Nobel-prize winning economist Paul Krugman isn’t paying enough attention to growing U.S. government debt as he promotes deficit spending, Columbia University professor Jeffrey Sachs said.
“Krugman has staked out a rather crude Keynesian position and unrelentingly so,” Sachs said today, referring to John Maynard Keynes, the British economist who advocated government spending to spur economic growth during the Great Depression. Krugman “knows one thing, which is stimulus, stimulus, stimulus and expand deficit spending,” Sachs said in a television interview on “Bloomberg Surveillance” with Ken Prewitt and Tom Keene.
Total federal debt held by the public has more than doubled as a share of gross domestic product in the last decade. It totaled 72 percent of GDP last year, compared with 35 percent in 2000, according to calculations by the Office of Management and Budget.
Krugman didn’t immediately respond to an e-mail or telephone request seeking comment.
On Feb. 6, Krugman, a professor at Princeton University and a New York Times columnist, wrote in his “Economics and Politics” blog that the U.S. economy was in a depression because an excess supply of savings prevented full employment. Government spending would help “reduce that incipient surplus,” he wrote.
“Paul has a powerful bully pulpit in his New York Times column, and he’s been on one theme for three years,” Sachs said. Krugman has “under-emphasized the risks of growing debt, he’s over-asserted what we really know about the effects of these policies and he has underestimated the long-term need for public-sector change and reform,” Sachs said.
To be sure, Krugman is “battling ideologues on the other side who have been equally extreme,” Sachs said. “This brawl is really a brawl of extreme positions,” he said. “It’s not very illuminating, but it is rather entertaining.”
Offering Republican presidential candidate Mitt Romney advice, Sachs said that “simply cutting government spending in order to be able to enable tax cuts is going to be seen as terribly unfair.” Such a policy wouldn’t address the need for more investment in education, research and development, and infrastructure, he said.