Budget deficits reflect economic conditions, not just government policy
A better way to make the point I was trying to make in this post is to say that people overestimate the degree to which budget deficits are a reflection of government policy rather than a reflection of background economic conditions. A set of policies that were balancing state budgets in 2004 and 2005 and 2006 and could've survived a mild recession but weren't able to hold the line against a once-in-a-generation economic storm aren't bad or profligate policies: It's just hard to endure economic catastrophes, and you wouldn't necessarily want to orient your economic policy around long-tail events. A pension program that was started in the early 1900s and that's worked pretty well but will run a temporary deficit when an uncommonly large generation retires isn't a poorly designed pension program.
In the current context, the main point here is that big deficits aren't being caused by stimulus spending or bank rescues or anything else: They're being caused by unemployment, which destroys tax revenue. This is true in the states, it's true in the country, and as the IMF graph atop this post shows, it's true worldwide. But because people tend to think of deficits as a measure of fiscal responsibility rather than an indicator of broader economic conditions, this gets mixed up, which also means that what we should do about the temporary rise in deficits gets mixed up.
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