Fiscal Discipline

Dana Goldstein notes some of the issues that feature in Hillary Clinton's stump speech but don't really come up when her rivals are talking. One such issue is the big domestic policy dog that didn't bark -- or at least hasn't thus far in 2008:

"Fiscal responsibility." All the candidates talk about rolling back the Bush tax cuts for the wealthiest Americans. But only Clinton uses this particular language. This is a comfortable talking point for her, since her own husband balanced the budget. It's something she touts at every appearance.

But note that there's an actual policy issue here. All the candidates are promising new spending. And all the candidates are promising the partial cancellation of the Bush tax cuts. Obviously, if you cancel those tax cuts you have room for new spending. But you have less room if you're also also promising balanced budgets. Right near the beginning of the campaign there was some Edwards-Clinton back-and-forth on this subject, with Edwards saying that new revenues would be dedicated first and foremost to his heath care plan, "fiscal discipline" be damned, and Clinton basically taking the opposite line. Eventually, that whole discussion faded from view but it's a potentially crucial distinction.

Comments

Maybe even the public simply assumes that there is no one on the Democratic side who could possibly even aspire to the levels of anti-fiscal lunacy practiced by the Bush Jr. / Reagan II / Tom Delay Republican marauders.

Posted by El Cid | January 3, 2008 8:55 AM

It's almost as if Hillary! is the right-wing candidate in the race.

Posted by otto | January 3, 2008 9:29 AM

maybe because fiscal responsibility means that you have to say "NO" to someone's favorite issue or say "YES" to raising taxes. Imagine, killing off your voting support on the basis of a principle that you won't be allowed to implement (535 reasons for that in washington).

Posted by mike c | January 3, 2008 9:31 AM

I think MY is really on to something here that needs to be discussed and thrashed out by liberals before, God willing and knock on wood, we elect a Democratic president. Remember the last one? Who told Bob Woodward that his administration became all "Eisenhower Republican" about balancing the budget at the expense of liberal budget priorities? Are we going to do that again? Personally, I'm all for some degree of greater fiscal discipline than we've seen the last 7 years, but I don't want to elevate that to some value that trumps S-CHIP and expanded health care, more Head Start, and other priorities that may move the budget numbers up. MY is pretty alert to note the first stirrings of balanced-budget fetishism that the Village loves to use to strangle liberal programs when liberals eventually have real power. I hope none of our candidates buy or consume this Kool-Aid, and it'll be interesting during the campaign to see if they do.

Posted by scott | January 3, 2008 9:33 AM

There is of course the tried-and-tested option of unfunded mandates on the states.

Posted by otto | January 3, 2008 9:34 AM

Surely one reason the issue has faded a bit is the subprime mess, high oil prices and fears about an economic downturn/recession. Sluggish economic conditions will probably be the chief driver of fiscal policy ever the next few years.

By the way, it appears "fiscal discipline" in a term Republicans like to use. Democrats like Clinton prefer "fiscal responsibility".

Posted by Dan Kervick | January 3, 2008 9:37 AM

The economic success of the 90s was made possible by fiscal discipline. Living within our means comes first. It's a simple choice between Clintn economics and Carter economics.

Posted by Adam Herman | January 3, 2008 9:46 AM

Of course Republicans think Democrats should forgo spending on health care and alleviating poverty, because the next Republican president will need that money for handouts to billionaires and futuristic weapons for pointless wars.

But I'll give Clinton benefit of the doubt and assume this is just campaign talk. After all, she has to brag about something from the first Clinton adminstration. So should it be Don't ask, don't tell?, NAFTA, Welfare Reform, DMCA, Desert Fox, the pardons? I think "balanced the budget" sounds pretty good in comparison.

Posted by Gary Sugar | January 3, 2008 9:49 AM

Fiscal responsibility is a freebie, and good politics as well. The 'Bush tax increases' are schedualed to take place in 2010. All Clinton has to do is allow the 'Bush tax increases' to mostly take effect with some modification to relieve the middle class of the schedualed 'Bush tax increases' and we have a president committed to fiscal responsibility.

Did I make my point? There is a tax increases schedualed to take place in 2010. This tax increase was put in place by Bush and the Republican congress that passed it seven or eight years ago. Democrats can take advantage of this for the cause of fiscal responsibility and make some political hay out of it as well.

Perhaps Hillary is the only one smart enough to see this possibility?

Posted by ken | January 3, 2008 9:53 AM

I suspect there's actually not that much to this distinction between Hillary the fiscal hawk and her opponents. While a cratering economy would push towards more spending, the empty till left behind by Bush II won't let much of it happen. Like Bill, Hillary would be forced to deal with the irresponsibility of predecessors first. As would any other Dem taking office in 2009.

Posted by jimBOB | January 3, 2008 9:54 AM

There is a tax increases schedualed to take place in 2010.

Yup. Pretty delicious. The Wurlitzer will scream bloody murder as it goes through, but the goopers have themselves to blame for it. Back when it passed, Krugman called it the "throw mama from the train" tax bill, since if you have a rich older relative, you really want them to expire before the tax cuts do.

The good news for Dems is that since the original tax cuts were so regressive, the reinstatement of 90's era tax rates will barely touch most of the middle class. Bwa haw haw haw!

Posted by jimBOB | January 3, 2008 10:02 AM

John Edwards is also in favor of completely pulling us out of Iraq. That should save some money.

Posted by Jose Padilla | January 3, 2008 10:02 AM

It annoys me when I agree with Hillary.

ken, I'm liking that "Bush tax increases" frame...

Posted by Spike | January 3, 2008 10:05 AM

To be clear: fiscal responsibility does not equal a balanced budget. One key element to gauge "proper" spending is whether the increase in percentage in paymeny of the debt is greater than the government projected deficit as a percentage of the budget. Real numbers need to factor in actual debt growth and "emergency" spending. Sadly, current governmnet accounting rules are so obscure that it is very difficult to know exactly where we are. Let's put it this way, if the deficit was only around 200 billion (which, if accurate, is fiscally responsible); how come the national debt grew 500 billion?

Posted by Raoul | January 3, 2008 10:05 AM

What else are you going to call a tax increase that was proposed by the Bush White House, passed by a Republican congress, and signed into law by Bush except the 'Bush tax increase'?

Fiscal responsibility is an important issue for all Americans and it becomes politicaly feasible because of the the schedualed 'Bush tax increase'. No Democrat need get their hands dirty over the tax increase, it is, in actual fact, all Bush's fault.

Posted by ken | January 3, 2008 10:24 AM

A balanced budget is a hallmark of fiscal responsibility, but it does not alone make for fiscal responsibility.

In other words, you don't get to just raise taxes and spending, but if the bottom line shows balance, call it fiscal responsibility.

Fiscal responsibility also includes not rifling through taxpayers couches to get every last possible nickle. It also includes spending levels which are sustainable. Historically, when we've gotten above 18% of GDP or so, bad things have started to happen to the economy and the budget deficit.

The true level of taxation is spending. Raising taxes endlessly to cover endless spending is not only fiscally irreponsible regardless of whether it balances the budget, but is also the most effective substantive political attack against Democrats(tax and spend, anyone?)

Posted by Adam Herman | January 3, 2008 10:33 AM

why not test market this concept? I'll assert that it is a big loser for Democrats -- the repubs would just love (and I mean LOVE) to turn this into: we present the dems with an opportunity to help YOU by simply renewing existing tax law and of course they screw you, you middle-class taxpayer just trying to get ahead. The dems will take any opportunity to extract money from the middle-class and give to their favorites in the lower economic classes.

if this occurs, a one-term Democrat presidency ahead.

Posted by mike c | January 3, 2008 10:37 AM

Of course Republicans think Democrats should forgo spending on health care and alleviating poverty, because the next Republican president will need that money for handouts to billionaires and futuristic weapons for pointless wars.

Bingo... we've seen how easy it is for the GOP to destroy a surplus, but they'd have a much harder time ditching popular programs. Didn't Paul Krugman write about how it would be wiser long-term to establish some social programs, because they'd be much more likely to survive whenever the right got back into power?- he's right; if your kid needs dental work, you don't put it off because you want to pay your car off in two years instead of five. You deal with the higher interest rate because there's more long-term value in taking care of your family than in financial bragging rights that may or may not ensure future wealth.

Posted by latts | January 3, 2008 10:52 AM

Since Republicans run as the party of fiscal discipline, it's probably best to force them to be the party of fiscal discipline, rather than presenting them with a balanced budget and allowing them to muck it up. There's no reason for the Democrats to do the Republicans' job for them.

The problem is that the Republicans are the tax-cutting and war-mongering party, and if the Democrats take "fiscal discipline" away from them as an issue, the former two are all they have left. If you give them a government with steady revenues and a balanced budget, they use the opportunity to slash revenues and invade foreign countries.

Posted by Tyro | January 3, 2008 11:09 AM

A balanced budget is a hallmark of fiscal responsibility, but it does not alone make for fiscal responsibility.

Yes, and not having a balanced budget in a few particular years does not make for fiscal irresponsibility. The way the economy has been managed in recent years - for good and for ill - is the product of a rather more sophisticated POV than the 'hallmark'. I'm not an economist at all, and it's obvious to even me that you have to think about the cost of your money over several years, what to invest in and how much, ROI in terms of social value (a larger prosperous middle class which pays its taxes generates a lot of money), etc.

I don't know if this is significant on HRC's part. Maybe it is. Maybe it's just Bill nostalgia (or both). Movement Conservatives certainly have certainly thought in terms of a grand multi-year plan, and they only complain about unbalanced budgets when they're not in charge of the government - when they are, they try their damnest to bankrupt the government, period. It's not a secret that that's the goal.

All three dem frontrunners have to appeal to indy (?) and GOP voters while they try to win primaries. Interesting how they do it. HRC, and to a lesser extent Obama, want to appear to be 'moderate' to elites. OTOH Edwards, brilliantly, can go after 'Reagan Democrats' - people who know something is seriously wrong and are tired of getting screwed for decades - people who will vote for him in droves in the primaries and General: the 'same' people (as it were) who enabled the Reagan Revolution. They are the real *middle*, not the big money people. Edwards resoundingly beats any Republican, including McCain. HRC and Obama probably would manage wins too, but it would be torture. I prefer 'resoundingly'.

The most amazing part of this whole process, to me, is the seeming Dem agonizing: the Republicans need a spanking so badly, and never get it, that they are now trying to spank themselves - and yet many Dems are playing cautious defence. It's deeply ridiculous. Movement conservatives have abandoned - not embraced - both conservatism and liberalism, a really risky play which leaves much of the field wide open. But, gee, let's wring our hands some more...

Posted by jonnybutter | January 3, 2008 11:22 AM

True, running small deficits for a few years is not a big deal, but we're talking about starting large, fast-growing programs. If we START those programs while we're in deficit, it will be hard to see how we'll avoid serious deficits almost immediately, only getting more severe as time passes.

Both parties need to agree to not spend more than 18% of GDP except in wartime(and the Iraq war doesn't count as wartime. Im talking WWII stuff here). There is plenty of money to do just about everything both parties want, provided we don't spend a lot extra on overhead costs(the sausage making process that results in massive pork and corporate welfare).

And that's what makes Democrats fiscally irresponsible more than anything else. Not so much the tax and spend policies, but the easy willingness to bribe legislators with large amounts of spending in their district in order to get this stuff passed. So a $20 billion spending bill to fund program A adequately becomes a $40 billion spending bill with $20 billion for program A and $20 billion in annual waste to keep political support for that program alive in Congress.

And before anyone protests, Matt Yglesias himself as defended this process of handing out money left and right in the process of horsetrading for social programs.

Posted by Adam Herman | January 3, 2008 12:32 PM

Dems are the fiscally irresponsible ones bribing their districts when the Republicans in Congress, with ZERO vetoes by GWB, signed off on an unprecedented number of appropriations earmarks? Interesting theory.

Posted by scott | January 3, 2008 12:55 PM

Adam: you seem wedded to this magical 18%- why not 20%? I think an ideal number would invariably vary as situations change-e.g., the graying of society. You also say that the Democrats are responsible for pork (you really imply both parties but for whatever reason you name Democrats)- by and large, the U.S. government is efficient- there is certainly a lot of corporate giveaways which suck from both parties teats but let's be real, their interests are not from the progressive side. Finally, about the much ballyhooed earmarks- for most part they do not add anything to the deficit since the money has already being appropriated. Earmarks, rightly or wrongly, represents the legislators wishes on how money is spent instead of giving 100% of that responsibility to the executive.

Posted by Raoul | January 3, 2008 1:05 PM

Of course the Republicans are worse. Are we going to apply this same logic to warfare and have the Democrats wage wars just because the Republicans did?

Someone has to be fiscally responsible or else we're screwed.

As for the 18% number, I guess it could be 20% for the right priorities(like health care), but it would have to be a lean and efficient 20%. Democrats really need to quit the sausage making. If a program can't get a simple majority even when Democrats are in power unless much arm twisting and bribery occurs, the program probably isn't worth passing in the first place.

Posted by Adam Herman | January 3, 2008 6:20 PM