David Leonhardt, the Obama administration’s columnist-in-residence at the New York Times (you thought it was Krugman?) is right on schedule with his defense of the $787 billion stimulus bill, coming as it does alongside Joe Biden’s annual report on the legislation’s success.

Let me tell you about the “stimulus is working” crowd. They are different from you and me. They possess and enjoy an obliviousness to mounting government debt which grants them an enviable ability to “live in the now.” GDP is up! Unemployment is down! And various measures of aggregate demand such as spending by state governments and consumers provide all the evidence we need that the stimulus is powering these trends. Success!

As for the naysayers, they just don’t understand how much worse things would be without the stimulus, Leonhardt writes: “Around the world over the last century, the typical financial crisis caused the jobless rate to rise for almost five years, according to work by the economists Carmen Reinhart and Kenneth Rogoff.”

Reinhart and Rogoff . . . Reinhart and Rogoff . . . Where have I heard those names before? Oh, yes:

Why we should expect low growth amid debt
By Carmen Reinhart and Kenneth Rogoff
Published: January 27 2010 20:17 | Last updated: January 27 2010 20:17
As government debt levels explode in the aftermath of the financial crisis, there is growing uncertainty about how quickly to exit from today’s extraordinary fiscal stimulus. Our research on the long history of financial crises suggests that choices are not easy, no matter how much one wants to believe the present illusion of normalcy in markets. Unless this time is different – which so far has not been the case – yesterday’s financial crisis could easily morph into tomorrow’s government debt crisis.
In previous cycles, international banking crises have often led to a wave of sovereign defaults a few years later. The dynamic is hardly surprising, since public debt soars after a financial crisis, rising by an average of over 80 per cent within three years. Public debt burdens soar owing to bail-outs, fiscal stimulus and the collapse in tax revenues. Not every banking crisis ends in default, but whenever there is a huge international wave of crises as we have just seen, some governments choose this route.
We do not anticipate outright defaults in the largest crisis-hit countries, certainly nothing like the dramatic de facto defaults of the 1930s when the US and Britain abandoned the gold standard. Monetary institutions are more stable (assuming the US Congress leaves them that way). Fundamentally, the size of the shock is less. But debt burdens are racing to thresholds of (roughly) 90 per cent of gross domestic product and above. That level has historically been associated with notably lower growth.

Reinhart and Rogoff, authors of the engrossing This Time Is Different: Eight Centuries of Financial Folly, go on to ask:

Given these risks of higher government debt, how quickly should governments exit from fiscal stimulus? This is not an easy task, especially given weak employment, which is again quite characteristic of the post-second world war financial crises suffered by the Nordic countries, Japan, Spain and many emerging markets. Given the likelihood of continued weak consumption growth in the US and Europe, rapid withdrawal of stimulus could easily tilt the economy back into recession. Yet, the sooner politicians reconcile themselves to accepting adjustment, the lower the risks of truly paralysing debt problems down the road. Although most governments still enjoy strong access to financial markets at very low interest rates, market discipline can come without warning. Countries that have not laid the groundwork for adjustment will regret it.

In other words, of course the stimulus is working, if by working one means temporarily buoying economic indicators like GDP and employment. But have we forever avoided the leg-down in growth and employment that typically follows financial crises of this magnitude? Or are we in for a painful adjustment in any case, and stimulus spending has only put off the inevitable, or made the inevitable worse by adding nearly $1 trillion to a staggering debt load?

The problem I have with most of the “stimulus is working!” crowd isn’t that they make flawed arguments in response to these questions. It’s that they don’t even seem to consider where the money is coming from, or what the private sector would be doing with it had the government not borrowed it (or printed it — should we talk about the printing?) There’s no acknowledgment that maybe the stimulus has come with some unpleasant trade-offs, such as a heightened vulnerability to a government-debt crisis that could make the financial crisis look like a bump in the road. People who fear these things are dismissed with Keynesian hand-waving about the righteousness of deficit-spending during recessions. But this is no ordinary recession. And these are no ordinary deficits.

Finally, say what you will about Sarah Palin, but I found her take on the stimulus to be a useful and simple explanation of the foregoing:

Americans were promised the stimulus would keep unemployment under 8%. It’s now well over that. We were promised it would be targeted and pork-free. It’s been loaded with pork, corporate giveaways, union bosses’ goodies, and other manners of waste. We were promised there would be no fraud, but our government now tells us it can’t even verify the eligibility of people applying for the $325 billion worth of stimulus tax provisions. We were promised there would be strict oversight, but billions of dollars apparently were allotted to congressional districts that don’t even exist. We were promised it would provide “green jobs” for Americans, but 80% of the $2 billion they spent on alternative energy went to purchase wind turbines built in China! We were promised it would help state governments weather the recession, but states receiving the stimulus bait will be in worse fiscal shape now because local governments will be on the hook for new unfunded mandates and continuation of government programs they couldn’t afford in the first place – as many of us governors warned state legislatures.
One year later, we see plainly that the stimulus was not a well-thought out plan. It hasn’t revived our economy; instead the debt-ridden package will prove to be a drag on our economy. It hasn’t put us on the path to a better future; instead it’s unfairly mortgaged our children’s future and stolen opportunities from them. It hasn’t strengthened us; instead it endangers our freedom and security by making us even more beholden to foreign lenders. The legacy of the stimulus isn’t jobs or economic growth – it’s more dangerous debt.

But of course, you should take everything I’ve written here with a grain of salt. As I watched the news the other night (MSNBC, natch) a man came on who made me realize that my concerns about the deficit are just a mask I wear to hide the fact that I’m “terribly, painfully, cripplingly, blindingly, afraid” — of black people!

UPDATE: Don’t miss Reihan’s take on Leonhardt, here. Reihan also notes the fact that Leonhardt introduces Reinhart and Rogoff as witnesses for the defense without mentioning their warnings about the dangers of government debt. And it’s not as if he isn’t aware of them — he blurbed their book on the subject!

UPDATE II: More here.