Public debt was around 41 percent of the gross domestic product in 2008. Today it is around 76 percent and still rising. Yet the economy continues to languish.
Nevertheless, a few hardy Keynesians urge the president to raise deficits still further. We respectfully disagree. Doubling down on this dubious policy will move the United States only more quickly towardexcessive indebtedness and a possible economic crisis. …
Krugman, an economist and New York Times columnist, agreed not so long ago with our position that demographic challenges demanded fiscal restraint. In 2001, he wrote that deficits mattered as he inveighed against President George W. Bush’s tax cuts. With the gross federal debt then at a mere $5.6 trillion, Krugman nervously declared that balancing the budget “is mainly a matter of preparing for the fiscal consequences of an aging population.” But these days, Krugman tends to be a bit more dismissive about the dangers of long-term debt despite America’s aging population and the addition of another $10 trillion of debt in the past 12 years.
The Congressional Budget Office’s February budget outlook showed just how much rising public debt will crowd out needed public investments and other programs later this decade. When that happens, conservatives will complain about the squeeze on defense spending; liberals will bemoan funding limits placed on education, job training and renewable-energy programs. And both sides will see how the high cost of servicing the debt will harm students in the classrooms, soldiers on the battlefield and drivers on America’s highways.