Don't Fear Debt —Failed Reform Is Scarier

Paul Krugman isn't surprised that the projected $9 trillion deficit over the next decade is being greeted as a sign of economic apocalypse—and that commentators think it proves health care reform should be scuppered. In fact, he writes in the New York Times, it's good to run a deficit during a recession; if anything, Washington should run "even larger deficits over the next year or two" to combat unemployment. Debt may be scary, but for political rather than economic reasons.

Right now the US can borrow at below 3.5%, and there's no real chance that the country's credit rating will suffer even with debt at 70% of GDP. What worries Krugman are politicians who may block efforts to bring down debt through reform, especially of health care costs. "That won't happen, of course, if even the most modest attempts to improve the system are successfully demagogued—by conservatives!—as efforts to 'pull the plug on grandma.'" (More Paul Krugman stories.)