The New Politics of Deficits
The Reagan administration's fiscal policies represent the boldest, yet most problematic, of all its efforts to transform the domestic agenda. By tolerating deficits on a scale unprecedented in peacetime history, the administration has been able to pursue simultaneously its commitment to a stronger defense and its pledge to cut the federal income tax rate. By tolerating these deficits, it has been able to create an austere political climate in which proposed cuts, not expected increments, focus the discussions of federal domestic programs. But by tolerating deficits of great magnitude, the administration has jeopardized the Republican party's reputation for fiscal responsibility and, perhaps more important, may have created a precarious political context in which any economic recession could have disastrous electoral consequences for the government in power. Much has been written about the possible economic consequences of current fiscal deficits. But little systematic attention has been given to the political context that has produced them. To the extent that analysts have considered the political causes of current deficits, they have depended on the cliche that politicians like to confer benefits immediately but postpone costs -at least until after the next election. 1 While this observation contains more than a grain of truth, it is a verity that applies to many times and places. It does not account for the peculiar propensity to engage in deficit financing that currently plagues American politics. To the extent that thinking about deficits has gone beyond a general suspicion