Economy

Deficits and the End of the World

Krugman on today's This Week:

The tea baggers have been trying to say that government spending doesn't stimulate the economy (despite piles of math to the contrary) and, as Beck is suggesting, the recovery bill is exactly like Pearl Harbor and 9/11.

Yet they also insist that World War II ended the Great Depression. Partly correct, actually. The economy was on the way back when Pearl Harbor occurred. And what specifically was it about the War that ended the Depression? Massive government spending of an unprecedented scale:

deficit_since_1930.jpg

Notice the size of the deficit as a percentage of GDP during the War. Notice how we're all still here, even though the deficit spiked to 30 percent of GDP. Glenn Beck, Rush Limbaugh, Michelle Malkin, Michele Bachman, most of the congressional Republicans and the tea baggers at large seem to think that the president's compromised recovery act is going to destroy America. History, on the other hand, indicates the exact opposite.