The economics editor at the WSJ, David Wessel, sounds like Paul Krugman! From “Putting the Brakes on Cutting the Deficit”:
“The deficit…is shrinking even before the year-end fiscal cliff or a last-minute compromise to avoid it. In the depths of the most recent recession, the fiscal year that ended Sept. 20,.2009, the deficit was 10.1% of gross domestic product…. Since then, the deficit has shrunk to 9% of GDP in 2010, 8.7% in 2011 and 7% in fiscal 2012. Private analysts predict the deficit will be between 5.5% and 6% of GDP in fiscal 2013…
“One reason the deficit is still large is that the economy is still lousy: More unemployment means fewer taxpayers as well as more government spending on jobless benefits, food stamps and the like. As the economy slowly improves, the deficit shrinks as these automatic stabilizers…adjust. Tax revenue rises. Safety-net spending falls. The U. S. budget deficit has been coming down at roughly the same pace as the U. K..’s — with far less austerity than Britain’s David Cameron has prescribed and substantially better growth.”
Really, people, short-term, we’d be better off with more government spending.