Counting down the seconds -- five, four, three, two... -- until Paul Krugman blows his top at President Obama's declaration Monday morning, as reported by Bloomberg, that the government must now "get serious" about reducing debt and helping spur job growth.
Spurring job growth, yes. As Krugman writes in his column today, even a 3.5 percent GDP growth rate isn't fast enough to reduce unemployment by more than a smidgen over the next few years, and there's no guarantee that such a growth rate will continue indefinitely, unless government redoubles its stimulus efforts.
But "reducing debt?" One of Obama's top economic advisers, Christina Romer, has repeatedly warned against repeating the example of 1937, in which Roosevelt heeded the pleas of the deficit hawks of the time and precipitated a recession that short-circuited recovery from the Great Depression. Is Obama listening? Now is not the time for the president to be saying "The government is going to have to get serious about reducing our debt levels."
Certainly, the bond market isn't demanding any such seriousness, yet. As Dean Baker points out this morning the current yield of 3.5 percent on ten-year-bonds indicates "that financial markets are very unconcerned about the deficit."
One can only imagine that Obama's pollsters are picking up on a successful effort by the GOP to make government spending the centerpiece of their attack on Obama's management of the economy. But I'm with Matt Yglesias on this point: When the midterm elections roll around, voters will care much more about high unemployment than they will big deficits. And the one way to absolutely ensure higher unemployment next year is to start "getting serious" about deficit reduction now.
UPDATE: Krugman responds.