Even before this fiscal crisis, the Republican Party’s fiscal conservatism had lost all coherence.
Fiscal conservatism used to be the idea that elected officials were to be prudential stewards of The People’s money.
“The fact is there must be balanced budgets before we are again on a safe and sound system in our economy,” said President Dwight Eisenhower at a press conference in 1953.
“That means, to my mind, that we cannot afford to reduce taxes, reduce income, until we have in sight a program of expenditures that shows that the factors of income and of outgo will be balanced.”
Eisenhower and Congress balanced the federal budget in 1956, 1957 and 1960. He did this as the military-industrial complex (a term he coined) and its benefactors demanded more military expenditures in order to surpass the Soviet Union.
My point is not to offer plaudits to Eisenhower, or say that he would approve of the taxing and spending policies of President Barack Obama. The point is that at one time fiscal conservatism made sense. The concept was more like a CPA’s code of honor, rather than a vehement hate for taxes.
There was, in fact, a time when the Republican Party actually had to be convinced to cut taxes. Like when they refused to vote for tax cuts proposed by President John Kennedy. Bruce Bartlett, a former economic advisor to President Ronald Reagan tells this tale in The New York Times in “When Tax Cuts Were a Tough Sell.”
Governors Rick Perry of Texas and Nikki Haley of South Carolina wrote an opinion piece for the Washington Post in 2011, titled “Break the spend-and-borrow cycle.” In the piece they implore their fellow Republicans to adopt Cut, Cap, and Balance Pledge.
The pledge calls for cuts in federal expenditures, strict limits on future expenses, and an amendment to the Constitution which requires the passage of a balanced budget. All of those ideas are counter to popular economic theory, especially the constitutional amendment in this economic climate.
Other than those wayward ideas, there was some actual wisdom to be found in the piece.
“In South Carolina, for the first time in history, legislators have to record their votes on every section of the budget, so that voters can see their spending habits,” wrote Haley. “And a new marker has been laid down – every dollar that comes in after the budget is initially balanced should go to one of three things: tax relief, debt relief or rebates directly to taxpayers.”
Now that makes sense.
Gov. Rick Snyder’s decision to cut the funds allocated for the state’s film tax credit was fiscally conservative. The move limited the amount of public dollars that went to private activities, activities which did not have real value like research and development.
What the Republican Party is doing now is not fiscally conservative. The problem and the threat of a heavily indebted society is that it will only be able to pay for debt service rather than an army, health care and education. The other problem is that the society will default. So the Republican Party’s response to a possible default is to not raise the federal debt ceiling and risk….default?
The values of fiscal conservatism are not ideological, they are practical. They are the oath of the careful bookkeeper, not a creed to never finance the priorities of the public.
