How Modern Conservatives Aren’t Like Hoover
Recently, I posted a picture of Herbert Hoover attached to my thoughts on the austerity versus fiscal expansion debate. He famously (and should be more famous for) sought to balance the budget during the Great Depression, which exasperated the situation. In his defense, that was what the dominant consensus of economists advocated. Even FDR tried it for a while. Of course, Keynes came a long and eventually changed everything. In order to save capitalism (too many people forget that part) Keynes argued for increasing government deficits by fiscal stimulus to push aggregate demand rightward making up for the lack of private sector spending and to fight deflation.
For Hoover, balancing the budget was a priority; for modern conservatives, balancing the budget is not only unimportant but something they actively work against. Matthew Yglesias makes the argument that lowering taxes and, thus, tax revenue is “the only goal they pursue.“ He ably shows that they don’t ever work to reduce the deficit.
1) There have been two presidents who were members of the modern conservative movement, Ronald Reagan and George W Bush, and they both presided over massive increases in both present and projected deficits.
2) The major deficit reduction packages of the modern era, in 1990 and 1993, were both uniformly opposed by the conservative movement.
3) When the deficit was temporarily eliminated in the late-1990s, the mainstream conservative view was that this showed that the deficit was too low and needed to be increased via large tax cuts.
4) Senator Mitch McConnell says it’s a uniform view in his caucus that tax cuts needn’t be offset by other changes in spending.
5) The deficit reduction commission is having trouble because they think conservative politicians won’t vote for any form of tax increase.
In sum, there are zero historical examples of conservatives mobilizing to make the deficit smaller.
So the problem today with the modern mainstream conservative movement is that they don’t care about the deficit while simultaneously refusing to allow modern Keynesians from pursuing fiscal expansion or allowing real deficit hawks from reforming entitlements to adequately contain costs.
To preempt anyone that might agree with McConnell that tax cuts don’t lead to “diminished revenue” here is an older National Review piece blowing up that absurdity. And here’s Bruce Bartlett with a roundup of studies showing that “starve the beast” doesn’t work either. Meanwhile, Ezra Klein and Paul Krugman post some graphs that utterly demolish the idea that tax cuts pay for themselves: