economic crisis, which has led to a plunge in tax receipts, required federal bailouts of financial institutions, and been met — appropriately — with temporary measures to stimulate growth and support employment.

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.

True, there is a longer-term budget problem. Even a full economic recovery wouldn’t balance the budget, and it probably wouldn’t even reduce the deficit to a permanently sustainable level. So once the economic crisis is past, the U.S. government will have to increase its revenue and control its costs. And in the long run there’s no way to make the budget math work unless something is done about health care costs.

But there’s no reason to panic about budget prospects for the next few years, or even for the next decade. Consider, for example, what the latest budget proposal from the Obama administration says about interest payments on federal debt; according to the projections, a decade from now they’ll have risen to 3.5 percent of G.D.P. How scary is that? It’s about the same as interest costs under the first President Bush.

Why, then, all the hysteria? The answer is politics.

Heaven forbid the conservatives running around like chickens with their heads cut off acknowledge that we’re in the same position as -or better than- we were under one of their own. Instead they’d rather storm the airwaves with stories of excessive government spending, even though that government spending is what’s keeping the economic engine of the country running right now.

[ Fiscal Scare Tactics ]
Source: The New York Times