Base10 got into a big discussion with his collegues over the President's fiscal policy. Basically, here's how it goes: You can justify the Bush tax cuts and deficit spending baed on basic Keynsian economics. If you're in a recession (as we were post 9/11), this fiscal policy is not only excuseable but required. Any economist who suggests that tax increases would alleviate a recession are misleading you. While one could make an argument about deficit spending and the negative so-called "crowding out" effect it has on private investment, deficit spending has long been a tool of fiscal policy in rough times. Any one who suggests otherwise, is misrepresenting basic macroeconomic principles.

But this point begs the question. We are no longer in a recession. The economy is growing at a very healthy pace. It is time to curb spending. (I'm not suggesting that we necessarily raise taxes). We're in the midst of a very expensive war overseas. The cost of this war is certainly justified, but somebody's got to pay for it. When was the last time Bush vetoed a spending bill? Oh, that's right. Never.

The other thing that ticks me off is the selective quoting of Alan Greenspan. The NY Times will often run a headline of the sort: "Greenspan warns on deficits." What he has actually been saying consistently for thwe last several years is that deficits will increase dramatically down the road if we don't do something about Social Security and Medicare. This half of the message seems to always be omitted by the NYT headline editors. The other side of this argument is that the deficit now is very large in nominal dollars but is not very large as a percentage of GDP. If the overall strategy is to grow your way out of the deficit, fine. But Mr. President, you could stop spending taxpayer money as if it is a never ending bag of carnival tokens.

- posted by Base10 @ 8:58 AM