Playing with fire

"So, to calculate what another trillion in deficits means for me personally, I take the amount I paid in federal income taxes that year and double it"

Strange thought.
My income is X, my deficit is zero. But next year I want to buy a house and I expect my income to remain X.
Does Mr. Hamilton suggest I can only borrow X ,
because if I want to buy a house of 2X, my income must rise to 2X ...

Truly superb.

I don't think he's suggesting that your income must rise to 2X. I think he's just breaking the numbers down so you can see what your lovely government has signed you up for on your behalf.

Whether you maintain your zero deficit policy and pay for it in one year or borrow to repay in the future, you are on the hook for 2X until you've paid the debt, someone has paid it for you or the lender forgives it.

Even if we disregard the fact that the government could sell assets, print money,
there remains the fact that the government would be able to reduce on other expenses ( wars, entitlements, pork, etc.).
I guess Mr. Hamiltons' taxes might even sink if the debt forces the government to cut fat away.

Krugman's response to Hamilton (http://krugman.blogs.nytimes.com/2009/11/27/def...) is unhinged:

"Now, back in 2003 I got very alarmed about the US deficit — wrongly, it turned out — not so much because of its size as because of its origin. We had an administration that was behaving in a deeply irresponsible way. Not only was it cutting taxes in the face of a war, which had never happened before, plus starting up a huge unfunded drug benefit, but it was also clearly following a starve-the-beast budget strategy: tax cuts to reduce the revenue base and force later spending cuts to be determined. In effect, it was a strategy designed to produce a fiscal crisis, so as to provide a reason to dismantle the welfare state. And so I thought the crisis would come."

His ex post storytelling about "starving the beast" "to produce a fiscal crisis" to "dismantle the welfare state" is insane. Where does he get the idea that people want to dismantle the welfare state during an economic crisis? The debate, right now, right smack-dab-in-the-middle of the crisis is: do we want to expand the welfare state! From Bush to Obama, the move has been toward expanding government's role, not shrinking it.

Also, how is the extra $1-$2 trillion for health insurance reform over the next 10 years a "temporary emergency" debt burden?

Even accepting for the sake of argument Krugman's claims that emergency spending is necessary in times of financial crisis, I completely fail to see how borrowing to finance an overhaul of health insurance is an emergency.

He's basically saying his explicit concern about the deficit back then was merely false advocacy. He is saying he wanted to argue against the war but hid behind the deficit rather than do so directly. Ergo, he implies, now, when deficits are to expand the welfare state he can reveal that he never really cared about deficits and thus can be intellectually consistent. Whew, I bet it took a load off his conscience to finally disclose the secret he had kept pent up all these years.

Intellectually shameful.

That's a great point and it makes me sick. I'm so pleased that Krugman will be burning in hell one day.