The following is taken from http://economistsview.typepad.com/economistsview/2009/03/ken-rogoff.html—.
It is a comment by Paul Krugman to the many people, such as Ken Rogoff, who are anxious to pin our economic problems on the deficit. He says:
The stimulus package wont prolong the recovery period it will shorten it by jump starting the economy in important areas and keeping it going until the private sector can take over (think of the government spending and tax cut as a bridge over trouble assets). –Stabilization policy does not have to change the size of government in the long-run.
What Krugman is saying is that, in the short term, the stimulus package does not create additional (temporary) public debt. It only makes certain that (in the short term) GDP and employment are much larger – but debt is much the same. It helps to stabilize both debt and output.
By attacking this strategy, what people like Rogoff are doing is to use the deficit as an ideological pretext to run a political agenda e.g. to attack the welfare state.
This is surely the best response one could make to Malcolm Turnbull. My own response is on http://www.onlineopinion.com.au/view.asp?article=8568—. It is rehash of an earlier Club Troppo piece.