Of course, they’re actually talking about real economic theory, but how can it compete with this brilliant piece of CW from some dude in governor of South Carolina:

Gov. Sanford, unlike most of his colleagues, speaks out against any federal bailouts, including a fiscal stimulus bill that is likely to include state aid. “When times go south you cut spending,” Gov. Sanford said. “That’s what families do, that’s what businesses do, and I don’t think the government should be exempt from that process.”

Because, you know, if everyone cuts back on spending, that will help the economy.  Hey, it makes sense when you equate the giant federal government with virtually unlimited borrowing power to a family of four.  Who needs economic theory, right?

Oh, and btw, Matthews barely lets Krugman talk here…it almost like he’s auditioning for something…