Kerry’s Fiscal Prudence

Yesterday Kerry gave a major policy address, in which he reoriented his economic proposals around the idea of fiscal discipline. As the Washington Post describes it:

Sen. John F. Kerry outlined a broad deficit-reduction policy yesterday, scaling back several campaign promises that he now concedes the country cannot afford if his new budget goals are to be met.

In his second major policy address of the general election campaign, the Massachusetts Democrat harked back to the fiscal and political policies of President Bill Clinton, sacrificing social spending to the goal of reducing the budget deficit by half in five years and eventually eliminating it by raising taxes on the rich and restraining government spending.

In addition, Kerry said that he would ask that all proposed spending and tax changes (including his own) must be offset by other changes in the budget, as was standard until a couple of years ago. He also suggested that the growth of certain discretionary programs (those not related to defense or education) should be held to the rate of inflation.

The details aren’t what’s important here, though. The significance of this address was that it signaled that Kerry has decided to adopt fiscal prudence as a core economic principle. This is a good change in emphasis for the Kerry campaign. The theme of fiscal discipline is one that sets up an easily understood contrast with Bush, is one that resonates with voters (at least in the abstract), and best of all, makes for good economics.