Noted “economist” and political hack Paul Krugman published the article “Why You Shouldn’t Obsess About the National Debt” in the New York Times on Thursday. He argued that “to the extent that debt is a problem, that’s a reflection of political dysfunction, mainly the radicalization of the GOP.” He specifically said “right-wing politics” is a bigger problem than “the size of the debt” and insisted he is much more worried about “the fate of democracy.” Even beyond the cartoonish partisan bias in the article, his assertions that we should not worry about the national debt are embarrassing.
The national debt reached $34 trillion at the beginning of this year, which is about 120% of the United States’s GDP. This is a terrifying prospect for numerous reasons, as high levels of debt slow economic growth, increase the risk of a financial crisis, and raise interest rates, resulting in higher costs for mortgages and other loans. Additionally, as the debt grows, the ability of future generations to respond to crises of all types effectively will be severely limited.
Krugman organized his piece around three main points. First, he said the size of the national debt is “a lot less scary than many imagine if you put it in historical and international context.” Second, he wrote that “making debt sustainable wouldn’t be at all hard in terms of the straight economics.” And third: “People who claim to be deeply concerned about debt are, all too often, hypocrites.”
First, his assertion that the size of the national debt is not a big deal is undermined in his own argument. Krugman wrote that debt as a percentage of the GDP is “roughly the same as it was at the end of World War II. It’s considerably lower than the corresponding number for Japan right now and far below Britain’s debt ratio at the end of World War II.” While the disastrous handling of the COVID-19 pandemic plays a role in our debt situation, that is very different from the most devastating war in world history, not to mention the aftermath of the Great Depression and the New Deal. Moreover, just because Japan is worse off than the U.S. does not mean the U.S. is in a good spot. That would be like arguing lung cancer is fine because someone else has brain cancer.
Secondly, his argument that making debt sustainable is not that hard only addresses half of the problem. Krugman criticized Republican tax cuts that are unsustainable in the long term but did not mention the equally, if not more, unsustainable spending of the federal government. Entitlement programs such as Social Security and Medicare are pushing the U.S. off a cliff, and no reasonable tax increases will be able to cover their snowballing costs.
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Failure to address spending brings us to Krugman’s third point, in which he is somewhat correct, that those who complain about the debt are mostly hypocrites. Republicans have played a key role in raising the national debt, with Donald Trump’s presidency being a major blot on the GOP’s record. Furthermore, the former president’s promise not to touch Social Security if he is elected in 2024 suggests that the GOP still is not serious about addressing the debt. However, Krugman did not criticize this because it would force him to admit that the Democrats’ plan of doing nothing is equally unserious.
The bottom line is this: Neither party is panicking about the national debt, but they both should be at least near panic. The current size and scope of the federal government are simply too big to sustain, and while people like high spending and low taxes, continuing down the current path will bring about a major debt crisis with an unclear solution. Politicians of today are bankrupting the America of tomorrow, and economists have the duty to tell the truth about that.