I mentioned in a recent post that “we are all Keynesians now”, in the sense of accepting that governments will run deficits during recessions and surpluses during slumps to stabilise the economic cycle. While this is broadly true, the natural corollary, that, over the course of the economic cycle, the budget should balance, implying a stable ratio of public debt to GDP, is much more controversial.

Broadly speaking, social democrats accept this position in principle, although they lean towards some tolerance of deficits. On the other side of politics, opinion is sharply divided between hawks who want to wipe out public debt and ‘supply-siders’ who favor continuous budget deficit. Ken Davidson points out the many flaws in Costello’s advocacy of zero debt.

Meanwhile Anthony York at Salon reports that Stephen Friedman’s nomination as chair of Bush’s National Economic Council is running into opposition from ‘conservative opponents of balanced budgets’ . This description would have been an oxymoron before 1980, but it is now apparently routine. I was surprised, for example, to read that the Cato Institute opposes balanced budgets

Chris Edwards, director of fiscal policy studies at the libertarian Cato Institute, was not overly enthusiastic about the possibility of Friedman heading the council. But, he said, “Even if he comes in with a balanced budget philosophy, if he can be a team player, then I see no problem.

BTW, ‘Team player’ is a term that could benefit from analysis. As used here, it seems to mean someone willing to repudiate their own views for the sake of a prestigious entry on the vita.