Bursting the Bubble of Paul Krugman's Fantasy World
Paul Krugman's weekend Op-ed, entitled "Pain Without Gain," argues that pursuing fiscal responsibility is the wrong course of action, and that instead governments should be spending even more in order to deal with current economic stagnation.
"This downturn is hitting nations that have never recovered from the last recession. For all America’s troubles, its gross domestic product has finally surpassed its pre-crisis peak; Europe’s has not. And some nations are suffering Great Depression-level pain: Greece and Ireland have had double-digit declines in output, Spain has 23 percent unemployment, Britain’s slump has now gone on longer than its slump in the 1930s . . . . [I]n early 2010 austerity economics—the insistence that governments should slash spending even in the face of high unemployment—became all the rage in European capitals. The doctrine asserted that the direct negative effects of spending cuts on employment would be offset by changes in “confidence,” that savage spending cuts would lead to a surge in consumer and business spending, while nations failing to make such cuts would see capital flight and soaring interest rates. If this sounds to you like something Herbert Hoover might have said, you’re right: It does and he did . . . . Meanwhile, countries that didn’t jump on the austerity train—most notably . . . the United States—continue to have very low borrowing costs, defying the dire predictions of fiscal hawks."
Of course, even with the institution of so-called "austerity measures," in Europe, and stimulus spending here at home, in reality it is the United States that has been the most "austere" nation out of those specifically mentioned by Mr. Krugman:
Mr. Krugman also trots out the name of Herbert Hoover, much like Democrats did throughout the 2008 campaign, and derides his opponents for their failure to study history. If Mr. Krugman took his own advice, he would know that Herbert Hoover was a progressive who denounced laissez-faire ideology, expanded the civil service, and closed tax "loop-holes" for the wealthy. In response to the onset of recession following the stock Market crash of 1929, Hoover signed into law the Emergency Relief and Construction Act of 1932 in order to spend federal funds on public works projects. Hoover also signed the Revenue Act of 1932, raising income taxes on high income earners, raising estate taxes, and raising corporate taxes. Hoover advocated for tax reduction for low-income Americans however. Franklin D. Roosevelt attacked Herbert Hoover for increased spending, raising taxes, increasing the national debt, and placing millions of Americans on the government dole. Roosevelt criticized Hoover's "reckless and extravagant" spending and position "that we ought to center control of everything in Washington as rapidly as possible."  Roosevelt's campaign even accused Herbert Hoover of "leading the country down the path of socialism." 
If all of the above—tax hikes on the wealthy, government spending on public projects, being criticized for "socialism," etc.—sounds familiar, it should. Democratic President Barack Obama and his policies are nothing new in America.
Of course, after criticizing Hoover's progressive policies, the Roosevelt administration hypocritically expanded on and added to them. Recession turned into two decades of depression. And yet Mr. Krugman advocates the same failed approach, ignoring history and reality himself. The fact is, we already know, based on history, how to turn our economy around. As discussed here, if Federal spending were kept at reasonable levels, the United States would actually be running a surplus and have room for further tax cuts. And as discussed here, the 1980 recession was actually the worst since the Great Depression by every meaningful economic measure—peak unemployment rate, peak GDP loss, number of quarters of GDP loss, inflation and the misery index, etc.—but the recovery was remarkably different, and much quicker, that the recovery following the Great Depression, or our current "recovery."
Mr. Krugman, it's time to learn the lesson that "three generations’ worth of economic analysis and all the lessons of history" show us. It's time for you to abandon your "reluctan[ce] to admit that policy ideas [you] thought reflected deep wisdom [have] actually amounted to utter, destructive folly . . . it’s time to put delusional beliefs about the virtues of" leftist economic policy behind you.
 Robert Lekachman, THE AGE OF KEYNES 114 (1966).
 Otto Friedrich, "F.D.R.'s Disputed Legacy," TIME (Feb. 1, 1982).