The Keynsian Left?

This is a pretty correct Andrew Sullivan post but whence this “Keynsian left” that believed in “massive new domestic spending combined with ‘deficits don’t matter.’” That’s a good summary of Bush’s policies, as Andrew says, but what does it have to do with a Keynsian left? The Keynsian idea was that you should use deficit spending to get out of a recession, and then bring the budget back into balance over the course of the economic cycle. That’s exactly what happened during the Roosevelt-Truman years where we started off with a 4.5 percent of GDP deficit that peaked in 1943 (there was a war on) at 30.9 percent of GDP and then began to fall. Starting in 1947 the budget was roughly balanced, with small surpluses alternating with small deficits. Kennedy and Johnson ran smallish, constant deficits and Nixon (a self-proclaimed Keynsian one) ran slightly larger constant deficits. It’s not until Reagan that the accelerating peacetime deficit becomes a feature of American policy before going away, only to return with the second Bush administration.

And even Reagan mostly increased defense spending while cutting taxes and, once it became clear that the deficit was exploding, turned around. Sullivan’s “Keynsian left” policies are a wholly novel innovation of the George Bush economic team, not something they cribbed from anyone else.