By contrast, the Feds can in principle run more debt continuously with no economic or distributional harm.
" . . . Put more debt into the picture and you blow the connection in the public mind.
" For a long time one could look at Democratic spending programs in terms of justice for the downtrodden, but progress has its price. The mainstream are increasingly identifying themselves as no different from the downtrodden and vice versa. The connection between justice in liberal-democratic terms and government spending is no longer there in the minds of the public. That's a good thing. It means that Americans are finally seeing themselves as one people. It also means that the start for justice in economic/Marxist terms is just beginning and it will require a different approach.
mbs: I agree that insofar as Govt spending tends to be associated with the poor, that's a bad thing, and insofar as the mainstream identifies with the poor, that's a good thing. In the latter event, I predict support for an expansion of the welfare state would grow, also a good thing.
" If the government is going to become the main funder of the economy, as you and I hope, it first must prove it can run a tight ship. That's a ways off now and it's going to be farther off if we get back into the deficit spending mode. Look who are embracing deficit spending now - the Republicans for goodness sake! Why is it suddenly in their political interest to openly encourage the government to spend beyond its means? Of course it's always been in their interest for government to do it, but why have they now embraced it openly?
mbs: the want to destroy the revenue system by distributing its proceeds to their constituents (donors). more debt increases pressure for spending cuts, as you say below. This has become an old story.
" I would have been surprised by the new Keynesian Republicanism but for a nice article in the New Yorker (which I can't find, natch, and) which suggested that the new Republican approach is to force the government into overspending. This, Repugs hope, will prevent Democrats' spending their way into the hearts of the middle class as the baby-boomers got older and more government-dependent. So long as you agree that there is some level of government debt which is too high (I assume you must), the Democrats will inevitably fall on the side of fiscal responsibility if they are to have the money to keep winning votes as the population ages.
mbs: I would put it differently. As long as the Dems play catch-up by invoking fiscal responsibility, they will lose to Repugs who promise more specific benefits, albeit debt- financed ones.
Thus, even crassest Democratic strategizer will see that his party must embrace balanced budgets and surpluses if they are going to compete out into the next couple decades. The argument between Republicans and Democrats used to be whether government can do good for Americans. Now the argument is what good, for whom and when.
I am not conservative. I question the value of government spending under a super-pro-capitalist regime. Why wouldn't I? The liberal fight is not just to keep the public sector large. The Republicans are all for that, so long as their constituencies don't have to pay.
mbs: that's not so clear. It would have been in 1994, when the mission was clearly to shrink the public sector. More lately, the Repugs seem to be evolving into a corporatist entity less worried about the size of the public sector. I simply disagree that the politically effective answer to the Repug's blase attitude towards debt is the converse. If it was, we wouldn't be having this conversation.