FISCAL POLICY(Credit: Bombaert/iStock by Getty Images) Conservative politics has traditionally been defined by its emphasis on fiscal prudence and the idea of a small state, while parties leaning left are usually associated with more spending and a larger presence of the state in the economy. But the reality may be different, write the IMF’s Era Dabla-Norris, Enrico Di Gregorio, and Yongquan Cao in a new blog. As new analysis shows, parties across the political spectrum sound increasingly similar when it comes to fiscal policy: they all campaign on ideas of a bigger government and on promising more spending. “From socialists to nationalists, support for more spending has steadily increased, while fiscal restraint rhetoric has lost favor across the board in the last three decades, after being most popular in the 1980s,” write the authors. Looking ahead, widespread calls for bigger and more active governments tasked with addressing climate change, defense, and costs associated with aging societies are accompanied by expectations of higher public spending, they note. The crucial question of how to pay for this increased spending remains open. Large fiscal deficits and elevated debt levels call for greater fiscal prudence, but political forces are pulling in the opposite direction. “Scholars, policymakers, and voters alike will need to rally around viable political strategies to keep fiscal sustainability at the center of the public debate, as uncertainty about the future of public finances mounts,” the authors say. |
