DEFICITS DON'T MATTER. Nice to see Krugman dismissing the deficit chatter that plagues so many Democrats these days. As he argues, fiscal responsibility has become something of a shell game in contemporary politics, with dutiful Democrats (Clinton) cleaning up after profligate Republicans (Reagan) only to see their demolished by the next GOPer to take the White House (Bush 43). Why enable their tax cuts and giveaways? Why indeed? But the argument for largely ignoring the deficit isn't merely political, it's substantive. Deficits don't matter. Interest rates have not skyrocketed as the government "crowded out" private borrowers. The economy has not tumbled in the face of Bush's borrowing. So there's really no urgency in deficit reduction -- the macroeconomy is relatively healthy (though we'll see where housing goes), even if its distribution is quite sick. What there is urgency in is a host of social programs and infrastructure investments long ignored by Republicans and, to some degree, sacrificed by Clintonian Democrats beneath the altar of deficit reduction. For Democrats to handcuff themselves by promising to cut spending for the totally amorphous goal of deficit reduction would make no sense -- there are other, more pressing, priorities requiring the cash. So as Krugman says, making the deficit worse probably isn't a good idea. But the priority isn't making it better, nor curtailing the progressive agenda to clean up after Bush's tax cuts. And if, after a couple more years of deficits that now fund a positive welfare state, the right wants to come to the table and talk about some revenue increases to restore "fiscal responsibility," well, that's all for the good then. Update: I should weaken the claim here a bit. It's not that deficits never matter, it's that, at this point, they aren't a pressing concern. Yes China could pull out the rug or we could have a national emergency or a variety of other unforeseen circumstances could occur -- all that's true. But it's not all likely, and it doesn't make deficit reduction a more urgent priority than other items on the progressive wish list. --Ezra Klein
