Deficit hysteresis

So it has come to this:

Liberal Leader Stéphane Dion, who this morning refused to say categorically he would never run a deficit if the economy slides, backtracked this afternoon to commit unequivocally that a Liberal government would never cause a deficit.

Quizzed three times by reporters in London, Ont., on Wednesday morning, Mr. Dion insisted he is committed to fiscal discipline, but would not say he would never run a deficit, if a deep recession hits.

As unreasoning aversions go, the fear of a budgetary deficit is probably not the worst for voters to have. And there once was a time - back when deficits were large, persistent and unsustainable - when the fear of a deficit was in fact a rational response to a truly scary situation.

But that time is past. The deficit-phobia we see now is a good example of hysteresis: the lagging of an effect behind its cause. Public debt is under control, and if the economy goes pear-shaped for a few quarters, we needn't panic if we run a deficit for a year, or maybe even two.

Comments

[tom s.]

So discourse has now deteriorated to the point where anything other than an unequivocal "never" is seen as cause for scaremongering and any qualifiers are seen simply as signs of weakness and indecision. It's shameful.

[Stephen Gordon]

What bugs me is the "quizzed three times by reporters" bit. Dion's original point was one of a reasonable, responsible, reality-based adult. Why this should be a red flag to the MSM is incomprehensible.