WASHINGTON – History is what we make of it – and sometimes we make a real hash. I take as my text for the sermon that follows an op-ed essay in The New York Times this week by Times’ columnist David Leonhardt. The headline tells it all: “Democrats, the Real Fiscal Conservatives.” Are you kidding?
It is certainly true, as Leonhardt argues, that the Republicans have lost any legitimate claim to be “fiscal conservatives.” But the notion that Democrats have replaced them is laughable. The reality is that both Republicans and Democrats are deficit addicts. Democrats have played a central role in this transformation.
Although I don’t always agree with him, I respect Leonhardt’s journalism. He is a Pulitzer-Prize winner who studied applied mathematics at Yale. But in this case, I think he has reached a partisan conclusion based on meager and selective evidence. If unchallenged, people might accept it as fact.
Here, in a nutshell, is Leonhardt’s argument. Since the late 1970s, Democrats have reduced deficits more than Republicans. By contrast, Republicans have ballooned deficits by cutting taxes. For example: The budget deficit declined as a share of Gross Domestic Product under President Bill Clinton and rose as a share of GDP under President George W. Bush.
Yes. But the size of deficits is importantly related to the business cycle – recessions raise deficits, while recoveries lower them – and Republicans have inherited more recessions. The buoyant economy of the 1990s reflected the aftermath of Ronald Reagan’s deep recession of the early 1980s, which reduced inflation and interest rates.