Consistency and inconsistency

Stephen Kirchner raises all sorts of issues in this post (no permalink) which I just found (interestingly enough, just after giving a talk to a leftish audience in which I criticized, among other ‘magic puddings’, the idea that expenditure could be funded by deficits in the long run). After talking in a rather waffly way about the US budget, Kirchner says:

Similarly, it has been amusing to watch many left-of-centre economists re-discover fiscal conservatism now that the government in the US is spending money on stuff they don’t like. John Quiggin characteristically overstates his case in referring to the rise of ‘banana republic populism’ in the US. There are many objections one could raise to the growth in non-defence discretionary outlays under the Bush Administration. But one can’t help but think that deficits of similar magnitude incurred by a Democratic Administration in the wake of a major recession would not occasion similarly alarmist predictions from the likes of Quiggin.

My first response is that it’s a bit annoying when you take the trouble to post almost your entire output on the Web and someone makes this kind of comment without reading what you’ve written. I’ve written many times, and in many different contexts, on the need for a ‘golden rule’ approach in which budgets are balanced (more precisely, public net worth is stable) over the course of the economic cycle. But Kirchner feels free to present me as a recent convert to fiscal conservatism motivated by political partisanship.

The second point is that the objection is not to the current relatively modest deficits, associated, as Kirchner says, with a major recession, but at the projection of deficits growing indefinitely into the future. Brad de Long gives the alarming details in numerous posts on his site.

The final point relates to Kirchner’s own inconsistency. He denies being a Keynesian, but seems to imply that running deficits in recessions isn’t such a bad idea (or maybe he’s just imputing this viewpoint to me). Or perhaps, like the US Republicans, he thinks that deficits are always good. I’ll leave it to him to clarify his position on all this.

To summarise, I don’t see anything wrong with the proposed US budget deficit for this year or next . But if a government of any political color put forward a long-term fiscal strategy as irresponsible as that put up by Bush, I would certainly be raising the alarm.

Update Following a discussion you can read in the comments thread, Stephen Kirchner has now graciously withdrawn the suggestion that my concern about fiscal sustainability is politically selective.