The GOP’s Imaginary Economic History
Paul Krugman makes an important point regarding the idea that the government has been kicking the can down the road for 20+ years: it’s bunk. The problem has been a failure of the GOP to consider anything besides tax cuts when there are surpluses and spending cuts when there is high unemployment. This is the wrong prescription, as the chart he shows in the post demonstrates clearly.
It was expected that the deficit would return during the early 2000s recession, but instead of instituting temporary measures, Bush went for “temporary” tax cuts which were designed to be permanent—unlike Clinton who took the time during the recovery from the 1991 recession to move to a balanced budget, through both spending cuts and tax increases. However, any deficit cutting should be left until the economy is back growing. Instead the GOP wants to cut, cut, cut even though doing so will–even according to the estimates they are using–lead to significant job losses.
Krugman sums it up:
Republicans have invented a history in which it has been fiscal irresponsibility all along — and far too many centrists have bought into the premise. The reality is that we had low debt and no fiscal problem before Reagan; then an unprecedented surge in peacetime, non-depression deficits under Reagan/Bush; then a major improvement under Clinton; then a squandering of the Clinton surplus via tax cuts and unfunded wars of choice under Bush. And yes, a surge in debt once the Great Recession hit, but that’s exactly when you should be running deficits.