The more intriguing part of the latest column is Krugman’s broad hint that there is a “right time” for austerity, and maybe even for “slashing government spending.” As it happens, the late 1990s saw not only an economic boom but the beginning of Professor Krugman’s moonlighting career as a Times columnist. The economy is “flourishing,” he wrote for the paper in 1999, with “unemployment at a 25-year low” while inflation is “quiescent.” A year later he stated the economy “has been practically wallowing in good news for the last few years: productivity has been soaring, allowing the economy to grow far faster than seemed possible without running out of labor . . . ”
One might expect that Krugman’s columns during those years of economic exuberance were as relentlessly single-minded in demanding counter-cyclical government austerity as the ones since 2008 have been in demanding counter-cyclical government spending. Manifestations of that principled symmetry, however, are somewhere between slight and negligible. In August 2000, for example, he proclaimed the truth, apparently inviolable, “that demands for government services grow with the economy: more air traffic to control, more homes to protect from forest fires.” Later, in a column just before the 2000 election, Krugman argued that because the future might bring unhappy surprises, the “responsible, sensible thing for the U.S. government to do is to run very big surpluses right now.” Without explicitly endorsing their view, he noted that “budget analysts who take the long view” believe that “if anything we should be raising taxes and cutting spending.”
That oblique reference to reducing outlays was as close as the boom-year Krugman columns got to endorsing austerity that entails reducing government spending, widely understood to be its defining feature. The more common tone, voiced by many Democrats during the Clinton years, was dour resignation to the political infeasibility of launching the next New Deal. Krugman numbered Vice President Al Gore among those New Democrats who have “clearly renounced the party’s old big-government, big-spending tendencies” in favor of the “penny-ante activism” of “handing out a few baby carrots here and there.” These timorous Democrats were opposed by Reagan revolutionaries who “didn’t want a scaled-back welfare state, they wanted a repudiation of the whole idea of a social safety net.”
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