At this point, the economic case for austerity — for slashing government spending even in the face of a weak economy — has collapsed.



Actually, the historical record shows that stimulus almost always ends too soon.

Let's start with the common claim that stimulus programs never go away.

In the United States, government spending programs designed to boost the economy are rare. Neither FDR's New Deal nor President Barack Obama's much smaller Recovery Act became permanent. Both were scaled back much too soon. FDR cut back sharply in 1937, plunging America back into recession; the Recovery Act had its peak effect in 2010, a fade that has been a major reason for our slow recovery.



So the whole notion of perma-stimulus is fantasy. Still, even if you don't believe that stimulus is forever, Keynesian economics says not just that you should run deficits in bad times, but that you should pay down debt in good times. And it's silly to imagine that this will happen, right?

Wrong. The key measure is the ratio of debt to GDP, which measures the government's fiscal position better than a simple dollar number. And if you look at U.S. history since World War II, you find that of the 10 presidents who preceded Barack Obama, seven left office with a debt ratio lower than when they came in — Ronald Reagan and the two George Bushes were the three exceptions.


The funny thing is that right now these same hard-line conservatives declare that we must not run deficits in times of economic crisis. Why? Because, they say, politicians won't do the right thing and pay down the debt in good times. And who are these irresponsible politicians? Why, themselves.

To me, it sounds like a fiscal version of chutzpah. Here we have conservatives telling us that we must tighten our belts despite mass unemployment, because otherwise future conservatives will keep running deficits once times improve.

Put this way, it sounds silly. But it isn't; it's tragic. The disastrous turn toward austerity has destroyed millions of jobs and ruined many lives. And it's time for a U-turn.

Paul Krugman is a Pulitzer Prize-winning economist who writes for the New York Times.