A Short Post About... The Devolution of Fiscal Conservatism

Just because someone calls themselves a fiscal conservative does not make it so.

Photo by Alexander Grey on Unsplash

So there I was, drinking my Monday morning coffee, just catching up on the news, when I decided to read a story by the Washington Post’s Marianna Sotomayor and Leigh Ann Caldwell on how newbie Speaker of the House Mike Johnson plans to avoid a shutdown.

The story was mostly about how Johnson was going to navigate the various clashing factions within the GOP House caucus. It was in all respects but one a perfectly diligent, professional piece of journalism.

But — and yeah, you knew there was a “but” — one paragraph caught me short. It’s not even central to the main story:

Johnson earned praise for his earlier decision to pair aid for Israel with rescinding Democratic-approved funds to hire more IRS employees. Doing so is projected to add to the deficit, but Republicans celebrated it as a show of unity since it paired the desire of many to help a foreign ally while assuaging fiscal conservatives’ concerns.

This paragraph raises a very important question: how does one define a “fiscal conservative”?

I know how it used to be defined. A fiscal conservative was someone so concerned about budget deficits and government debt that they were dedicated to the proposition of bringing the budget as close to balance as possible. How to do that could vary across the ideological spectrum. For Democrats on the left, that could be accomplished through tax increases to fund greater government spending. For Republicans on the right, that could be accomplished through cuts in government expenditures to match lower taxes. For moderates in both parties, it meant a little from column A and a little from column B.

You know what, to my understanding, would never be an example of fiscal conservatism? Agreeing to a policy shift that increases the size of the deficit! That is, of course, what Johnson’s dead-in-the-water proposal would do. The Washington Post reporters even acknowledge that point in their story — and yet they also write that Johnson’s proposed policy shift would please fiscal conservatives! What am I missing here?

I suppose one could suggest that I have missed the evolution of Republicans when it comes to budget deficits. Until 1990, it was possible for Republicans to focus on the deficit qua deficit and even support tax increases. Then George H.W. Bush agreed to such a fiscal package, contradicting his “no new taxes” pledge, and became a one-term president. After that, fiscal conservatives believed in reducing the deficit only through cutting government spending. And that’s fine, it’s certainly one way to reduce the budget deficit.

By the 2000s, however, self-described fiscal conservatives could argue in favor of tax cuts through the power of “dynamic scoring.” General equilibrium models allowed for the possibility of tax cuts to generate more economic growth, which would in turn translate into greater tax revenue. That allowed for the (theoretical) possibility that some tax cuts could pay for themselves.

By the time of the 2017 Trump tax cuts, however, the GOP’s dynamic scoring estimates were just hand-waving exercises, overpromising on revenue gains and thereby giving Republican “fiscal conservatives” political cover to vote for it even though, in retrospect, “The Act clearly reduced revenue.”¹

And that leads us to 2023. Apparently a Republican can still call themselves a fiscal conservative even if they approve of something that widens the deficit because… because…. “IRS BAD!” I guess?

The devolution of the term “fiscal conservative” is now complete. We have reached the Orwellian endpoint wherein someone can be labelled a fiscal conservative while supporting policies that are fiscally profligate.

This absurdity will continue, but the hard-working staff here at Drezner’s World would like the political and economic press to call BS on using this term inappropriately. Use a different moniker, put “fiscal conservatives” in quotes, or call them “so-called fiscal conservatives.”

Just stop describing them as fiscal conservatives as if that were true. Because it’s not, it’s really, really not.

1. I’m skipping over the flighty fiscal conservatives in the GOP, the ones who favored tax cuts über alles when a Republican was president and then fiscal probity when a Democrat was president. I’m doing this because life is short and by now this point is obvious.