What on Earth Is a Fiscal Conservative?

[Time for change]

When I was a child the most important characteristic that defined a “fiscal conservative” was someone who believed in balanced budgets, restraint from running up debts, etc. Does anyone remember that time? At the national level, a “fiscal conservative” was a politician who believed that our country should pay off its debts and balance its budgets.

The opposite of a fiscal conservative was a liberal. It wasn’t really that liberals believed that budgets shouldn’t be balanced or that we should run up debts. Rather, it was a matter of priorities. Liberals believed (and still do) that the purpose of government is to serve its people and that sometimes costly government programs are needed to do that. Examples include Social Security, Medicare, public education, public health, and yes, even welfare for those who need it to have the opportunity to live a decent life.

So the liberal view was that we should balance budgets and reduce debt when we can, but sometimes, in order for government to provide the services that its citizens desperately need, exceptions should be made, and debt could be run up in the short term in order to serve a more important purpose.


But now all that has changed

It seems that it is no longer the case that conservatives are more in favor of balanced budgets that liberals. To see how that is true, take a look at this chart, that shows national debt as a percentage as GDP. The “budget deficit” is indicated by the slope of the line. If the line goes up, that means that there is a budget deficit, which causes the national debt to rise. If the line goes down, that means that the debt is going down, because it is being partially paid off with at least some of the budget surplus. The national debt was very high when Truman was in office because he had inherited a huge national debt due to our expenditures on World War II. But under Truman (a liberal) the national debt diminished at a rapid rate. Under Eisenhower, Kennedy and Johnson the national debt continued to decrease (as a percent of GDP) at a rapid rate, and under Nixon and Ford it decreased at a slower rate.

Ronald Reagan’s administration did not balance budgets at all, he ran up massive national debts, and yet he was considered a fiscal conservative. Bill Clinton then came along and managed to turn things around so that by about 1995 our country was running up surpluses and paying down its debt for the first time since Ronald Reagan became President in 1981. While many people would call Clinton a moderate rather than a liberal, he was certainly called a liberal by the so-called fiscal conservatives. And George W. Bush, who is considered one of the most “conservative” Presidents we’ve ever had, operates his administration on massive budget deficits that run up massive national debts – and yet he’s still considered “conservative”.


How does one explain all this?

It’s like the world is being inverted. Old categories for referring to one’s financial proclivities seem to have been turned upside down. Is there any principle can explain this?

Yes, there is, and it’s pretty simple.

Today’s so-called fiscal conservatives who support the Republican Party of George Bush don’t give a damn about balancing budgets or reducing debt. That should be obvious. Today’s Republican Party and those who support it, whether they claim to be “fiscal conservatives” or not, have as their number one priority making wealthy individuals and corporations wealthier. So, if the question is “Do we give the wealthy massive tax cuts or don’t we?”, the answer is YES every time.

These so-called fiscal conservatives justify this by claiming that massive tax cuts for the rich don’t increase the deficit – they reduce it by improving the economy. That argument is so absurd that it’s hardly even worth addressing. Anyone who believes it should tell their boss to stop paying them for their work – because foregoing their salary will help them in the long run by improving the economy.

But when it comes to decisions on programs that will help average Americans, all of a sudden the so-called “fiscal conservatives” become very concerned about costs, and they claim that we can’t afford those programs because they would unbalance the budget.

Oh, and they also favor military spending and eliminating laws that regulate wealthy corporations to require them to be socially responsible (such as regulations against polluting our water supplies and air). They favor those things because they help their wealthy patrons to make larger profits.

What is their motivation for favoring the wealthy over average Americans? Simple. That’s where they get their money to run their campaigns. They would hardly get any votes based on the policies that they advocate. But with enough campaign contributions from wealthy donors they obtain enough money to cover the airways with messages that obfuscate their real positions and make voters believe that their policies are helpful to average Americans.


Some examples

Don’t believe me?

First let’s take a look a report written by the Drum Major Institute for Public Policy at the end of 2005. The report is called “Congress at the Midterm: Their 2005 Middle-Class Record. Ratings were based on 8 votes in each chamber, according to whether their votes favored the middle-class vs. the wealthy and powerful. The overall assessment of our Republican Congress was:

In vote after vote, Congress disdained the concerns of middle-class Americans and opted instead to favor the already wealthy and powerful: a surefire recipe for a shrinking middle class.
Congress championed the wish lists of oil companies, the insurance industry, and credit card issuers over the concerns of middle-class consumers and small businesses, while making it harder for ordinary citizens to hold corporate wrong-doers accountable.

But the ratings were radically different in the two major parties. In the House, 44% of Democrats received an A, compared to 0% of Republicans. In the Senate, 20% of Democrats received an A, compared to 0% of Republicans. 99% of House Republicans “failed”, compared to 11% of House Democrats. And 95% of Republican Senators “failed”, compared to 2% of House Democrats (Ben Nelson).

Now, to make the point more specifically, let’s consider three statements on which I would think that almost all fair minded people who are fiscally responsible and believe at the same time that government has some responsibility for serving its citizens would agree:
1) Government ensuring that veterans have decent health care is a GOOD thing.
2) Adding a trillion dollars to the national debt is a BAD thing.
3) Taxing millionaires in order to achieve #1 and prevent #2 is NOT a TERRIBLE thing.

We can all agree on those three things right?

Well, actually no. The vast majority Congressional Republicans – the Party of “fiscal conservatives” – don’t agree with these opinions at all.

To prove this point, let’s take a look two glaring examples:

Veteran health benefits
In June 2006, two Democratic Senators sponsored a bill to provide much needed health benefits to veterans. This wouldn’t have hurt the federal budget because it would have been paid for by increasing the income tax on millionaires to pre 2001 levels and closing some corporate loopholes. Well, that was too much for the fiscally responsible Senate Republicans. Only a single Republican joined all 45 Democratic Senators in voting for this bill, as it went down by a vote of 54-46.

The Death Tax Repeal Permanency Act
The passing of this law would have made the repeal of the inheritance tax* (see below) permanent starting in 2012. Because this law was not passed, persons who inherit over $1.5 million from a single person or over $3 million from a married couple will have to pay taxes on the inherited money over those amounts.

The passage of this law would have cost our government an estimated one trillion dollars over ten years. 100% of Republicans and 21% of Democrats in the House voted for this bill. But it didn’t pass because 91% of Senate Democrats opposed it, along with 4% of Senate Republicans.

Why did Republicans try so hard to pass a bill that would have cost our government a trillion dollars over ten years when it would have benefited only people inheriting over $1.5 million? Their stated reason is that the estate tax hurts poor farmers and other average Americans. Yeah, right. It would hurt average Americans who inherit over $1.5 million by making them pay taxes on the amount over $1.5 million. How can Democrats sleep at night after voting to tax inheritances in excess of $1.5 million? How can anyone be expected to live on $1.5 million plus the meager amounts of inheritance that is left over after the remaining millions or billions of dollars are taxed? What were those Democrats thinking? :sarcasm:

* Republicans routinely refer to the inheritance tax as a “death tax”, in order to make it sound ominous. That idea is preposterous, yet Republicans use the fact that the death and the inheritance occur at about the same time to confuse their constituents. If one’s parents die and yet the person inherits less than $3 million there is no tax. Why? Because it is the inheritance, not the death, that is being taxed – more specifically it is inheritance over $3 million that is taxed.


So what shall we call today’s “fiscally conservative” Republicans?

Well, I hope I’ve made the point that these so-called fiscally conservative Republicans aren’t fiscally conservative. Hell, they’re not even fiscally responsible – voting to increase the federal debt by a trillion dollars so that millionaires and billionaires can have more money. No, “fiscal conservative” is not the proper word to describe these people.

What about “screwers of the middle class and the poor”? Nah, that’s too cumbersome.

Then how about “suck-ups to the corporations and the wealthy”? Nah, that’s too long.

Let’s just call them “elites”.

[HappyWeasel]

1. nah...just elitist neo-con.

[originalpckelly]

2. As someone who's a fiscal conservative, I'd like to point out...

that that chart almost certainly does not include Social Security or Medicaid, programs which have had money stolen from their trust funds to pay for deficits. The deficits are just replaced with debt, or IOUs. However, that debt is just as real as the debt shown in the graph.

I don't think there has been a real fiscal conservative in the White House in the last 70 years.

[hfojvt]

7. the deficits are always replaced with debt

so I am not sure what your complaint is. Clinton did reduce the budget deficit. One complaint I have is that he set the stage for the Bush tax cuts (and Grand Theft Surplus) by talking about this huge 'surplus' and a balanced budget which really wasn't.

[originalpckelly]

12. The problem here is that the deficit that makes up the debt in that graph...

is actually much larger. There is a second set of books and a second deficit, all of which is covered up when the government takes money from Social Security and Medicare.

[Time for change]

30. But I don't see why Clinton should be blamed for what Bush did with the surplus that he created

The surplus could have been used for good things, such as paying off the debt, protecting the SS Trust fund, or creating a national health insurance program. If 5 corrupt Supreme Court judges hadn't taken it upon themselves to choose our last pResident, Al Gore probably would have done those things.

Why hold it against Clinton?

[barb162]

9. did you see "60 Minutes" yesterday? David Walker

is my idea of a fiscal conservative
http://www.cbsnews.com/stories/2007/03/01/60minutes/main2528226.shtml
snip
But David Walker is no wild-eyed zealot. As Steve Kroft reports, David Walker is an accountant, the nation’s top accountant to be exact, the comptroller general of the United States. He has totaled up our government's income, liabilities, and future obligations and concluded the numbers simply don’t add up. And he’s not alone. Its been called the "dirty little secret everyone in Washington knows" – a set of financial truths so inconvenient that most elected officials don’t even want to talk about them, which is exactly why David Walker does.
snip

[originalpckelly]

13. Yep, D.C.'s been cooking the books.

Big time.

[barb162]

15. Take a look at what I just posted; it's getting no hits so far

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=347310&mesg_id=347310

The thing is I agree with the idea of national health insurance. Problem is I can't figure how the US pays for it. We can't even pay for what we have going NOW! Nobody wants to deal with the costs. We better wake up in this country.

[Time for change]

20. The costs of the U.S. government providing universal health care are small compared to

the costs of the Iraq War and even smaller compared to the Bush tax cuts on the wealthy. Ending the war OR reverting to pre-Bush level taxes on the wealthy would more than pay for it:
http://www.amsa.org/uhc/CaseForUHC.pdf

The fact is that a single payer system that could be used in this country would be far less expensive for Americans than the current system. Because of the great multiplicity of plans in this country, vast amounts of money are wasted on administrative costs, as well as price gouging that is made easy because it is impossible for consumers to evaluate the appropriate costs of medical care.

We have Medicare. Why can't we have it for the rest of the population in this country as well? Health care in the U.S. is abyssmal. Infant mortality rate among the highest of all the industrialized countries:
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=104x5651724

[A Simple Game]

58. We can't pay for what we have going NOW, because we are

paying more per person than any other country in the world.

Single payer universal should reduce the cost of health care, not increase it. Short term, yes there would probably be an increase, until all the uninsured people got their health care up to par, then the cost per person should go down.

[Time for change]

19. He sounds like a typical Republican

He moans about how "entitlement programs" are killing our budget, but he doesn't say a word about the hundreds of billions being thrown away on an unnecessary war or the trillions that are mounting up because of the Bush tax cuts for the wealthy. It almost sounds like Bush asked him to do that show.

[TahitiNut]

11. The Trust Funds have to invested SOMEWHERE ... they're not "stolen"

Trust Finds have always been invested in T-bills ... always. The only thing the "unified budget" does is combine the off-budget and on-budget funds and understate the deficit by offsetting it with (subtracting) the surplus in payroll taxes. That's merely arithmetic - not "stealing."

My chart below shows the portion of the Federal Debt held by the Trust Funds instead of outside interests (including other countries). It's just a matter of who 'owns' the debt instrument (T-bill).

[Time for change]

25. Thanks for the great charts -- They graphically demonstrate what Reagan and Bush have done to the

financial foundations of our country.

Could you explain one thing about this? I think I understand this, but I'm not sure: Why is it that during the JFK/LBJ years we have an impressive shrinking of the national debt at the same time that we're seeing continuing budget deficits?

[TahitiNut]

26. When the GDP increases at a higher rate than deficits ...

... then the debt as a percentage of the GDP will shrink. It's valid and responsible, however, to present the debt as a percentage of the GDP since it's our ability to create value that's indicative of our indebtedness.

Reduced to a more understandable scale, we assess our family indebtedness in terms of gross family income. A family that owes only 3 months of income is far less in debt than a family owing a year's income. It's not unusual for an individual to take on debt with the expectation that his/her income will rise ... that's what student loans are all about.

[A Simple Game]

59. " they're not "stolen"

I think it would be appropriate to add a "yet" to that line.

Back during *'s "Save Social Security" tour, he gave clear indications that the federal government, at least under him, had no intention of buying back the treasury notes held by Social Security.

Sorry no link and I don't plan on staying up late enough to find one, but I'm sure many people remember him saying that one way or another.

P.S. Thanks for the charts.

[Time for change]

23. But take a look at the great chart in post # 11

Even accounting for the portion of the debt held by government accounts, there has still been impressive declines in the national debt from the early 50s through about 1974, and then again during the Carter and Clinton years -- and a greatly expanding debt during the Reagan-Bush-Bush years.

[Cleita]

31. I'm a fiscal conservative, in the old fashioned way that you

described, yet I am a liberal and a social liberal at that. However, back then all the conservatives used to attack us for being tax and spend liberals. You don't hear that anymore, do you? I think it's time to turn the tables and hang that label on the GOP, exept we need to call them the borrow and steal conservatives.

[Patsy Stone]

3. Budget Busters

They're trying to destroy the budget, (see Iraq, et. al.) which will allow them to cut entitlements and privatize everything in order to "fix" it. The result will be the death of the middle class (already evident in pension failures and skyrocketing insurance costs) and the birth of the worker citizen. The government will print the money, protect the homeland while they keep us in perpetual war with Oceania, pass laws to rule our lives, and do little else.

Sorry, that was a bit of a downer, but it's not a pretty sight no matter how you look at the soaring deficit and overall budget.

[Time for change]

33. That's it in a nutshell

It's terribly upsetting that Congress has not started impeachment proceedings yet. They are setting a terrible precedent by failing to do that, one that is likely to lead to the depressing scenario that you envision.

[Deja Q]

51. Bollocks. They're making a new middle class.

In India, in China, and soon in Russia.

China has pulled 400 million people out of poverty (or by what they claim as poverty).

If the business folks are out to destroy our middle class, why give them one?

Indeed, it's like destroying our freedoms in order to make them around the world.

Why?

What's the catch?

That splinter of information we're not seeing that ties every seemingly bizarre happenstance together?

[unblock]

4. it's simple, really. they lie. that explains everything.

they want to have their fiscal conservative image (cake) and spend lavishly on tax cuts and pork and kickbacks (eat it too).

but they can't do this and still tell the truth, so they lie.

and the media plays along because they're bought and paid for, too.

[rman]

41. Exactly right

Spend the people's money on the rich class that rules.
But they couldn't get away with it if they'd be honest about it.

[Time for change]

49. Yeah, that's the sad truth

If we had a decent news media they would never in a million years be able to get away with this stuff.

[Canuckistanian]

5. The real question is, what's a 'fiscal liberal'?

The myth that a liberal government spends money recklessly and expands government drastically is not proven by the facts. Liberal governments shrink deficits, spending and capital outlay.

We need look no further than the present kleptocracy to see that.

[barb162]

17. What's the last liberal government you saw?

[meldroc]

6. The Democrats have been far more fiscally conservative than any Republican.

I consider myself to be a fiscal conservative (yet still liberal) in that yes, I strongly believe that we need to have programs like Social Security, Medicare, universal health care, etc., but we need to find a way to sensibly finance them. That means we need to bring in enough tax revenue to pay for these programs, and keep these programs economical - don't skimp and cut corners by screwing people a la Walter Reed, but don't waste money. It's certainly possible if we can get a government that isn't run by crooks, idiots and assholes.

The GOP historically has run on fiscal conservatism, but they've never walked the walk. Now they're not even talking the talk - they're just cutting taxes for the rich and not even pretending to act in the best interests of the American public.

[Time for change]

18. That's an interesting

A liberal and a fiscal conservative at the same time. I've never heard that before, but it makes sense.

I guess that I'm that too in some ways. Personally, I'm a fiscal conservative, in that I personally hate to be in debt and go to great lengths to avoid being in debt. Yet I'm a liberal in the sense that I believe that government should spend money on the types of programs that you mention, plus many others.

I'm not sure it's fair to say that they've never walked the walk. I believe that Eisenhower was a true fiscal conservative, in that balancing the budget was a priority with him.

[barb162]

8. Believe it or not, there a still are some fiscal conservatives around

One was on "60 Minutes" yesterday. They usually are not at all wild about Bush and his gang who spend like drunken sailors. Bush's first Treasury Secretary, as I recall, was a fiscal conservative. He wrote a book trashing Bush as I recall.

[Atman]

10. Similar to a Unicorn

You hear people talk about them all the time, and some people even kinda worship them...but no one has ever actually seen one.

.

[hfojvt]

14. a number of things are wrong there

1) Republicans do not talk about being fiscal conservatives any more. They do, however, still hammer liberals as people who will a) increase taxes, and b) increase red tape and c) introduce wasteful spending

2) They never advertise, and in fact loudly deny, that their tax cuts are for rich people. The media, being mostly rich people like Russert, OReilly, and Matthews never talk about it either. Tony Snow, et. al. wrote widely published columns in favor of the tax cuts. I wrote a few LTTEs against them. His/their BS received much wider dissemination. Both my Congressa$$hole and Senator wrote to me that a) the tax cut was not for rich people and b) the Reagan tax cuts increased revenue. They both are Republicans, but even Democrats like Jean Carnahan (D-Mo) and Dennis Moore (D-KS1) ran for re-election in 2002 bragging that they voted for the Bush tax cuts.

Anyway, I got side-tracked. After the first Gore-Bush debate the media went into over-drive to find 'lies' that Gore told. The RNC helped, but the media was happy to give their nitpicks wide coverage. Bush's huge and deliberate lies about his tax cuts, his assertion that Gore was using fuzzy math - they could not be troubled to tell the obvious truth - Bush was lying like a sack of sh*t. Ted Koppel claimed he was confused by the math. Here's a clue Ted - call Krugman, call Bob McIntyre of Citizens for Tax Justice, call a group of graduate students in economics at any reputable university and ask them to analyze and explain it.

3) They blame Reagan's deficits on increased spending by the Democratic Congress

4) They are now Keynesians and claim that any tax increase will kill the economy. Even a professional like Greenspan backs them up on this - claiming that tax increases will slow economic growth, while at the same time the Fed raises interest rates to slow economic growth.


Anyway as far as calling them 'elites' they have tagged rich liberals with that moniker. Thom Hartmann, in his book 'Screwed' calls them 'Cons'

[barb162]

16. As long as I'm as it

I might as well add, we should increase taxes to pay for every bill that is passed by Congress. That would be fiscal responsibility. Pay for it "as you go, as it is being spent." I bet you we wouldn't be seeing such wild spending as we have seen the last few decades. The voters would be screaming but I think that is the only way to control all this nonsense. People would then have to prioritze and not have future generations paying for our mess.

[mmonk]

21. A lie or dishonest term.

[KharmaTrain]

22. My Parents Considered Themselves "Fiscal Conservatives"

Call it their Depression mindset. They lived with the "if I can't afford it, I can't have it" and to always "save for a rainy day". Every expense was kept in a ledger and expenses were always budgeted...cause ya never knew if there would be an emergency. They stayed as fluid as they could while being diversified...going for the most guaranteed securities they could find and never extending credit beyond what they could pay. Paying interest was a major sin and waste of money.

While they were frugal, they were far from socially conservative as with the money the began to accumulate through their careful planning and investing, they helped many get educations, donated to hundreds of social causes and were lifelong, proud Democrats. My father worked almost to his dying day in his 80s and they proudly identified themselves as "middle class". It was a example I watched and follow in my own fiscal attitudes and practices.

The Repugnicans have never been in favor of true Fiscal conservatism as they were the first to jump in with the military-industrial complex and created the corporate welfare system that led to the culture of greed that flourished under the Gingrich/DeLay/K Street years in Washington. Crony capitalism is not fiscally conservative.

[Time for change]

57. My parents were much the same as you describe

Neither they nor I have ever voted for a Repugnican, but I'm pretty sure that they were a lot better in those days than they are now.

[porphyrian]

24. A miser. - n/t

[Ganja Ninja]

27. A mythical creature similar to a compassionate conservative or

a moral conservative. Also see: all hat no cattle.

[Touchdown]

28. Someone who hates gays, but doesn't admit it.

3/4ths of them I've seen anyhow. Look at the thunderous applause Coulter got with her "faggot" remark.

[HamdenRice]

29. Interesting, but missing the grand ideological struggle over Keynesianism

Originally, the definition of "fiscal conservative" had a much bigger ideological component -- namely whether one was for or against the economic philosophy of John Maynard Keynes, called Keynesianism, which was the ideological foundation of the New Deal.

Before the Great Depression, economists did not understand very well why economies went through cyclical recessions and depressions. Keynes showed that depressions were caused by a collapse of business and consumer demand. As the economy slowed down, people became scared and began hoarding or saving their money. This in turn slowed the economy further, leading to less consumption and more saving in a vicious cycle.

During recessions and depressions, governments, especially Republican governments also cut back as tax revenues fell, in an attempt to "balance the books." This was done most famously and disastrously by President Herbert Hoover at the beginning of the Great Depression.

Keynes argued that to prevent a depression, government should boost demand itself, even if it did not have the money to do so, by borrowing. Indeed, if governments had to follow "counter-cyclical" policies (expanding while the economy contracted) it would have to borrow, because tax revenues would be falling.

In other words, what your OP leaves out, is that liberal, New Deal economics argued that governments should intentionally go into debt in order to jump start the economy. This was called "deficit financing."

Another part of Keynesian economics that was counter-intuitive was that a little inflation was actually a good thing. Over time, it tended to reduce burdens on debtors, increase wages and hence boost consumer spending.

Note that Democrats who embraced this were not necessarily spending money because of alleged "needs"; they were spending money for the sake of spending money. Keynes famously argued that a government might as well hire one group of employees to bury some random objects, and hire another group of employees to dig them up. The point wasn't what they did, but that wages were pumped into the economy. Of course, governments, especially Roosevelt's administration, did not spend money on such useless activities, but spent it on reconstruction and development programs, such as the Civilian Conservation Corps.

Because of the demonstrated success of Keynesian economics during the New Deal, Keynesianism became the consensus economic policy of the Democratic party and most of the Republican party. Eisehower was a Keynesian, and launched the national highway building program under the interstate highway system as both a Keynesian economic and military infrastructure project. By the Nixon administration, Republican Richard Nixon could confidently and famously say, "We're all Keynesians now."

The Keynesian consensus began to fall apart, however, under the Carter administration. Because Johnson and Nixon had gone "too far" with deficit financing -- financing both the war in Vietnam and a big expansion of social programs with borrowed money -- and the economy was then hit with inflation, followed by the Arab oil embargo, the country experienced a new kind of recession: "Stagflation." There had been no model really that could have predicted both a stagnant economy or recession at the same time as inflation.

Economists discovered a new phenomenon: That excessive government borrowing could "crowd out" private borrowing for investment, raising interest rates, leading to recession. This swung the ideological argument in favor of the enemies of Keynesians -- the University of Chicago based "monetarists" led by Milton Friedman. The Monetarists believed that the only role of government in managing the economy should be to manage the money supply and keep inflation as low as possible, and to a certain extent manage interest rates. In other words, it should use monetary policy, not fiscal policy.

The Republican party ideologically embraced Monetarism, but did not practice it; the Democratic Party continued to embrace the rhetoric of Keynesianism, but practiced monetarism.

President Carter was the first president to take budget deficits seriously as a means of combatting stagflation, but he was not in office long enough for his policies to take effect.

Ronald Reagan in known for his rampant Keynesian spending spree on tax cuts and military expansion; but if you did not live through those years, you may forget that the late Carter/early Reagan years were an vast, devastating experiment in Monetarism. Fed Chairman Paul Volker raised interest rates to record levels -- at times the interest rates exceeded 15%! -- to squeeze out inflation. In other words, the Fed induced a painful brutal recession to stop inflation. Only then did Reagan emark on his massive deficit spending.

Clinton pursued a monetarist policy. By the Clinton years, the fundamental concern of Keynesianism -- that consumer demand could fall in a vicious cycle -- was obsolete. The US economy was tied to the global economy so that a fall in US consumer demand could be offset by overseas demand. Consumers consumed through recessions, using credit, and indeed the problem with consumers was the opposite of lack of demand, but was lack of savings. Bank deposits no longer "sat there" like hoarded money, but was recycled through a much more sophisticated and national banking system than existed in the 1930s. So Clinton's monetarism -- reducing the deficit and keeping interest rates low, plus the possibility of a massive peace dividend if the US stayed out of war and cut its military -- was successful, but scared the crap out of the right wing of the Republican party.

They worried that if Clinton was successful, and the debt was reduced to trivial levels, it would set the stage for a new wave of New Deal Keynesian social spending once all fear of federal "crowding out" in the credit markets was eliminated -- that is, Democrats would enact universal health care, free college tuition, guaranteed full employment, improved primary education, and energy independence -- and under the rubric of "starve the beast" right wingers like Grover Norquist argued that the administration should intentionally bankrupt the federal government to foreclose the possibility of such an expansion of social programs. They worried that successful social programs would make the federal government popular (just as it had during the New Deal), which would lead to greater demand for more social programs and a permanent Democratic majority. They want (1) citizens to hate the federal government for its perceived incompetence (hence Katrina) and (2) the federal government to be incapable, fiscally, of addressing any social programs.

I realize that this is somewhat abstract and ideological, but that's my point: that the powers in Washington really are engaged in an ideological struggle over the economy, not a pragmatic one.

[Time for change]

32. Thanks for the thorough explanations -- It's outrageous that a pack of corrupt politicians

would work so hard just to prevent our government from providing the programs that so many of citizens need. They couldn't even begin to get away with that sort of crap if not for a passively compliant corporate news media.

I don't understand the part you talked about where make-work jobs are set up just for the purpose of employing people. Was there ever a time in our history when there wasn't real work that needed to be done? Why couldn't the government employ people to do things that were really needed -- like in a national health plan that ensured adequate medical care for all of our citizens -- rather than making up things that don't need to be done?

[HamdenRice]

35. Make work was a theoretical concept of Keynes, but FDR really did

create some make work programs.

I actually found the quote from Keynes! The internets is amazing, ain't it?

<quote>

If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coal mines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course by tendering for leases of the note-bearing territory), there need be no more unemployment and with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is.

<end quote>

A simplified version of Keynesian economics' basic equation is that:

NI = C + I + G - T

which is simply, National Income (a kind of measure of gross domestic product) is equal to consumer spending + business investment + government spending minus taxes.

There are offsetting equations that deduct imports and add export earnings, but for now this is enough.

Note that if consumers spend more, NI goes up. But if consumer spending is flat or goes down, then the government can raise NI if it increases spending, so long as it doesn't raise taxes to do so.

By definition of the equation, then, to boost national income back up during a recession, the government can spend more but it must do so without raising taxes, which means it must borrow (deficit financing).

In general both Democrats and Republicans have been Keynesians, but the Democrats have tried to boost the economy by raising G, while the Republicans have tried to boost the economy by lowering T.

By putting people to work, even in make work jobs, the government puts buying power in circulation. The person doing make work will buy more food and clothing, which puts farmers and textile workers back to work, who in turn buy furniture, which puts furiture workers to work, and on and on.

A lot of Roosevelt's programs were made, for political reasons, to look like they were doing useful work, but a lot of it was just make work. My father was the beneficiary of one of those programs. He was in the Civilian Conservation Corps as a teenager. He helped build a dam to create a lake in rural Virginia, but honestly, the lake served no particular purpose (it wasn't used for irrigation or electricity) except recreation. But more importantly, he sent money home to his family who were able to purchase clothing, seeds and farm implements, to get back to their work of being tobacco farmers.

The New Deal even put writers to work making plays (eg Richard Wright), photographers to work taking pictures of the poor (Dorthea Lange, Walker Evans) and so on. The point wasn't that the country desperately needed lakes or plays or photos, but that it desperately needed consumer buying power.

On edit: I didn't really answer your question of why governments generally don't do work that "need to be done." To a certain extent they did -- for example building roads or damns for electricity.

But politics comes into it. Businesses didn't want the government competing with them, so there's a vast amount of things the government politically can't do. That leaves them with a narrow range of infrastructure work and social services. During the New Deal, there was a lot of useful work done, but the government had to throw more money at the consumer demand problem faster than they could really come up with useful projects -- and their theory told them that the actual nature of the projects was less important than that people were doing something.

[Time for change]

36. Thanks

Are you an economist?

[HamdenRice]

40. Not exactly

When I was a student I took lots of courses in economics and have worked in the field of economic development in Africa and Asia.

[Orsino]

34. Someone pretending to be open-minded, but really just looking...

...for an excuse to vote Republican.

[dave123williams]

37. If you want to know the origin of the phrase 'fiscal conservative' you should read this:

"Before the Civil War the Democratic slave masters used to have anti-black conventions where they called us "out-our-names." But after the Civil War, when they had lost power and were trying to get it back, they knew they had to change their language. So instead of holding anti-black conventions, the same former Democratic slave masters had anti-taxpayer conventions - since they were being taxed to pay for the new freedmen's education, health care, and housing. They were known as fiscal conservatives, and they called the Radical Republicans of that day - who were supporting such programs - "tax and spend liberals." That's the origin of the phrase!"

http://www.jessejacksonjr.org/query/creadpr.cgi?id=%22006434%22

[Time for change]

38. Wow! That's a surprise

I had no idea the word originated with the Democratic Party.

I knew that the word "fiscal conservative" is used to justify a lot of bullshit, but I thought that it had some validity as a sincere political philosophy at one time. But the more responses I read to this post the more I wonder about that.

Not that it's anything new to use labels to obfuscate one's real intentions. Wars are perpetrated in the name of God. Clinton is impeached for "perjury". George Bush speaks of "evil doers" :rofl:

I wonder why Jesse Jackson was focused so much on Trent Lott in particular. I mean, it's not as if the Senate and House isn't filled with people like that.

[dave123williams]

52. I think it was in response to the whole Strom Thurmund incident re Lott

You have to understand that the Democratic party of today isn't what it was 140 years ago. There was a flipping of party loyalty in the South when the Civil Rights Act of 1964 was passed by Lyndon Johnson. Essentially, all the Dixiecrats ran to the GOP, and most GOP moderates ran to the Dems.

Evidently, people in the South miss slavery and loved Jim Crow.

[Time for change]

53. Yes, but certainly the scene was set for the role reversal of the parties

with FDR's New Deal, if not before that.

But still, I didn't know that the term "fiscal conservative" was used in that manner so long ago.

[dave123williams]

54. Understood - kind of an eye-opener, right? :)

:)

[Time for change]

55. It is

I've read a lot of history, and yet I'm not familiar with the term being used as a kind of racist code word. Nor am I familiar with its use in the 19th century.

[ComerPerro]

39. There is no such things as a fiscal conservative. They do not exist

even in your nostaltic vision of the past, a "fiscal conservative" was simply someone who tried to use the excuse of fiscal responsiblitiy to deny fair treatment and essential services to those who need them, while allowing corrupt corporations to go on unregulated and unchecked.

If anyone were actually fiscally conservative, they wouldn't even be in government, but would instead be shutting it down.

[Time for change]

46. Certainly there must be at least some

There are a number of people these days -- Paul Craig Roberts and John Dean come to mind -- who claim to be conservatives but who are very upset with the Bush administration and have very publicly said so. I tend to believe that those types of people are the real and sincere types of fiscal conservatives -- though I can't say for sure because I don't know enough about their history.

I found Dean's "Conservatives without Consciences" to be very interesting". He makes a list of characteristics of Conservatives with and without consciences. The list for "Conservatives with consciences" (which he considers himself to be) is remarkable in that I couldn't find a single difference in that list to a list that I would make up that characterized liberals.

Anyhow, a large number of people on this thread consider themselves to be fiscal conservatives.

[ChairmanAgnostic]

42. a simple misstatement. what they tried to say was

a physical Conservative. One who thinks that muscle mass means they are correct.

[IanBean]

43. I consider myself to be fiscally conservative

THe current Republicans are definetely not fiscally conservative.

[Time for change]

45. Hmmm -- That can't be -- See post #39

Welcome to DU IanBean :toast:

[IanBean]

48. I must be a figment of my imagination

Cheers!

[jmowreader]

44. We need some new terms

I'm thinking "fiscal conservative," "fiscal moderate" and "Republican."

The Fiscal Conservative is an advocate of pay-as-you-go economics, and the theory that the government' sfunction is limited to border security, arresting murderers and extinguishing fires. (Delete long screed about the reason no Repuke ever suggests privatizing the fire department.)

The Republican has lots of rich friends who got that way by selling things to the government. Rich friends love getting contracts for multimillion-dollar items, but they really don't like paying taxes themselves. Now, there's a serious disconnect here: if the government doesn't receive tax revenues, they can't buy the multimillion-dollar items. But anyway, a Republican loves deficit spending.

The Fiscal Moderate is what most of us are. You can talk about being a "fiscal conservative" until you're blue in the face, but the reality of the situation is that some of the things the government simply must do--public works being at the top of the list--are expensive as hell. If you need a new sewage plant, you need a new sewage plant. You issue bonds, build the plant and pay down the securities. And that's okay. What's NOT okay is to issue a big chunk of debt then cut taxes--which is how the government is funded, like it or not--when the bills start coming in.

[many a good man]

47. It's "fiscal responsibility", not "fiscal conservativism"

That terminology begs the question: "who is more responsible?"

[Rosemary2205]

50. Fiscal conservative= I got mine. Fuck you.

I have no idea why anyone has to post 10 paragraphs to say something as simple as "greed".

[Pachamama]

56. An endangered species...

...true "fiscal conservatives"....