What does it mean to be a fiscal conservative?

I claimed many times on the radio in the past that I am a true fiscal conservative, maybe the last, and I think it generated significant traction with the audience. I think most of the policy discussion around deficits and the fiscal trajectory of policy, if not engaging in outright obfuscation, is muddled at best.

I think it is generally the case this term, fiscal conservative, is not defined at the start of discussions or vague notions of what people want it to mean are merely suggested. From where I stand right now the individuals held up as fiscal conservatives are typically in one of two camps.: they either reflexively want to cut taxes or want to blindly cut taxes. Both of these actions are undertaken with little to no regard for consequences, knock on effects, or pretty much anything else. That is truly unfortunate, if not surprising in the hyperbolic media world surrounding what pass for policy discussions these days.

Dealing with only one side of the situation should not be sufficient to earn such a title. Sure you could be labeled a “deficit reducer” or something of that sort but that does not truly make you fiscally conservative. I also think it is a situation of talk is cheap, since stated opposition to things is often given the cover of being likely to pass legislative bodies anyway. Witness any number of politicians touting spending done by bills they voted against. To oppose something on the ground of fiscal responsibility yet pat yourself on the back to your constituents for delivering for them should bot be surprising, but still should not be celebrated.

The fact of the matter when you look at government budgets (mostly talking US here right now, but it does apply elsewhere) is that we will bot balance the budget on the back of spending cuts alone. There are simply too many popular programs, initiatives, and priorities of the public that have support from enough voters to conceive of enough people voting against all the programs. Politicians have a goal, getting re-elected, and voting against things too often is a great way to be a “former” politician.

It is also not possible to generate all the revenue needed at this time through tax increases. There are no true hidden pots of untapped revenue just sitting out there at this time. So what do we do to get the budget back closer to balance?

The solution I would propose is to cut spending and increase taxes. This is the only way to achieve the goal is a realistic fashion, given the constraints I outlined above. The fiscal resilience of a country is difficult to measure, if not impossible. It depends on market perceptions and economic realities and often is not a problem until it is a problem. Poorly thought out fiscal policy right now is a major contributor to the inflation problems we face, and while not as convenient a target as the Fed, is no less culpable.

We should want a balanced budget to give us flexibility for the future and resilience in the face of what appear to be a never-ending series of crises for our time. We are not going to get there without a better definition of what it takes to be a true fiscal conservative and it is a discussion we need to have sooner, rather than later.

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