A number of people--including your truly--have been making the point for a long time that there is no debt and deficit "crisis". The problem is that there is a bi-partisan obsession with the phony "crisis", helped by the transcribers of press releases (formerly known as "journalists") that has drowned out any rationale discussion--a discussion that would put our focus squarely on the true crisis: one in five Americans does not have decent, good-paying work.
It is fitting that on Labor Day Paul Krugman makes this point.
As he points out in a column called "The Fatal Distraction":
I don’t mean to dismiss concerns about the long-run U.S. budget picture. If you look at fiscal prospects over, say, the next 20 years, they are indeed deeply worrying, largely because of rising health-care costs. But the experience of the past two years has overwhelmingly confirmed what some of us tried to argue from the beginning: The deficits we’re running right now — deficits we should be running, because deficit spending helps support a depressed economy — are no threat at all.
And by obsessing over a nonexistent threat, Washington has been making the real problem — mass unemployment, which is eating away at the foundations of our nation — much worse.
Although you’d never know it listening to the ranters, the past year has actually been a pretty good test of the theory that slashing government spending actually creates jobs. The deficit obsession has blocked a much-needed second round of federal stimulus, and with stimulus spending, such as it was, fading out, we’re experiencing de facto fiscal austerity. State and local governments, in particular, faced with the loss of federal aid, have been sharply cutting many programs and have been laying off a lot of workers, mostly schoolteachers. [emphasis added]
The rest of the column essentially argues that the president needs to understand this fact and argue for a large, bold jobs program--knowing that the Republicans will oppose it.
This is still an important message to get out, particularly because the foolish Catfood Commission will be sharpening its knives in the next couple of months.
Last year, I published an e-book laying out the argument about the phone debt and deficit "crisis": "It's Not Raining, We're Getting Peed On: the Scam of the Deficit Crisis". You can also read each chapter here, here, here and here.