dajo9 said:
Responsible fiscal policy means running higher deficits in bad times and lower / none in the good times. Critical thought requires understanding context and how the right answer can change depending on circumstances.
Dajo and I often go at it on economic policy, but what he says is exactly correct. This is also why the Fed is supposed to be independent and we have councils of economic advisors, etc. The problem is our economic policy has become political, with using taxes and spending on a macro basis for political ideology. For example, we had a President that wanted to raise taxes in the middle of a recession for purposes of income (not wealth) distribution ideals, or a current President who hammers the FED chairman to make questionable decisions, and wanted yet another tax cut and more spending when the economy was from a macro standpoint (you can argue about income or wealth distribution impacts separately) doing well, when he isn't doing stupid things on the international front.
I think the disconnect is how you address what comprises taxes and spending versus the macro impact of the level of spending versus taxes (how you move the deficit needle). For example, in a recession, you can have a tax policy that reduces taxes for stimulus, but provides the tax cut benefits to lower income or less-wealthy people to achieve redistribution policy. Or you can provide the benefits to "job creators" who are likely the more wealthy or higher income people. This depends on your political/economic perspective. But what have to do is is provide a higher deficit in a recession. The same applies to views on spending and FED policy. For example, you may have dramatic views on speeding programs, but in good times, you have to carve that back and prioritize on a macro basis or you get inflation or other problems. And I do think this has become a real disconnect for today's politicians. The last President to actually get this IMO was Clinton. But we had a more bi-partisan approach in those days and Presidents we chose often were policy wonks (like Clinton) or at least listened to policy wonks (e.g., RR). Now economics seems to be dominated by political doctrine and short run political gain.
