Deficits

My good friend Max often makes the point that campaigning on the evils of deficit spending is generally not the way to win elections. I think he´s essentially right on this point. He´s also been rather sanguine about the long run budget picture, noting the CBO numbers don´t look so bad.

However, I think what Max has missed something. Even us (supposed) big government liberals recognize that once you let the Leviathan out of its cage, it´s hard to bring it back in. In the 90s it probably took the fortunate confluence of the bizarre Perot candidacy, a dogmatic Alan Greenspan, an extremely robust economy, anti-government Republicans, and a responsible president to bring the budget into balance - something which, at the time, seemed impossible.

Now, a balanced budget isn´t a good thing in and of itself, but back in 1992 the long run fiscal health of the U.S. was starting to worry some reasonable people. Moderate deficits in perpetuity are fine, but at some point they start to spiral out of control.

We´re probably at $450b and counting for this year, already busting through projections from just a few short months ago. I´m not sure how much of a political winner this is, but increasingly it´s becoming a genuine economic issue.