Paul Krugman has a must read column, Fiscal Scare Tactics, on the irresponsible and harmful fear mongering over the federal budget deficit.

The deficit threatens economic recovery, we’re told; it puts American economic stability at risk; it will undermine our influence in the world. These claims generally aren’t stated as opinions, as views held by some analysts but disputed by others. Instead, they’re reported as if they were facts, plain and simple.

These aren’t the facts.
. . .
To me — and I’m not alone in this — the sudden outbreak of deficit hysteria brings back memories of the groupthink that took hold during the run-up to the Iraq war. Now, as then, dubious allegations, not backed by hard evidence, are being reported as if they have been established beyond a shadow of a doubt. Now, as then, much of the political and media establishments have bought into the notion that we must take drastic action quickly, even though there hasn’t been any new information to justify this sudden urgency. Now, as then, those who challenge the prevailing narrative, no matter how strong their case and no matter how solid their background, are being marginalized.

And fear-mongering on the deficit may end up doing as much harm as the fear-mongering on weapons of mass destruction.

Last year, during the debates over the American Recovery and Reinvestment Act ("stimulus bill") so-called "centrist" Democrats and Republicans, including Evan Bayh, Olympia Snowe and Susan Collins, forced major reductions in the economic stimulus because of misplaced fears we shouldn’t increase budget deficits.

The result was a stimulus package that was only half the size responsible economists said was needed to make a sizeable dent in the projected unemployment levels. Then the unemployment levels got even worse than Administration forecasts, so today we’re left with 10 to 17 percent unemployment and only modest reductions expected over the next several years.

The misguided demands by centrist Senators hurt the country. They needlessly left millions of people unemployed; they forced budget-strapped states to lay off more teachers, firemen, police and public health and safety workers and to curtail or end important public services. They postponed needed investments in public infrastructure at precisely the time when that investment would be cheapest and do the most good.

And yet when President Obama spoke to Senate Democrats on Wednesday, one of the designated questions came from clueless Evan Bayh, wondering what the President and Congress should do to get those awful deficits under control. Unfortunately, the President gave the stock answer that he inherited most of the deficit, while part was necessitated by the recession and he’s working to fix the rest. All true, but he should have told Bayh to get a grip and then addressed the misconception, explaining why we need more, not less deficit spending now to achieve not just a "statistical recovery" but a human recovery.

The conservative, anti-government campaign to create fear about budget deficits has been relentless. It has been fostered by the Peterson Institute, founded by a billionaire whose goal is to slash Social Security. It’s become the favorite scare message of the Republican party and, as Dean Baker keeps pointing out, it’s been pushed dishonestly on the front pages of the Washington Post and Wall Street Journal. Krugman concludes:

The main difference between last summer, when we were mostly (and appropriately) taking deficits in stride, and the current sense of panic is that deficit fear-mongering has become a key part of Republican political strategy, doing double duty: it damages President Obama’s image even as it cripples his policy agenda. And if the hypocrisy is breathtaking — politicians who voted for budget-busting tax cuts posing as apostles of fiscal rectitude, politicians demonizing attempts to rein in Medicare costs one day (death panels!), then denouncing excessive government spending the next — well, what else is new?

The trouble, however, is that it’s apparently hard for many people to tell the difference between cynical posturing and serious economic argument. And that is having tragic consequences.

For the fact is that thanks to deficit hysteria, Washington now has its priorities all wrong: all the talk is about how to shave a few billion dollars off government spending, while there’s hardly any willingness to tackle mass unemployment. Policy is headed in the wrong direction — and millions of Americans will pay the price.

Update:
NYT: Jobless rate down to 9.7%, but revisions to previous months show deeper recession that thought.

Update II: Need a picture of the unemployment problem? See this.

More:
Brad DeLong, When will it be morning in America? (unemployment projections graph), and Barack Grover Cleveland Obama
Harold Meyerson, A jobs lesson from the New Dealers
Baseline Scenario/James Kwak, Budget Sense and Nonsense
Paul Krugman, Romer and Bernstein on stimulus