Friday, June 25, 2010

Kling on a Budget Compromise... I hope he doesn't actually consider this to be as original as he seems to be considering it

It can be very strange to read Arnold Kling sometimes - sometimes I get the impression he is very disconnected from the world outside GMU libertarianism. He writes about the budget hawk/stimulus dove fiscal policy combo of:

"1 A larger deficit in the short term.
2. Specific, clear measures to reduce deficits over the next ten years, by trimming entitlements and raising taxes.
3. Linking (1) and (2) in a single piece of legislation."

And then says "I would think someone would articulate it"...

...ya Arnold - LOT'S of people articulate this. Paul Krugman, Brad DeLong, and Ezra Klein to name a few that advocated this sort of thing in the very recent past. All these liberal bogeymen fall more or less in line with what Kling describes, not as a compromise position, but as their preferred position. Krugman was talking about the long-term budget back in the Bush administration too, so its not just a matter of talking responsibly as a means of selling his stimulus wish-list. Instead of recognizing this for what it is - a differentiation between macroeconomically unsound boom-time deficits, macroeconomically sound bust-time deficits, and a completely separate long-term entitlements problem - critics of Krugman act like he flip flops from the Bush administration to the Obama administration. Scott Sumner attributed it to "Bush derangement syndrome" in a post that really makes you wonder how well Sumner knows his opposition. Sometimes - sometimes - reading posts by Kling or Sumner you get the impression that they think everyone out there that doesn't see things the way they do is a liberal, vulgar Keynesian that thinks we should always be spending tons of money. There's no recognition at all that this proposal he outlines is largely what a lot of left and center-left people have been saying for a very long time. It's always been my position. It's the position of the entire executive office here at the Urban Institute (Bob Reischauer, Rudy Penner, Gene Steuerle, the late Ned Gramlich, Len Burman (formerly of the Urban Institute)), all of them! Some of these guys are very, very liberal and I've heard considerably more serious talk from each of them about the long-term budget than I've heard out of all of EconLog commenters put together.

Talking past each other and second guessing each other is a very serious problem in economic and policy debates. It's part of the reason why I've consciously tried to take a firm, not-entirely-convinced, but receptive position on libertarianism and the Austrian School here on this blog. I think it's important to overcome this second guessing each other as much as possible (and sometimes there are legitimate disagreements that are simply going to stand). But it really makes me wonder how progress on something like fiscal policy is possible when someone like Arnold Kling doesn't appear to realize that the position he outlines is a very, very common one that I at least hear every single day.

There's a lot of distrust or sheer misunderstanding to overcome just among researchers and wonks - and we're not even the ones with constituencies and clients to pander to! Congress is a whole different can of worms!


  1. I don't mean vaguely talking about fixing the long-term budget one day. I mean making specific proposals that actually bring the long-term budget into balance and linking those to stimulus proposals.

  2. The first three I listed may not be the right people to offer specific proposals - especially Krugman and DeLong who have professorial responsibilities and are not public finance experts anyway. Ezra Klein gets pretty specific, though.

    Everyone I listed from the Urban Institute gets into specifics. I'm not sure they've put it all in one package - but they've definitely delved into the details.

    Ultimately, it sounds like you're talking about Congressmen and women. That, I agree, is sorely lacking. But that's the whole problem - this is a very common position held in the policy researcher/wonk community. It's not a common position among the political class, largely for the reasons that commenters have raised on your blog.

  3. And Arnold - DeLong has been asking for precisely the same thing. He calls what we're doing now "the worst of both worlds fiscal policy" - ie, not enough stimulus and not dealing with the long-term budget.


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