01/23/2013 11:26 am ET

Paul Krugman: 'Just Wrong' To Say Government Spending Is Suddenly Surging

Many politicians and pundits treat it as an obvious truth that the U.S. has a government spending crisis. But that's "just wrong," according to Paul Krugman.

"The idea that we've had some kind of spending surge, and that current deficits reflect that surge, is just wrong, and distorts public discussion," the Nobel Prize-winning economist wrote in a blog post on Tuesday.

Krugman wrote that government spending has looked high over the past few years because the recession shrank the economy and kicked safety net programs into gear. But when measuring government spending as a share of the economy's potential size, he wrote, government spending has actually declined during the Obama administration.

Some Republican lawmakers have claimed that government spending is the country's biggest threat. Senate Minority Leader Mitch McConnell (R-Ky.) said on Tuesday that the government should focus on "spending and debt; because if we don't get a handle on that, nothing else matters." And House Speaker John Boehner (R-Ohio) blamed the national debt for the slow economic recovery in a speech in January, claiming: "Our government has built up too much debt."

But government spending actually hasn't grown that much under Obama on an absolute basis. Government spending has grown 8 percent by that measure since President Barack Obama took office at the beginning of 2009, according to Commerce Department data. And as a share of real GDP, government spending has declined by 5 percent.

Also according to Commerce Department data, both in absolute terms and as a percent of GDP, the deficit peaked in 2009 but has been shrinking since then.

Meanwhile, the government has been laying off workers -- including teachers and firefighters -- over the past few years in an effort to curb spending. Some economists, including Krugman, say that this austerity has made the economic recovery slower than it would have been otherwise.



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