Debt Sanity

Jared Bernstein:

For Democrats, deficit reduction was a tactic that morphed into an intractable policy position. Back in the G.W. Bush years, many Democrats (I was one!) argued that cutting taxes as deeply as he did would lead to the bad kind of budget deficits: structural ones that starve government of needed revenues and increase even when the economy is growing. We were right, but too many Democrats now fail to distinguish between structural deficits and Keynesian ones. They just think they’re all bad.

For Republicans, deficit reduction is a cudgel to bash government. They are ideologically opposed to social insurance, stimulus, infrastructure investment, and everything else, but they gussy this up as an economic argument about markets and debt burdens on future generations. Worse, for them it’s mostly rhetoric. Since Reagan, it’s the Republicans who’ve run structural deficits (Obama’s deficits are largely cyclical—very much a function of the recession).

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