In the postwar era, the consensus among both Republican and Democratic administrations has been that, except during recessions, the federal government ought to aim to run a surplus, Brad DeLong writes in a new column for Project Syndicate (via Mark Thoma). (Things didn’t work out so well in the Reagan years, but few Reagan advisers really meant to run deficits that big.) Continues DeLong:
[O]nly George W. Bush’s economic advisers have broken with this consensus. … [T]heir failings do pose a dilemma for Democratic deficit-hawk economists trying to determine what good economic policies would be should Barack Obama become president. Those of us who served in the Clinton administration and worked hard to put America’s finances in order and turn deficits into surpluses are keenly aware that, after eight years of the George W. Bush administration, things look worse than when we started back in 1993. All of our work was undone by our successors in their quest to win the class war by making America’s income distribution more unequal.
A chain is only as strong as its weakest link, and it seems pointless to work to strengthen the Democratic links of the chain of fiscal advice when the Republican links are not just weak but absent. Political advisers to future Democratic administrations may argue that the only way to tie the Republicans’ hands and keep them from launching another wealth-polarizing offensive is to widen the deficit enough that even they are scared of it.
I can’t really fault the political reasoning here. But the prospect does kinda scare me.
Also, it is very interesting to see someone hurl the phrase “class war” from the other side of the partisan divide.