Thursday, November 05, 2009

Being Liberal and Being Fiscally Responsible Are Not Incompatible

A common myth in our political culture is that on the economic front conservatives are fiscally responsible and liberals are fiscally reckless. The truth is that the difference between modern conservatives and modern liberals has more to do with smaller government attitudes (conservative) versus bigger government attitudes (liberal). Fiscal sanity has very little to do with it. For instance, I would say that I am not opposed to bigger government, as long as it is still a solvent government.


Eric said...

When you guys show Paul Krugman and Robert Reich the door, you'll have a fair point, but most liberal economists are die hard Keynesians, and fiscal responsibility has never been a Keynesian priority.

Huck said...

Eric - Define fiscal responsibility. Here's a fact: I have never once heard either Krugman or Reich argue that deficits don't matter. That bit of fiscal wisdom came courtesy of Dick Cheney. Liberals may think that deficit-spending during a recession or more sspending on social safety net programs for the disadvantaged or elderly is a good thing, but I've never heard a liberal Keynesian economist argue that it didn't matter how to pay for it. I've mostly heard such economists argue that because we need to pay for them, taxes need to be raised. Keynesian economists know that the piper has to be paid, and are at least honest enough to suggest that we, through taxes, should be the ones to pay for it -- not the Chinese. As misguided as you might think that is, it is not fiscally irresponsible. What is fiscally irresponsible are tax cuts without spending cuts. And that is a Republican legacy - one even Reagan contributed to.

andrew said...

"fiscal responsibility has never been a Keynesian priority."

Wait, wat?

So you're saying to spend more money to get even more back in taxes is a bad idea? Sounds like prudent investing advice to me.

If anything we should provide a greater subsidy on education, putting it into more people's grasp to create more interest bearing bonds, I mean higher income taxpayers.

Eric said...

Generally I am speaking here about the reaction to the current economic crisis, and my point was only that when conservatives support massive deficit spending to spur the economy, it is a betrayal of their principals, whereas when liberals do it, it is in accordance with theirs.

Under more 'normal' economic conditions, I would agree with Huck's assessment that liberals can be fiscally responsible, as defined by requiring immediate non-deficit funding be applied to pay for the policies they institute.

"So you're saying to spend more money to get even more back in taxes is a bad idea? Sounds like prudent investing advice to me."

No, I'm saying that the more investment risks a government takes with money they coerced from people agaisnt their will, the less fiscally responsible they are being.