Fiscal Conservatism Defined – Part 2

April 28, 2009

In a related story, fiscal conservatives believe in balanced budgets (this is why the current conservative movement should abandon its love affair with Ronald Reagan, he of the unacceptable peacetime budget deficits). Individuals, businesses and the government should not spend money they don’t have. Fiscal conservatives reject the notion that short-term budget deficits are a necessary policy tool to fight recessions. Government borrowing reduces the amount of capital available to individuals and businesses, prolonging and deepening recessions. If government prints money rather than borrows it, it devalues the currency, creates inflation and forces individuals to work harder to maintain the same standard of living. It would also be wise for the federal government to balance the budget and use some of the surplus to pay down systematically the national debt. Morally responsible policy would require the generations responsible for much of the debt to bear the burden of paying it back.

 

Fiscal conservatives should push the federal government to adopt a policy of sound money. The balanced budgets mentioned above are the foundation. The Federal Reserve should drop its dual-goals of low inflation and full employment. The Federal Reserve should maintain a base interest rate that is higher than the rate of inflation. Abandoning reckless free trade agreements in favor of trade policies that better protect US citizens and workers would help reduce the trade deficit and buoy the value of the currency. When the US was at the height of its economic hegemony, it had trade rivals, not trade partners. The US should not fear a trade war. It has won in those in the past, and with the right policies, it will win them in the future. A return to the gold standard would be the ultimate sound money step. However, fiscal conservatives need not be ideologically pure on this issue if they can achieve implementation of the aforementioned policies.

 

Fiscal conservatives should fight to eliminate GSEs, or government sponsored entities. GSEs such as Fannie Mae and Freddie Mac essentially insure investors against the risk of loss. Unfortunately, subsidizing mediocrity and providing safety nets for failure encourages more of both. In addition, the process of creative destruction that is vital to the prosperity of any nation is interrupted or derailed.

 

Other ideas fiscal conservatives should consider supporting are the decriminalization of marijuana (tens of billions of dollars wasted fighting this “threat”), a non-interventionist foreign policy that includes bringing our troops stationed overseas home (empire maintenance is threatening to bankrupt and collapse us, as it did to the Persians, Greeks, the Romans, the Holy Romans and the British), eliminating farm subsidies and the phasing out of Social Security (retirement is not a right, and it is probably an outdated 20th century phenomenon, anyway). Fiscal conservatives should push for legislation that supports the production of energy from all sources, including (especially) nuclear, oil, oil shale, natural gas, coal, hydroelectricity, wind and solar. The US can and should be the world leader in energy production. Fiscal conservatives should become production-huggers who stand up to tree-huggers and cloud-worshippers.

 

The fight ahead will be difficult and the opponents will be tough and determined. For the future of this country, fiscal conservatives have to win this argument. The long term alternative is likely learning Chinese and professing allegiance to the People’s Republic.

 

Jason Moss

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