Here's Bill Clinton speaking at the Campus Progress conference in Washington, DC, yesterday:
In the current Budget debate, there is all this discussion about how much will come from spending cuts, how much will come from tax increases. Almost nobody's talking about one of the central points that everyone who's analysed this situation makes -- including the bipartisan Simpson-Bowles Commission -- which said you shouldn't do any of this until the economy is clearly recovering.
Because if you do things that dampen economic growth . . . And the UK's finding this out now. They adopted this big austerity budget. And there's a good chance that economic activity will go down so much that tax revenues will be reduced even more than spending is cut and their deficit will increase.
He gets it. He understands the point that John Maynard Keynes made eight decades ago:
The boom, not the slump, is the right time for austerity.
But here's Barack Obama -- who came to office with a pro-Keynes, pro-stimulus mindset and advisory team (Christina Romer, Larry Summers) -- speaking on Saturday 2 July, in his weekly radio address:
. . . We're working to reduce our nation's deficit. Government has to start living within its means, just like families do. We have to cut the spending we can't afford so we can put the economy on sounder footing and give our businesses the confidence they need to grow and create jobs.
I never thought I'd opt for Bill Clinton over Barack Obama (or "Barack Herbert Hoover Obama", as Paul Krugman puts it) but, on the deficit, the latter has become an austerian in recent months. Clinton, on the other hand, remains a Keynesian -- and it is Keynesian economics that can get us out of this mess.