The deficit game

Bruce Bartlett

Bruce Bartlett, former Reagan and Bush I economic adviser:

I think many Democrats and independent political observers are puzzled by the intensity with which Republicans are pursuing their tax cut. It’s not politically popular and may well lead to the party’s defeat in next year’s congressional elections. So why do it?

The answer is that Republicans are pushing the tax cut at breakneck speed precisely because they know they are probably going to lose next year and in 2020 as well. The tax cut, once enacted, however, will bind the hands of Democrats for years to come, forcing them to essentially follow a Republican agenda of deficit reduction and prevent any action on a positive Democratic program. The result will be a steady erosion of support for Democrats that will put Republicans back in power within a few election cycles.

The theory was laid out almost 30 years ago by two Swedish economists, Torsten Persson and Lars EO Svensson. In a densely written article for the Quarterly Journal of Economics in 1989, they explained why a stubborn conservative legislator would intentionally run a big budget deficit.

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It has to do with what economists call time inconsistency – the consequences of actions taken today may not appear until the future, when a different political party will be in power. Thus the credit or blame will accrue to that party rather than the one that implemented the policy, because voters tend to attribute whatever is happening today to the party in power today even if that party had nothing to do with it.

Thus Barack Obama got blamed for a recession and resulting budget deficits he had nothing to do with originating. No matter how many times the Congressional Budget Office showed that the vast bulk of the budget deficits in his administration were baked in the cake the day he took office, Republicans nevertheless blamed him and his policies exclusively for those deficits.

2 Responses to The deficit game

  1. Imhotep November 21, 2017 at 11:52 am #

    The Republicans led by Paul Ryan, an Ayn Rand devotee, are purposely creating a massive deficit and debt because they believe that voters will soon demand that Congress cut so-called “entitlement programs,” like Medicare and Social Security, in order to reduce the “out of control” deficit and debt.
    (For get about ever seeing a single-payer health care system.)

    Getting rid of Medicare and Social Security has been a Republican goal for decades.

    The current Republican Tax Cut/Reform Bill takes us a long way down the road to their ultimate goal.

    Republicans are the enemy and any Democrat who sides with them on the tax cut bill are actually Republicans in disguise and should be treated that way.

  2. Doug in Oakland November 21, 2017 at 3:31 pm #

    Like how the Republicans deliberately tried to damage the economy while Obama was in office so they could avoid having to admit the good his policies had done to their voters.
    Seems quaint in retrospect, now they just straight up lie about it.

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