Deficit Economics

By PoliPundit ~ November 9th, 2003 @ 4:01 am

Let’s talk about the new Democratic Party economics, which we might call Krugmanomics: a combination of deficit dread and demands for higher taxes on the rich.

Politically, voters care about budget deficits only when they feel insecure about their own jobs. The deficit then becomes an emblem of economic mismanagement (never mind the Keynesian wisdom that a growing deficit is desirable when the economy is slack, providing countercyclical demand).

Likewise, voters never crave tax hikes but are most receptive to tax hikes aimed at the undeserving rich when their own economic anxiety is high.

This is extremely unpromising fodder for a party that wants to get elected to majority status more than once every 40 years or so. By now you can already see the problem with Krugmanomics: It appeals only on the downside of an economic cycle.