The political economy case for Kerry
Brad de Long gives a rather unenthusiastic case for thinking Kerry will be a better economic manager than Bush. The first and most convincing of his proposed reasons is that
The Bush administration always does much worse than you anticipate, no matter how low your expectations are
The others are the quality of his team and the fact that he will restore proper processes.
The reason Brad doesn’t display more enthusiasm is that Kerry hasn’t given much ground for it. He has a plan to cut the deficit in half, but then, so does Bush.
I’d like to offer an argument based on political business cycles to suggest that Kerry has to do better than Bush.
It’s unclear how long the current budget and current account deficits can run on without generating a serious crisis, but a sufficiently wild-eyed optimist could give it five years. As we’ve seen the Bush Administration has no shortage of wild-eyed optimists. So it’s reasonable to expect that, if Bush gets back in, he’ll go an as before, planning to leave any problems to his successor.
By contrast, Kerry is presumably hoping to be his own successor, that is to serve a second term, and not to encounter a major economic disaster while in office. No-one remotely in contact with reality imagines that current policies (or the soft options implied in Kerry’s plan) will stave off budgetary crisis beyond 2012 [the baby-boomer Social Security wave starts in 2010]. So Kerry will have to bite some bullets, fairly early in his term of office. I offered some tactical suggestions on this a while ago.
fn1. And if you believe Bush’s plan, you might be interested in the IPO of my new dotcom, which will replace the Brooklyn Bridge with a virtual exchange, eliminating the need for anyone to actually cross the East River.