Sign up to get Today’s Best Articles in your inbox
Join 350,000+ subscribers and keep yourself informed with a selection of
The Week’s most interesting, enlightening and entertaining stories - plus daily puzzles.
You are now subscribed
Your newsletter sign-up was successful
Want to add more newsletters?
An account already exists for this email address, please log in.
A deficit of insight about debt
Unemployment today is a far bigger problem than the deficit, and we need to spend to fix it, said Paul Krugman at The New York Times.
Politicians and pundits who harp about the deficit being dangerously high are deeply confused, said Paul Krugman. They often compare America and its debt to a family with a mortgage it cannot afford. This is a “really bad analogy” in two ways. Unlike a family, the government doesn’t have to pay back debts as long as they “grow more slowly than the tax base.” Our debt from World War II, which was bigger than today’s as a percentage of GDP, “was never repaid”; it “just became increasingly irrelevant” as the postwar economy—and with it, tax receipts—boomed. And while an indebted family owes money to someone else, U.S. government debt is mostly “money we owe to ourselves.” Countries with “stable, responsible governments” manage debt by imposing “modestly higher taxes when the situation warrants it.” Unemployment today is a far bigger problem than the deficit, and we need to spend to fix it. But Washington’s “wrongheaded, ill-informed obsession with debt is standing in the way.”
The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Join more than 350,000 subscribers and keep yourself informed with a selection of The Week’s most interesting, enlightening and entertaining stories - plus daily puzzles.
Join more than 350,000 subscribers and keep yourself informed with a selection of The Week’s most interesting, enlightening and entertaining stories - plus daily puzzles.
