By instinct and upbringing, I’m a fiscal conservative. The family credit cards are all paid off, for example, and I still drive the first new car I ever bought, a 1980 Toyota.
Politically, I’m a fiscal conservative as well. No, not a fiscal conservative as the GOP has tried to define it, but an actual fiscal conservative. I believe that in normal times the federal government ought to be raising as much in tax revenue as it spends, and spending no more than it brings in. (Note that these are not normal times.)
The Republican Party has tried, with some success, to redefine “fiscal conservative” by looking only at one side of the ledger. A fiscal conservative in GOP parlance is someone who cuts taxes, period.
Oh, they give lip service to cutting spending. They promise it, but they never deliver it. Quite the contrary. Federal spending under Ronald Reagan, for example, increased much faster than it did under Bill Clinton, even after adjusting for inflation. But since Reagan also cut taxes, he is recalled by some as a fiscal conservative.
At one level, putting together a federal budget is not at all complicated. You face two basic, simple policy decisions:
– Are you going to cut spending or raise spending?
– Are you going to cut taxes or raise taxes?
Combining those choices from either side of the accounting ledger gives you four basic policy directions, ranked here in order of fiscal conservatism. You can:
1. Cut spending and raise taxes.
2a. Cut spending and cut taxes.
2b. Raise spending and raise taxes.
4. Raise spending and lower taxes.
The most fiscally conservative approach is clearly the first, especially when the national debt is so high. Ideally, the fastest means to bring our economic house into order would be to both cut spending and raise taxes. But politically, no one has come close to pulling that approach off and no one will. It is a political reality that no one of either party can get elected or stay in office by cutting entitlements, which is where the big savings would be.
Fiscally speaking, options 2a and 2b can be equally responsible. But again, the option of cutting spending is not politically viable. (Cutting can be accomplished in individual programs, but cutting to produce an actual reduction in federal spending is impossible.) Republicans can and do claim to champion option 2a, but nothing in their record in office suggests they are serious about it.
The least fiscally conservative approach, the approach that is least fiscally responsible, would be No. 4. That is also the approach that “fiscally conservative” Republican leadership at the national level has pursued with dogged determination, in good times or bad.
President Obama claims to want to change all that. In these extraordinary times, even most conservative economists agree that large deficits are required to keep the economy afloat. But in his speeches in China and here at home, Obama has acknowledged that such deficits have to be temporary, that they cannot be sustained at anything close to these levels over the long term without bringing economic ruin.
I don’t know how serious he is about it. We’ll see. He is talking about spending cuts, and they are absolutely necessary. But in the real world such cuts can only shrink the rate of increase. They cannot reverse it, and Obama knows it. Given the upward pressure on the budget, the only feasible means of addressing the longterm debt crisis is through tax increases.
That statement will no doubt be met by howls of protest from the tea-party crowd, which has accepted as an article of faith that they are wildly overtaxed by a confiscatory federal government. The numbers say they’re wrong; the numbers say that as a percentage of GDP, federal taxes today are well within the range established in the last 40 years, and would remain so even with tax increases.
Of course, forced to choose between actual facts and comforting myth, a lot of people would choose the myth. But myths don’t pay the bills. Myths don’t bolster the dollar. Myths don’t save our grandchildren from the immense bills we’re handing them as a legacy.
Assessing our options, you might even say that Obama and the country as a whole face the same question posed by the poet himself oh so many years ago:
2b, or not 2b?