Don't Fear Debt —Failed Reform Is Scarier Krugman: We need deficits in a recession; they 'saved the world' By Jason Farago Posted Aug 28, 2009 6:19 AM CDT Copied Demonstrators outside a town hall meeting on health care reform hosted by former Vermont Gov. Howard Dean and Rep. Jim Moran, D-Va., in Reston, Va., Tuesday, Aug. 25, 2009. (AP Photo/Charles Dharapak) Paul Krugman isn't surprised that the projected $9 trillion deficit over the next decade is being greeted as a sign of economic apocalypse—and that commentators think it proves health care reform should be scuppered. In fact, he writes in the New York Times, it's good to run a deficit during a recession; if anything, Washington should run "even larger deficits over the next year or two" to combat unemployment. Debt may be scary, but for political rather than economic reasons. Right now the US can borrow at below 3.5%, and there's no real chance that the country's credit rating will suffer even with debt at 70% of GDP. What worries Krugman are politicians who may block efforts to bring down debt through reform, especially of health care costs. "That won't happen, of course, if even the most modest attempts to improve the system are successfully demagogued—by conservatives!—as efforts to 'pull the plug on grandma.'" Read These Next A Social Security whistleblower says retaliation made him quit. A new possible clue in the hunt for Travis Decker. RFK Jr. suggests antidepressants to blame after shooting. There've been some big changes in how COVID vaccines are given. Report an error