I testified in the House Budget Committee this AM and have many excellent war stories to share. But no time to do so now. Until then, please read my testimony, to which I devoted some thought.
Roughly speaking, the position of the majority Republicans is that you should always balance the budget for... I just sat with these folks for two long hours and I can't really finish that sentence.
Partly for moral reasons. One witness blamed "Keynesianism for the decline in beneficial "Victorian fiscal morality." Another had a macro-model that maintained, contrary to the CBO's analysis of the Republicans' budget resolution, that the deep near-term cuts would boost, not hurt, growth because forward-looking households would realize that Republican spending cuts would eventually lead to greater investment, more tax cuts and higher incomes in the future, so they spend more today to offset the cuts.
One member, touting the folk'ism that since families have to balance their budgets the Feds should too, took issue with my point that in fact, families borrow long-term all the time for things like college and homes. He asked me if I make more than I spend. I told him I certainly went into debt to pay for college, and he said he did too!
Another Republican member went on about how much he hated government debt and I had the chance to ask him, "so, why did you guys pass $570 billion in non-offset tax cuts?!" I think he answered, not unreasonably, something like, "well, maybe that's something we can put on the table."
And so on.
Here are my bullet points:
- The idea that the budget should always be in balance actually runs counter to optimal fiscal policy in an advanced, dynamic economy like ours. Instead, smart fiscal policy must be flexible, with deficits temporarily rising in recessions to support the weak economy and coming down in recoveries as the economy strengthens.
This post originally appeared at Jared Bernstein's On The Economy blog.