"In a saner political environment, the economic logic behind Rubinomics would have been compelling. Basic fiscal principles tell us that the government should run budget deficits only when it faces unusually high expenses, mainly during wartime. In other periods it should try to run a surplus, paying down its debt." -- Paul Krugman, "Democrats and the Deficit", New York Times, 22 December 2006I thought principles tell us that we should use government to develop institutions (e.g., unemployment insurance) that provide automatic fiscal counter-cyclical stimulus.
Furthermore, I don't know why I should believe the economy is supply constrained in the long run.
Update: Added a couple more links. One, by exhibiting a different rightist brand, only reinforces my opinion that Krugman is an example of an intelligent conservative.
"Basic fiscal principles tell us that the government should run budget deficits only when it faces unusually high expenses, mainly during wartime."
ReplyDelete...wartime, sure ... but what about in cases of recession and depression?