Krugman Tries to Mislead About Rising Government Spending and Debt With Sleight-of-Hand

by Oct 8, 2013Liberty & Economy2 comments

It's not an "attempt to rewrite history" to point out the fact that the CBO's (Congressional Budget Office) own future projection shows increased spending and rising debt.

Paul Krugman blogs:

Suddenly, the shutdown/debt ceiling confrontation isn’t just about Obamacare; it’s about curbing runaway spending growth and exploding debt.

I’m a bit surprised. I didn’t expect Republicans to worry about the facts that federal spending has been flat in nominal terms, and falling fast in real per capita terms, for several years, or that the deficit is plunging. But I did think they might worry that the public has moved on from the debt scare, and also that some people might balk at the sudden attempt to rewrite history.

It’s not an “attempt to rewrite history” to point out the fact that the CBO’s (Congressional Budget Office) own future projection shows increased spending and rising debt.

CBO-total-spending

federal-debt-CBO

Of course, Krugman also argues that there’s no foreseeable debt crisis here. But the CBO report itself suggests otherwise. See here.

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2 Comments

  1. Gor Bismori

    You don’t get it. For every cent (debt) government borrows, it makes another cent in assets. Debit – credit. It isn’t that government keeps piling up these debts, receiving nothing in return, and placing generations perpetually in hock. As Krugman said, the US may owe 8 trillion, but for it, it has received 16 trillion. Of course, people would panic (your aim) at the sound of “8 trillion” but what about the “16 trillion” – that you have very conveniently failed to mention. To you, it’s as if the US never grew at all since it began borrowing (to raise revenue, outside of taxes). It has, but then the recession came, and this is the real problem, leading to massive unemployment. (You haven’t mentioned this one, either.) The figures you cite from the CBO are misleading. Yes, the US’s debt has risen, but there’s nothing in the CBO report warning about a debt fallout coming very soon.

    Reply
    • Jeremy R. Hammond

      You have no idea what you are talking about. I don’t know where you get the idea that the government can get more from borrowing than it owes in return (you didn’t get that from Krugman), which is plain nonsense. Debt is by definition a liability. The government owes not only the principle on this debt, but also interest. It owes back more than it borrows, not less. (Why do I have to explain this elementary point?!)

      As for the recession, what does it have to do with my point above? If you want to understand the causes of the recession, I suggest you read the book I wrote about it, Ron Paul vs. Paul Krugman: Austrian vs. Keynesian economics in the financial crisis

      And “the figures you cite from the CBO are misleading”? What is that even supposed to mean? How so? See that green line going UP in the first one? That’s increasing spending. Notice that the revenue line doesn’t match it ever, or increase to keep up. That’s increasing deficit spending. And do you see how the line in the second graph goes UP? This rising debt. Are you trying to argue that the CBO is wrong?

      Finally, you say, “there’s nothing in the CBO report warning about a debt fallout coming very soon”. The key phrase there is “very soon”. The CBO report does warn about a debt fallout, it just doesn’t guess at a specific time this will happen. This can’t go on forever. When the world wakes up to the fact that the US government is insolvent and can never repay its debt, they will stop financing it. This will happen. It’s a matter of when, not if.

      Reply

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