Paul Krugman: Paul Volcker 'Really Should Know Better'

This weekend Paul Krugman used his blog to call out Paul Volcker, accusing the widely respected former Federal Reserve chairman of political opportunism.

He "really should know better," Krugman wrote.

The Nobel Prize-winning economist has a problem with Volcker -- inventor of the gutted Volcker rule and famed tamer of high inflation -- joining the Peter G. Peterson Foundation's Coalition for Fiscal and National Security, which is calling for a deficit reduction deal "by the end of the year." In a statement Peterson's group says "our long-term debt is the single greatest threat to our national security."

Short retort from Krugman: That's absurd. Volcker has been "assimilated by the Peterson borg," wrote Krugman, who said it is wrongheaded to think we can reach a long-term deficit reduction agreement now when Congressional Republicans refuse to detail their own plan. "Look, we aren't going to get a Grand Bargain this month, or for that matter in the next couple of years; the GOP is still in total denial, insisting that revenue come from closing loopholes they won't name and that there be big cuts in spending they won't identify."

The post is part of Krugman's long-running campaign to decouple the deficit from the fiscal cliff, the tax hikes and spending cuts scheduled to take place on Jan. 1 if the government does nothing. Last month Krugman told WNYC radio in New York that the fiscal cliff actually "has nothing to do with the budget deficit."

Yet Congressional Republicans and business leaders have been calling for a deficit reduction deal to avert the fiscal cliff.

And they are influencing the political consensus. Political leaders, ranging from Rep. Paul Ryan (R-Wis.) to President Barack Obama, have said that the deficit is a grave threat.

But much of today's deficit "mainly reflects the depressed state of the economy," Krugman wrote in a New York Times column on Monday.