So let’s review the past year:
1. Keynesians warned us that it would be a huge mistake to adopt fiscal austerity in America. It would cut growth sharply. Mark Sadowski has the details.
2. The “Laffer wing” of the Keynesian movement predicts the damage to growth will be so great that the deficit might not even decline.
3. Then we find Congress does the austerity, despite the advice of the Keynesians.
4. Job growth continues in 2013 at almost exactly the same pace as in 2012. The tax revenues pour in.
5. The budget deficit gets much smaller.
And how do the Keynesians react to all this? They say “I told you so.” There was never any reason to worry about the big bad deficit. It’s coming down very fast “on its own.” Yes, if by “on its own” you mean that the evil GOP forced eurozone-style austerity on the US, and the Fed offset the effects on NGDP (unlike the ECB.)