Underbelly Buce does some digging:
The Holland Principle: Who first said that the US government is "an insurance company with an army." Paul Krugman often gets the credit, but he says it is not original with him: "this isn't original" he wrote, invoking the principle on April 27, 2011. Ezra Klein also gets credit; he presented it alongside a lovely pie chart on Feb. 14, 2011, but I find a (second-hand) reference back in 2007 crediting Krugman, so Krugman at least trumps Klein. A polisci textbook (Jan. 1, 2010) credits it to "a Bush administration staff member."
And here's a ref dated April 5, 2004 crediting it to "OSTP's Mike Holland" as from Science in for 4/11/2003. I haven't taken the time to track it all the way to JSTOR. OSTP=Office of Science and Technology Policy? "Mike Holland" would appear to be this guy, whose Linkedin profile shows that he was at OSTP at the relevant point in time.
Recognizing that no quote is original, and that we can probably count on finding an earlier avatar on a clay pot in Sumer, I'd say that for a moment we ought to call it "The Holland Principle." Yo Mike, okay with you?
Update: Paul Krugman emails:
Someone should have asked me. Peter Fisher, undersecretary of the Treasury, in 2002.