Spend Now, Save Later

“Penny-pinching at a time like this isn’t just cruel; it endangers the nation’s future,” says Paul Krugman, who laments the government’s plans to reign in current spending to pay back the budget deficit. Kruman continues, “And it doesn’t even do much to reduce our future debt burden, because stinting on spending now threatens the economic recovery, and with it the hope for rising revenues. So now is not the time for fiscal austerity. How will we know when that time has come? The answer is that the budget deficit should become a priority when, and only when, the Federal Reserve has regained some traction over the economy, so that it can offset the negative effects of tax increases and spending cuts by reducing interest rates.”