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 The Air Force has changed its tune on Ashli Babbitt. Details trickle out on 2 more victims of the Minneapolis shooting. Open that wallet big time for a trip to Disney, if you can afford it. A 'tense' clash with RFK Jr. led to CDC chief's trouble. Report an error