Michael Gerson Applauds Fiscal Insanity
Via Brad DeLong comes a rather strange piece of writing from Michael Gerson:
During the Reagan years, big government got bigger, with federal spending reaching 23.5 percent of GDP (compared with just over 20 percent under the current president). But the Reagan reality is more admirable than the myth. He wisely chose what was historically necessary – large defense increases and tax reductions – over what was politically unachievable: a massive rollback of government. And the critics believe in a caricature of recent budgets. Well over half of President Bush’s spending increases have gone to a range of unexpected security necessities, including military imminent-danger pay, unmanned aerial vehicles and biological-weapons vaccines.
While Gerson bashes small government conservatives, he reaps praise to Jeb Bush and Mitt Romney for being big government conservatives. Gerson leaves out our big government governor in California – who like Jeb Bush and Mitt Romney promises magic fairy dust in the form of low taxes and lots of spending. Should I remind Gerson that there is a long-run government budget constraint and the law of scarcity (dubbed crowding-out in macroeconomics) or should we just return the microphone back to Dr. DeLong:
Large defense spending increases and tax reductions don’t go together. In the short run they produce a fiscal boost to employment. In the medium run they produce slow growth as government deficits drain the pool of capital available for investment. In the long run they produce hyperinflation, as the failure of the government’s resources to match its commitments leads to an effective default. Such an economic policy strategy is not “historically necessary.” It reveals a lack of a moral compass, and either total ignorance about the requirements of good government or enormous cynicism – a belief that we can make a mess and somebody else, somebody responsible, will clean it up.
I may not be a small government conservative but I’d rather listen to them than the nonsense from the likes of Michael Gerson.