Krugman: Spending Cuts Would Destroy 'Possibly Millions of Jobs'

July 1st, 2011 11:36 AM

With a month to go before the next supposedly "drop dead date" regarding the nation's debt ceiling, liberal media members are out in force with hysterical claims about the world ending if Congress isn't free to spend more money it doesn't have.

Ever the faithful shill, New York Times columnist Paul Krugman did his part Friday cautioning that any spending cuts at this time "would destroy hundreds of thousands and quite possibly millions of jobs":

The federal debt limit is a strange quirk of U.S. budget law: since debt is the consequence of decisions about taxing and spending, and Congress already makes those taxing and spending decisions, why require an additional vote on debt? And traditionally the debt limit has been treated as a minor detail. During the administration of former President George W. Bush — who added more than $4 trillion to the national debt — Congress, with little fanfare, voted to raise the debt ceiling no less than seven times.

So the use of the debt ceiling to extort political concessions is something new in American politics. And it seems to have come as a complete surprise to Mr. Obama.

Little fanfare? Complete surprise to Mr. Obama?

Well, Mr. Krugman must have forgotten what Mr. Obama said about this very issue on the floor of the Senate on March 16, 2006:

The fact that we are here today to debate raising America's debt limit is a sign of leadership failure. It is a sign that the U.S. Government can't pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government's reckless fiscal policies. [...]

This year, the Federal Government will spend $220 billion on interest. That is more money to pay interest on our national debt than we'll spend on Medicaid and the State Children's Health Insurance Program. That is more money to pay interest on our debt this year than we will spend on education, homeland security, transportation, and veterans benefits combined. It is more money in one year than we are likely to spend to rebuild the devastated gulf coast in a way that honors the best of America.

And the cost of our debt is one of the fastest growing expenses in the Federal budget. This rising debt is a hidden domestic enemy, robbing our cities and States of critical investments in infrastructure like bridges, ports, and levees; robbing our families and our children of critical investments in education and health care reform; robbing our seniors of the retirement and health security they have counted on.

Every dollar we pay in interest is a dollar that is not going to investment in America's priorities. Instead, interest payments are a significant tax on all Americans--a debt tax that Washington doesn't want to talk about. If Washington were serious about honest tax relief in this country, we would see an effort to reduce our national debt by returning to responsible fiscal policies. [...]

Now, there is nothing wrong with borrowing from foreign countries. But we must remember that the more we depend on foreign nations to lend us money, the more our economic security is tied to the whims of foreign leaders whose interests might not be aligned with ours.

Increasing America's debt weakens us domestically and internationally. Leadership means that "the buck stops here." Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.

I therefore intend to oppose the effort to increase America's debt limit.

That's what Senator Barack Hussein Obama said five years ago. For some reason, Krugman opted to ignore that little detail as he misinformed his readers about Congress typically raising the debt ceiling "with little fanfare." And he wasn't done:

Failure to raise the debt limit would also force the U.S. government to make drastic, immediate spending cuts, on a scale that would dwarf the austerity currently being imposed on Greece. And don’t believe the nonsense about the benefits of spending cuts that has taken over much of our public discourse: slashing spending at a time when the economy is deeply depressed would destroy hundreds of thousands and quite possibly millions of jobs.

Oh really?

As NewsBusters reported in March, federal spending was cut by 48 percent during the 1920s leading to arguably the best economic expansion in American history. By contrast, the highest spending decades in the previous century were by far the weakest economically.

From 1929 to 1939, spending tripled as unemployment rose from 3.2 percent to 17.2 percent.

More recently, federal outlays have exploded by 41 percent since fiscal 2007, yet the recession began at the beginning of fiscal 2008. Six million jobs have been lost since then with unemployment going from 4.4 percent to 9.1 percent.

In the last 100 years, there is absolutely no positive peacetime correlation between exploding federal spending and a strong economy.

Quite the contrary, the two decades of fiscal restraint - the 20s and the 90s - were arguably our nation's strongest economic periods in the modern era. But idiots like Krugman continue to misrepresent this every chance they get.

And he wonders why voters are so ill-informed.