Paul Krugman says ‘deficits matter again’ now that Trump is president

Paul Krugman before the 2016 election: budget deficits don’t matter.

Paul Krugman after the 2016 election: deficits matter again.

For years, the Keynesian economist has purported the idea that budget deficits don’t really matter, the exploding national debt isn’t really a big deal and that any kind of government stimulus is better than no stimulus. That has been his line of thinking for years, and predominantly since the economic collapse.

If these were actual principled stances then you could give Krugman a break, and maybe a book written by either Murray Rothbard or Milton Friedman. It turns out, however, that his statements are not based on principle but rather based on partisanship.

Krugman published an op-ed in the New York Times on Monday entitled “Deficits Matter Again.” Anyone who has tracked Krugman’s history will likely spit out their coffee and perish from laughing.

So, according to Krugman, deficits suddenly matter again? How could he change his longstanding opinion just two months after the 2016 presidential election? Well, it’s simple: Donald Trump is president and Republicans are in charge of the House and Senate. One can easily discern that in the mind of Krugman deficits only matter when the GOP is leading the country.

You may be wondering how Krugman is justifying his opinion this time around. Here it is: the unemployment rate.

“How do we know that we’re close to full employment? The low official unemployment rate is just one indicator. What I find more compelling are two facts: Wages are finally rising reasonably fast, showing that workers have bargaining power again, and the rate at which workers are quitting their jobs, an indication of how confident they are of finding new jobs, is back to pre-crisis levels,” he wrote.

But this argument falls flat when you look at the jobless rate before the election to the time he published the post. In November, a time when he called for a crusade of deficit-financed spending, the unemployment rate was 4.6 percent. In December, the unemployment rate actually ticked up to 4.7 percent.

No, it wasn’t a change in the labor markets that altered his opinion, but rather the result on November 8.

It is obvious that he is nothing but a partisan hack who is willing to change his opinions on a dime. Why anyone listens to Krugman or reads his columns, aside from a weekly dose of laughter, is a mystery.

Krugman, however, was correct when he slammed the Republicans and their sudden indifference to the budget deficit.

“Not long ago prominent Republicans like Paul Ryan, the speaker of the House, liked to warn in apocalyptic terms about the dangers of budget deficits, declaring that a Greek-style crisis was just around the corner. But now, suddenly, those very same politicians are perfectly happy with the prospect of deficits swollen by tax cuts; the budget resolution they’re considering would, according to their own estimates, add $9 trillion in debt over the next decade. Hey, no problem.

“This sudden turnaround comes as a huge shock to absolutely nobody — at least nobody with any sense. All that posturing about the deficit was obvious flimflam, whose purpose was to hobble a Democratic president, and it was completely predictable that the pretense of being fiscally responsible would be dropped as soon as the G.O.P. regained the White House.

“What wasn’t quite so predictable, however, was that Republicans would stop pretending to care about deficits at almost precisely the moment that deficits were starting to matter again.”

Anyone could see that the Republican leadership, including Donald Trump, wouldn’t care at all about fiscal matters once they took office. It was the same way with the Democrats prior to 2008: they pretended to care about the debt, the deficit and the debt limit, but when they took office those things didn’t matter.

Here is the ultimate conclusion everyone should make: deficits always matter, not just when Democrats or Republicans occupy the White House. Budget deficits harm a nation’s fiscal future and should always be reined in through spending cuts and the end to wars.

You can expect this type of behavior from politicians, but economists, particularly Nobel Prize recipients, should definitely know better. Shame on you, Paul Krugman. Shame on you.

How will Krugman sleep at night, knowing that he has upset his god, John Maynard Keynes?