Saturday, December 10, 2011

"Shenanigans"?

Paul Krugman schools Olympia Snowe:
Actually, it’s nonsense on multiple levels. A nation that can borrow at negative real interest rates isn’t exactly facing a debt crisis. We do have a $15 trillion debt — but that debt reflects a combination of (1) permanent tax cuts, not paid for at all (2) large temporary spending on wars, not paid for at all, and (3) a severe economic crisis, which has depressed revenue (mainly) and required some emergency spending (which accounts for only a small piece of the debt)

And another thing: short-term outlays offset by long-term austerity is precisely what macroeconomics 101 says you should do when faced with a depressed economy. It’s not “shenanigans”, it’s orthodox macro and the height of responsibility.

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