Do readers remember the debt panic of the early Obama years? For a while scare stories about national debt dominated discussion in the media and inside the Beltway.
.I got a lot of grief at the time for bucking that consensus, urging people to relax about government debt. The United States, I argued, had lots of “fiscal space” — ability to run up debt without losing investor confidence — so it should focus instead on the importance of restoring full employment, which required running substantial deficits.
These days, however, many though not all of the people who were screaming about debt back then have gone quiet. Funny how that happens when there’s a Republican in the White House.
Yet there is much more reason to be worried about debt now than there was then. On one side, there’s no longer any good economic reason to be running large deficits. On the other, America has changed in ways that have greatly reduced our fiscal…
