Hat tip to Cullen Roche, who put up a transcript of Krugman’s response to questions from Reddit users yesterday.

Question (Weisenthal):

Back in the 2000s, you frequently blasted Bush for running large deficits. However in recent posts and interviews, you’ve said that a country with its own sovereign, un-pegged currency can’t ever face bond vigilantes.

What’s more, the sovereign currency issue seems to be something of a new line of thinking for you, given that initially you wondered why Italy and Japan were paying different rates given broadly similar economic conditions. Now you seem to have found peace with that question, based on the sovereign currencies issue.

Thus in light of this change of thinking, do you still stand by your comments regarding Bush’s deficits?

Answer (nytimeskrugman):

I was clearly too worried about bond vigilantes back in 2003 — and I’ve written on my blog conceding that mistake.

I wasn’t wrong, however, to condemn the Bush deficits. Deficits serve a useful function when the economy is deeply depressed, and in particular when monetary policy is up against the zero lower bound. You should not gratuitously increase debt in normal times, when any fiscal stimulus can and will be offset by Fed policy.

And don’t you wish now that we hadn’t run those unfunded wars and tax cuts? The ratio of debt to GDP would be 20 or 25 percentage points lower, and we’d be feeling a lot more relaxed about current deficits.

Roche disagrees with Krugman’s view of the aughts. He argues the deficits that ran during the Bush II era contributed to high growth. I think the truth is somewhere in the middle. Lower taxation policy probably had an impact on the periphery of job creation, but the deficits that Bush ran really don’t seem to have pointed goal. Cutting taxes on higher earners helped higher earners keep cash in their pockets, but cutting taxes while running up expenses in military armament and lowering trade doesnt seem to be an effective manner to pursue ‘smaller government’