Responsibility Knocks


To say a bit more on the question of Hillary Clinton and fiscal responsibility, "fiscal responsibility" is, of course, one of those phrases designed so as to be impossible to disagree with. Nobody's going to say "I favor an irresponsible fiscal policy" though some people do, in fact, favor such policies. The question is which policies are irresponsible. Late during Bill Clinton's administration, a combination of happenstance, politicking, and substantive belief produced a notion that to run a responsible fiscal policy requires a budget surplus. This worked pretty well as a tactical gambit vis-à-vis congressional Republicans' demands for new tax cuts since the basic congressional math took large new spending initiatives off the table anyway.

But as a general governing agenda, it's sharply limiting. Fiscal responsibility, as defined by The Washington Post, means something like "new spending must be financed by unpopular tax hikes unless it's spending on a war or the military or spending proposed by Republicans; also, budget deficits are an acute problem if a Democrat is president or if they're forecast to occur far in the future as a result of Social Security." That, obviously, is a political framework designed to make progressive governance impossible while simultaneously giving lip service to the desirability of spending money on important priorities like health care, education, clean energy, infrastructure, etc.

What's more, I don't think it's substantively clear that running modest budget deficits is a bad thing. Generally speaking we don't, in life, think that borrowing money is per se a bad idea -- it all depends on the terms of the loan and what it's buying you. Taking out a loan to pay for a college education is normally a good idea. Taking out a loan to buy a house is often a good idea, but as we've been seeing lately sometimes it's not. The federal government has the privilege of being able to borrow money on quite favorable terms which seems like something you want to take advantage of to some extent. A dept-to-GDP ratio that's trending sharply upwards, as we had in the Reagan years, is a problem, but a gentler decline than we had in the late-1990s would have been fine had it been sustained.