Krugman on the Deficit and British Austerity

Paul Krugman's column begins:

President Obama's second Inaugural Address offered a lot for progressives to like. There was the spirited defense of gay rights; there was the equally spirited defense of the role of government, and, in particular, of the safety net provided by Medicare, Medicaid and Social Security. But arguably the most encouraging thing of all was what he didn't say: He barely mentioned the budget deficit.

Mr. Obama's clearly deliberate neglect of Washington's favorite obsession was just the latest sign that the self-styled deficit hawks — better described as deficit scolds — are losing their hold over political discourse. And that's a very good thing.

From the White House transcript of President Obama's Inaugural Address:

We must make the hard choices to reduce the cost of health care and the size of our deficit.

Maybe Professor Krugman nodded off for that line in President Obama's speech, the same way that his Times editorial page colleague Charles Blow missed the reference to economic ups and downs and international conflicts, and Andrew Rosenthal apparently missed the gun control reference.

Elsewhere in the same column, Professor Krugman discusses Britain:

Consider, in particular, the case of Britain. In 2010, when the new government of Prime Minister David Cameron turned to austerity policies, it received fulsome praise from many people on this side of the Atlantic. For example, the late David Broder urged President Obama to "do a Cameron"; he particularly commended Mr. Cameron for "brushing aside the warnings of economists that the sudden, severe medicine could cut short Britain's economic recovery and throw the nation back into recession."

Sure enough, the sudden, severe medicine cut short Britain's economic recovery, and threw the nation back into recession.

Professor Krugman blames "austerity," but one can just as easily blame Prime Minister Cameron's decision to follow through on his Labour Party predecessor Gordon Brown's decision to raise the income tax rate for the highest earners to 50%, a level Mr. Krugman has supported for America as a way to counter income inequality. Said Mr. Cameron at the time, "The rich will pay their share." How does Professor Krugman know for sure it was deficit reduction of the sort that he opposes that caused Britain's recession rather than tax increases on the rich of the sort that he supports? He doesn't say.