The unexpected support for Bernie Sanders’ pioneering socialist platform in 2016 has encouraged other presidential hopefuls to offer a similar agenda as they seek the Democrat nomination for the 2020 election. For them, ‘socialist’ implies a more activist government, with more expenditure and intervention to address social issues. They affirm fiscal conservatism, so higher taxes are central in their platforms. However, the US economy seems to have lost its growth dynamic. In this environment, big-spending socialists may be ready to accept budget deficits and higher public debt.
Coincidentally, some prominent economists, concerned about this prospect of secular stagnation, are suggesting that the conventional wisdom advocating balanced budgets is inappropriate. They argue that the usual fears about public debt are unnecessarily alarmist.
An economic rethink of fiscal policy allows the political debate more scope to explore a role for government that goes beyond the post-Reagan small-government mantra. As the Democratic candidates skirmish for nomination, the overlap between the socialist agenda and the economic rethink will enliven and enrich the political debate.