What is Fiscal Conservatism?
Fiscal conservatives care most about how governments handle money. Their rule of thumb is simple: do not spend more than you collect over time, and keep taxes as low as the basic duties of the state allow. They worry that large debts pass the bill to children and grandchildren, and that high taxes dull the urge to work, save and start firms. This is a view about economics, not about family life or religion, so its supporters can differ widely on social questions. Some are social conservatives, and others are liberal or libertarian on those issues.
Core beliefs
- A government should aim to balance its books across the economic cycle.
- Heavy taxes hold back work, saving and investment.
- Large public debt is a burden on future taxpayers.
- Every spending program should be tested for waste and results.
- Private markets usually use resources better than officials do.
- Stable prices protect the value of savings.
History
For most of the 1800s, balanced budgets were just normal practice. Britain's William Gladstone, a Liberal who served as chancellor and prime minister, was seen as the model of careful finance and low taxes. The Great Depression changed the mood. John Maynard Keynes argued that deficits in a slump could help recovery, and many governments agreed after 1945. Fiscal conservatives stayed critical. In the United States, Calvin Coolidge in the 1920s and Robert Taft in the 1940s and 1950s were known for resisting spending. Milton Friedman made the case for limited government and steady money, and James Buchanan studied why elected governments tend to run deficits and proposed written limits on borrowing. Both won Nobel prizes in economics.
Variants
Deficit hawks put debt reduction first and will accept tax rises to get it. Supply-side conservatives put tax cuts first, saying growth will pay for much of them. Reformers target the large programs that drive costs, such as pensions and health care. In Europe, budget discipline is often argued through the rules of the euro area, where Germany has been a strong voice. Libertarians share many goals but want a far smaller state, while moderate fiscal conservatives accept a solid public sector if it is paid for.
Criticisms
Keynesian economists say cutting spending during a downturn deepens it, and that borrowing is cheap and sensible when the economy is weak. Critics on the left add that austerity hits the poor and public services hardest. Some on the right, including national conservatives and populists, say strict rules block spending on defense, roads or families that a country needs. Observers also point out that governments that claim the label have often run large deficits anyway, especially when they cut taxes without cutting spending.
In practice
Fiscal rules are the clearest legacy. Most US states must balance their yearly budgets. Germany wrote a "debt brake" into its constitution in 2009, and the European Union has set limits on deficits and debt. Privatization, tax cuts and spending reviews in many countries drew on the same ideas. The argument over austerity after the 2008 crash was largely an argument about fiscal conservatism. On the 12 axes it scores toward Private on Ownership, toward Free on Markets and strongly toward Self-reliant on Welfare.