This post should probably be part 2, but there’s another tax cut being pushed forward.
When the Great Recession hit conservatives told a story about about belt-tightening. The average citizen was having to cut back, so the government should have to cut back as well. Today the economy (at least by market standards) is growing. Conservatives are now pushing a second tax cut beyond the large deficit created by the first. In the broadest possible terms the conservative’s response has been to spend little when things are bad and spend more (or as I’d like to say: give away the communal pot) when things are good. They’ve told this as a “common sense” story, but, as I’ll explain, it not only isn’t conservative, it’s nonsense.
Say you’ve been laid off. (I’ve personally experienced this 4 times since the Great Recession started. Stupid gig economy.) True, you’ll tighten up your spending a bit like on luxuries, upgrades you can delay, or other items that aren’t going to help you make money. However, you continue to pay for things that will help you make money. You need energy so you pay for food to eat and a place to sleep. You need to get a new job so you continue to pay for the internet to search for one, the phone to communicate, a car to get to an interview, and, if you need to, nice clothes for interviews.
Then, when you get the job and the money is coming in and things are good, a conservative person would… well… you’d save some. As I’ve said, I’ve been laid off 4 times in less than a decade, so, yeah, you save. You pay down debts. You pay back any friends you borrowed from. You make the upgrades so that you’re better prepared for the next downturn. You make ready any tools you need to avoid or at least mitigate any future downturn.
The thing is, when you don’t have money coming in you have to spend whatever you have and borrow for what you don’t. If you need to borrow gas money to get to an interview (be it from a friend or on a credit card) it would be stupid not to do it. That’s borrowed money (or credit) that will yield positive results.
The same is generally true of government spending during a recession. The greatest cost to a government during a recession isn’t bank bailouts. It’s lost revenues from taxes. So when the government spends on its citizens by creating jobs directly or indirectly or by investing in infrastructure be it physical (roads, etc) or non-physical (like making sure the banking/financial system doesn’t collapse), it’s making investments like a person borrowing gas money for an interview. Perhaps not every drive to every interview is going to yield all the results you want, but it will eventually yield positive results.
Unfortunately, recessions tend to happen in cycles. It’s usually not as frequent as being laid off every two years. But they do happen with regularity. So to prepare for them it’s important that a government do the equivalent of an individual saving, improving their credit position, and generally mitigating the risks of a future downturn. This would be conservative.
In a government context that would mean balancing the budget, increasing revenues, letting interest rates rise, and implementing strong and just regulations now while things are good. Balancing the budget or even having a surplus improves our credit and financial health. While things are good raising taxes a little and letting interest rates rise give us more tools for economic stimulus when times get tough. And, implementing strong regulations in the places where we’ve had problems can help keep things from getting as far out of hand next time.
The conservatives in government have generally pushed for the opposite of these things. Sure interest rates have gone up a little thanks to the Fed (to Trump’s chagrin). They’ve blown the budget (with tax cuts). They made a historic decrease in revenues (again with tax cuts). And they’ve fought tooth an nail against meaningful regulation of the financial sector, even loosening the little that was implemented after the recession. And to top it all off, they’re leader (Trump) is picking trade fights with everyone.
“Conservatives” aren’t acting conservative. They’re pushing the economy too hot and using up all our “savings” during good times like a guy with a new job spending too much and partying too hard. When the party ends and our credit is maxed out and we haven’t been investing and we have fewer tools and fewer friends and worse credit and we hit a bump in the road, what are we supposed to do then?