Paul Krugman on National Debt

Paul Krugman has asserted that worries about the United States national debt are often overstated, especially when the economy requires significant deficit spending for recovery, such as after the 2008 financial crisis. He previously argued that advanced nations possess ample fiscal space to sustain higher debt levels without immediately losing investor confidence, a faith he bases on historical precedent like post-war UK debt levels, assuming competent governance will act responsibly when emergencies subside. He also noted that countries experiencing crises typically borrow in other currencies, a vulnerability the US, as the issuer of its own currency, does not face regarding a liquidity crunch.

However, he indicated a shift in his view in a 2025 article, suggesting that current conditions warrant concern because the economic emergency justifying large deficits is over, while America's fiscal space has been reduced by political actions. He directly criticizes Republican policies for increasing the debt through tax cuts and new spending, arguing these actions demonstrate a lack of seriousness that raises the actual risk of a debt crisis, regardless of previous historical norms. He implies that the primary driver of current debt concern should be current fiscal irresponsibility rather than the absolute level of debt itself.