I recently saw a tweet by Paul Krugman asserting that, “What we do have is a persistent problem of weak demand; yes, we have full employment now, but only with extremely low interest rates, which means little ability to respond to the next downturn. This makes a strong case for a big government investment program.”
Ah yes. We need more government stimulus.
I can already hear Republicans and Trump supporters mocking Krugman and his silly Keynesian fiscal stimulus. And it is silly. This is, after all, the guy who suggested a fake alien invasion would be good for the economy because it would boost government spending.
But Republicans who mock Krugman do so with a complete lack of self-awareness.
Given that the U.S. has been in a period of economic growth, the current administration, along with a predominantly Republican-controlled Congress, has provided the economy with an unprecedented amount of government spending. In fact, we’ve never seen budget deficits this high except during the Great Recession.
It’s hard to even fathom what Krugman is talking about. In FY2019, the federal government spent a staggering $4.45 trillion, according to CBO estimates. That was an 8 percent increase over FY2018. Both military and domestic spending increased. In other words, we saw a healthy expansion in both the warfare and welfare states. Despite increasing federal revenue, the national debt grew by $1.2 trillion in FY2019. (If you’re wondering how the debt can grow by a larger number than the annual deficit, economist Mark Brandly explains here.)
But we still need a “big government investment program?” If $4.5 trillion isn’t enough government fiscal stimulus, how much is? Six trillion? Seven trillion?
I’ve noticed a pattern over the years. Republicans complain about Democrats spending money and then they get power and keep right on spending money. Meanwhile, Democrats claim the Republicans aren’t spending enough money and when they get into power, they spend more money.
Notice the common denominator — spending money.
And this is exactly why the national debt is fast-approaching $23 trillion.