Paul Krugman has earned a certain kind of reputation among fiscal hawks. They say he’s a lunatic. A radical. That he has no idea what he’s talking about. That he’s just not SERIOUS. But there’s a very good reason that Joe Scarborough and the rest of the right wing political machine despise the New York Times columnist and Nobel Prize winner:

He’s a threat to their plans for an America where wealth goes to the very top and the rest are left to scrabble for crumbs.

Krugman has the uncanny ability to take complicated economics and make them accessible to the layperson. He also has a clear track record of being right. He predicted the housing bubble would burst, he predicted the recession that would result, he fairly screamed that the stimulus was not large enough, he’s stated, over and over, that interest rates would not rise and there would be no runaway inflation and he’s been right year after year.

Now he’s telling us, and has been for some time, that there is no deficit problem.

The boogeyman of the deficit is what the GOP and its propaganda mill use to terrorize the average American into screaming for huge government cuts. Such cuts have the effect of dragging out the economic slump, keep unemployment high and decimate the social safety net the right so hypocritically despises. High unemployment drives down salaries and makes the populace so desperate that they are incapable of demanding better working conditions, thus increasing corporate profits. The resulting fear and anger is easily manipulated by unscrupulous politicians (see: GOP 2012 Platform, All Of), thus obscuring their continued efforts to stall the recovery by attacking same sex marriage or “slutty” women.

Anyone that clearly and concisely explains that the boogeyman is not real is, by definition, a serious danger to the agenda behind austerity. Keeping this in mind, expect the right to freak out over Krugman’s latest volley in the war of reality versus corporate bullshit. On Saturday, he detailed what might be the most damning explanation of why the deficit is already under control:

Anyone who is serious (as opposed to Serious) about matters fiscal knows that it’s highly misleading just to focus on the raw deficit numbers (ONE TRILLION DOLLARS), for two reasons.

First, fluctuations in the deficit tend to be driven by the business cycle; when the economy slumps, revenues fall and some kinds of expenditure, like unemployment benefits, rise. You want to take out these “automatic stabilizers” when assessing the underlying state of the budget.

Why take them out? Because they’re only a reflection of the slump not the actual underlying problems. Emphasizing the money being spent on the safety net during a downturn is like focusing on keeping air in the tire and ignoring the hole. That money is a symptom that goes away when you fix the problem. So what you really want to look at is what’s left.

Second, we don’t have to balance the budget to have a sustainable fiscal position; all we need is to ensure that debt grows more slowly than GDP. So CBO is now out with its latest report on automatic stabilizers. It estimates that in fiscal 2013 these stabilizers will amount to $422 billion, accounting for just about half of a projected $845 billion deficit. So the cyclically adjusted deficit will be $423 billion. How does this compare with the deficit consistent with fiscal sustainability? Well, there’s about $11.5 trillion in federal debt in the hands of the public. A reasonable, indeed fairly conservative guess is that nominal GDP will in future grow by 4 percent per year, half from real growth and half from inflation. This means that the sustainable deficit is 4 percent of $11.5 trillion, or $460 billion. Hey, we’re there!

The thing about deficits is that they do not matter in the short run. Republicans like to tell this story about how the country is like a family that needs to “tighten its belt.” This is a false analogy designed to fool people into agreeing that we must must MUST cut spending. A growing GDP is a growing economy. A large deficit will not affect this. In fact, deficit spending has been proven (repeatedly) to induce growth. This is why, during their respective recessions, previous presidents increased public employment:

Sure, the deficit spending went up, but that spending went right into the economy in the form of wages, which are far more beneficial to growth than tax cuts. President Obama, on the other hand, has allowed the GOP to do the exact opposite with the result being anemic growth; which is precisely the outcome Republicans are looking for. How do we know they want the economy to falter? Because every effort at austerity in every other country has failed spectacularly. The United Kingdom is about to enter a triple dip recession due to its stubborn refusal to abandon the austerity policies that are clearly strangling it. Why would anyone want to emulate this total failure unless they wanted the same outcome?

So, previous presidents, including Bush, knew that deficit spending was not an immediate issue (Cheney once famously said, “Deficits don’t matter”). Krugman has shown that we’re already at a point where the underlying economy can support the debt and deficit we do have. And we know, for a fact, that further austerity measures (like the Sequester the GOP fought so hard for) will be counterproductive.

Is it any wonder the right wants Krugman to shut up and go away? Without their boogeyman, Joe Scarborough and his cohort of lying weasels won’t be able to scare the public into supporting economic suicide.

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