Fear the deficit?

Paul Krugman compares the hysteria about the US budget deficit to the "group think" that convinced so many people that Iraq possessed WMD.  He believes a story told to help Republican candidates will turn destructive:

For the fact is that thanks to deficit hysteria, Washington now has its priorities all wrong: all the talk is about how to shave a few billion dollars off government spending, while there’s hardly any willingness to tackle mass unemployment. Policy is headed in the wrong direction — and millions of Americans will pay the price.