TW: I was a deficit hawk in 1981 when Reagan came up with the electorally brilliant but economically dangerous strategy of exploding defense spending, cutting taxes and watching the fiscal deficits rise accordingly. I was a deficit hawk in 1993 when zero Republicans voted for the Clinton economic plan that led to surpluses for the first time in thirty years. I was a deficit hawk in 2001 when W. Bush pushed through tax cuts for the wealthy, while sending $400 checks to everyone else and exploded defense (again) spending. But I am not a fiscal hawk for 2009-2011 or so when to be so would be economically foolish. I will be a deficit hawk again once we are through the current crisis.
This stuff is not brain surgery but it does require a little knowledge of economics and a non-ideological approach. Those primarily Republicans who continue to sing from the same hymnal without regard for actual circumstances risk leading into the very deep hole.
This piece focuses on an op-ed a Democratic senator, Evan Bayh, wrote where he heads down the same path as the Republicans. He is from a red state, IN, so he is playing to his constituents but that does not make him right. The Economist does a nice job of walking him off the ledge.
From Economist:
"Evan Bayh...says Barack Obama should veto a spending package to fund the federal government for the remainder of the fiscal year. Speaking of the proposed increases in spending, Mr Bayh says that they "might be appropriate for a nation flush with cash or unconcerned with fiscal prudence, but America is neither." The senator would make fast friends with some of our commenters, who wonder how The Economist could've offered (tepid) support for the president's stimulus plan. Where is the fiscal sanity?!
I give Mr Bayh and those who agree with him credit for not changing their views, even in the face of the foundering economy. He is a principled senator, if a lousy economist. By all means Mr Bayh ought to try to curtail spending where it is wasteful. But is now really the time to focus, with tunnel vision, on reigning in the deficit?
"Families and businesses are tightening their belts to make ends meet -- and Washington should too," says Mr Bayh.
But that is exactly the opposite of what most economists are counselling. If families are indeed tightening their belts, then the government needs to make up for the shortfall in spending.
...My problem with fiscal hawks is not that they are never right—I once considered myself a member of the club—it's that they assume austerity is always the answer. Like other hawks, Mr Bayh has trotted out the same argument in good times and bad, ignoring any and all non-deficit-related variables (like, say, a collapsing economy)."
http://www.economist.com/blogs/democracyinamerica/2009/03/on_fiscal_sanity.cfm
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