Paul Krugman likes to show numbers in the manner which best favors his argument. Profits for big corporations are stated in raw numbers, for instance, because "Blowhard Corp made $23 billion in profit last week," makes big business look worse than saying that "Blowhard Corp made 2.3% profit on $1 trillion in sales."
Likewise, government borrowing is never related to total government revenue or spending, which would show a ratio of very nearly 50% and scare the crap out of everyone, but rather to the total economy or GDP, where it reflects a much smaller percentage. Krugman et al are unconcerned that the two numbers are only marginally related and that the comparison is much like comparing your personal borrowing to your employer's revenue rather than to your own personal income. Your mortgage is probably 150% of your annual income, which is pretty alarming, but it’s only 1.2% of your employer’s revenue so the lender can rest easy. That would make some sense, I guess, if your employer was paying your mortgage.
Unfortunately for Paul Krugman and company, government borrowing is becoming a rather alarmingly high percentage of current GDP. Krugman points out that this is partly due to the GDP being reduced by the depression, and that we should therefore look at government borrowing as a percentage of the potential GDP. By doing this, he illustrates that government borrowing under Obama has plunged dramatically, and he has a chart to prove it.
This is quintessential economic argument. If you can’t win your argument with real numbers, then just switch to using imaginary numbers.
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