Krugman on what is a constant mantra from the Republicans these days, runaway deficits. the same folks who approved unpaid for wars and tax cuts for millionaires.  BP

Krugman:

Let?s talk for a moment about budget reality. Contrary to what you often hear, the large deficit the federal government is running right now isn?t the result of runaway spending growth. Instead, well more than half of the deficit was caused by the ongoing economic crisis, which has led to a plunge in tax receipts, required federal bailouts of financial institutions, and been met ? appropriately ? with temporary measures to stimulate growth and support employment.

The point is that running big deficits in the face of the worst economic slump since the 1930s is actually the right thing to do. If anything, deficits should be bigger than they are because the government should be doing more than it is to create jobs.

True, there is a longer-term budget problem. Even a full economic recovery wouldn?t balance the budget, and it probably wouldn?t even reduce the deficit to a permanently sustainable level. So once the economic crisis is past, the U.S. government will have to increase its revenue and control its costs. And in the long run there?s no way to make the budget math work unless something is done about health care costs.

But there?s no reason to panic about budget prospects for the next few years, or even for the next decade. Consider, for example, what the latest budget proposal from the Obama administration says about interest payments on federal debt; according to the projections, a decade from now they?ll have risen to 3.5 percent of G.D.P. How scary is that? It?s about the same as interest costs under the first President Bush.

Why, then, all the hysteria? The answer is politics.

The main difference between last summer, when we were mostly (and appropriately) taking deficits in stride, and the current sense of panic is that deficit fear-mongering has become a key part of Republican political strategy, doing double duty: it damages President Obama?s image even as it cripples his policy agenda. And if the hypocrisy is breathtaking ? politicians who voted for budget-busting tax cuts posing as apostles of fiscal rectitude, politicians demonizing attempts to rein in Medicare costs one day (death panels!), then denouncing excessive government spending the next ? well, what else is new?

The trouble, however, is that it?s apparently hard for many people to tell the difference between cynical posturing and serious economic argument. And that is having tragic consequences.

For the fact is that thanks to deficit hysteria, Washington now has its priorities all wrong: all the talk is about how to shave a few billion dollars off government spending, while there?s hardly any willingness to tackle mass unemployment. Policy is headed in the wrong direction ? and millions of Americans will pay the price.

Paul Krugman  NYTimes 2-5-10