Magical Thinking on Debt and Deficits?

I would agree with a fair amount of David Frum's latest op-ed, but there one part of article that doesn't make a whole lot of sense to me:

2) The deficit is a symptom of America's economic problems, not a cause.

When the economy slumps, government revenues decline and government spending surges.

Federal revenues have collapsed since 2007, down from more than 18% of national income to a little more than 14%. To put that in perspective: That's the equivalent of losing enough revenue to support the entire defense budget.

Federal spending has jumped to pay for unemployment insurance, food stamps and Medicaid benefits.

Fix the economy first, and the deficit will improve on its own.

Cut the deficit first, and the economy will get even sicker.

3) The time to cut is after the economy recovers.

Businesses are hoarding cash. Consumers are repaying debt. State and local governments are slashing jobs. (Since 2009, the number of Americans working for government has shrunk by half a million, the biggest reduction in civilian government employment since the Great Depression.) Right now, there's only one big customer out there: the federal government. How does it help anybody if the feds suddenly stop buying things and paying people?

I have two problems with this. First, Frum has talked a lot about David Cameron's Conservative Party which has been busy in the midst of this recession cutting government programs. Yes, there are some differences, but what makes it okay for the Conservative Party to tackle debt, and wrong for the GOP to not take on debt?

Also, Frum says that if the economy is fixed, then the debt will take care of its own. Really?

I think the economy can help make a difference, but part of the reason we were able to get the deficit under control in the 90s was party because President Clinton and the Republican Congress came together to make certain decisions. The same goes for the 1990 Budget deal when President Bush made deals with a Democratic Congress. Deficit issues just don't solve themselves all because economy gets better. Debts and deficits get solved when lawmakers get together and make deals. I'm not saying the economy has no role in alleviating those problems, but to say that somehow problems with the deficit will go away when the economy gets better is about as silly as saying that tax cuts will solve the deficit or revive the economy or cure cancer.

The other problem that I see here is that while I do think most people don't want an all cuts deal as what was agreed to, the fact is voters decided last fall to elect people that at least said they were concerned about government spending. As much as I think that Republicans are wrong to assume that the American public wants only to cut spending alone, legislators would be foolish to ignore that part of the reason the GOP is in control of the House and made gains in the Senate was because of a desire to restrain federal spending.

What Frum has been arguing for within GOP is a kind of conservative-Keynesianism that was fashionable in the Republican Party from Dwight Eisenhower to the Reagan years. Beginning in the 50s, the GOP made (some) peace with the New Deal. This meant allowing for high taxes and government spending. Unlike a lot of folks, I don't think there was anything wrong with this approach way back when. But the problem is, the country has changed. Many liberals (and some reformed-conservatives like myself) thought the election of Obama would usher in a Second New Deal and a rebrith of Keynesianism. But America has changed and in many ways is backing away from full on Keynesianism. That doesn't mean that the nation has embraced the Tea Party's vision for America, but it does mean that the era of big government solutions is long gone.

Tea Party conservatives are wrong to think we can go back to some pristine era of minimal government, but reformist conservatives are wrong to think we can go back the Eisenhower years. Conservatives are going to have to forge a new vision that is centered on a small(er) government that is still activist and willing to be the GOP for today and not sometime in the past.