Roll Call: Latest News on Capitol Hill, Congress, Politics and Elections
December 18, 2014

The ‘Fiscal Fever’ is Broken

Paul Krugman writes that “we were … suffering from fiscal fever [in 2012]: the insistence by virtually the entire political and media establishment that budget deficits were our most important and urgent economic problem, even though the federal government could borrow at incredibly low interest rates. Instead of talking about mass unemployment and soaring inequality, Washington was almost exclusively focused on the alleged need to slash spending … and hack away at the social safety net.”

The good news is that the “fever is broken.” Why?

“First, the political premise behind “centrism” … became untenable. There are no moderate Republicans.”

“Second, … a falling deficit has undermined the scare tactics so central to the ‘centrist’ cause. Even longer-term projections of federal debt no longer look at all alarming.”

“Finally, over the course of 2013 the intellectual case for debt panic collapsed.”

The bottom line: “While policy remains terrible, we’re finally starting to talk about real issues like inequality, not a fake fiscal crisis.”

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