04/05/2012 11:19 am ET

Simon Johnson: The Dangers Of The Fiscal Policy Debate

There are two competing narratives about the federal government budget in the political mainstream today.

The first is that we are, or soon will be, in crisis, because of runaway government spending. To avoid this crisis, we should cut spending by a great deal and as soon as possible.

The second view is that all talk of a fiscal crisis is essentially a hoax; we have a jobs crisis, and we should spend as much as necessary to get us out of the deep recession. From this perspective, we should fix the budget once the economy is back on an even keel.

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