It's time to strike the term "fiscalresponsibility" from responsible political rhetoric. Few terms in publicdiscourse have moved as directly as this one has from imprecision tomeaninglessness without any intervening period of coherence.
Democrats have been particularly loose-lipped about it lately. HouseMinority Leader Richard Gephardt, recently campaigning in Iowa for a fellowDemocrat, was quoted in The Des Moines Register as calling the Bush tax cut fiscally irresponsible and touting the Democrats' 1993 effort to reduce the budget deficit. "I'm glad we did what was right in 1993," he said, "and I'll do it again because I believe in being fiscally responsible with taxpayers' money." The reporter for the Register assumed that Gephardt had meant that Democrats would repeal the Bush cut if they controlled the House. The minority leader's office promptly issued a rejoinder: He'd meant no such thing.
Then what did Gephardt--who is among the Democrats' shrewdestpoliticians--mean? In the weeks since the tax cut was enacted, Democrats andliberal pundits have attacked it, along with Bush's budget projections, forsloppy math and plain dishonesty. "No way the numbers will fit" is the commoncomplaint, based on the implausibility of maintaining a balanced budget whilecutting taxes by $1.3 trillion and simultaneously delivering on promises toincrease spending on the military, education, and prescription drugs. Inevitably,the Bushies will have to raid the Social Security and Medicare trust funds, sayDemocrats.
Yet Democrats won't commit to repealing the tax cut. As a result, they'vesprung a fiscal trap on themselves--and Republicans couldn't be happier. IfDemocrats won't repeal the tax cut, their pious pronouncements about fiscalrectitude suggest that they might go along with even deeper cuts in spending thanthe Bush administration will admit to seeking, in order to keep the budgetbalanced.
The theology of fiscal responsibility prevents Democrats from proposinganything that requires substantial new spending. Any plans for affordable anduniversal health care and preschool, effective mass transit, and better schoolswould invite the question, how do Democrats plan to pay for it all withoutrepealing the tax cut or borrowing?
The fiscal trap also undermines the Democrats' contention that Bush's one-sidedSocial Security commission has painted a misleadingly bleak picture of SocialSecurity's future in order to frighten voters into believing that the systemneeds a radical overhaul. If the Bush tax cut is as fiscally irresponsible as theDemocrats say it is, then Social Security's future is indeed bleak and theyshould commit to repealing the tax cut. They can't have it both ways. There's nodebating that the United States will have a huge elderly population that needssupport. The issue isn't the "solvency" of the system but whether we participatetogether in providing that support or decide that individuals and families shouldbe on their own. Privatization is the first cousin of social Darwinism. That'swhat Democrats should be shouting about.
All of which brings us back to the political obtuseness and economicincoherence of "fiscal responsibility" as a Democratic theme song. Last year, youmay remember, Al Gore promised to use the budget surplus to eliminate the federaldebt altogether. But why should this be an objective of public policy? To thecontrary, as John Maynard Keynes noted 70 years ago, government borrowing canhelp ensure sufficient demand, so the nation's productive capacity will be fullyutilized. It's a bizarre twist of fate that the Bush administration is nowchampioning Keynesian economics while Democrats have been sounding like apostlesof Herbert Hoover.
There's an even more basic reason that government borrowing may beappropriate: As Bill Clinton wisely noted at the start of his administration (butforgot later on), it's better to borrow money for improvements in education,health care, and infrastructure than for the nation to do without them. Arational family or business surely would borrow to make correspondinginvestments. Where's this sound logic on the Democratic side now that we need it?When Republicans aren't shamelessly using Keynesian theory for their own ends,they're reverting to the supply-side notion that people will work harder if theycan keep more of the money they earn. The rich, in particular, will apply theirtalents with greater verve if their take-home pay is in the stratosphere ratherthan merely sky-high. Supposedly, all this will spur economic growth and buoy taxrevenues enough to fill any fiscal shortfall. We tried this theory once, and itfailed.
What has not been tried--we didn't give it a chance in the Clintonadministration--is the Democrats' fundamental alternative, which is to expand theeconomy by investing in people through public spending. Not just rich people, buteveryone. This would require repealing the Bush tax cut and borrowing ifnecessary.
We may never have a chance to try it if the Democrats keep insisting on fiscalresponsibility--demanding that the budget be balanced and the debt be eliminated.Americans won't ever know what's really at stake behind the warring numbers overtaxes, the budget, and Social Security if Democrats continue to claim thatausterity leads to economic growth while Republicans tell them to throw a party(and if they're rich, to throw an even bigger one) with the money they save bypaying less in taxes. No one any longer is talking about the central economicimportance of investing in our nation's people--and that's about as fiscallyirresponsible as you can get.
