John Taylor's Classic Dodge on Federal Spending

This morning, Professors John Taylor and Laura Tyson presented competing visions for the future of fiscal policy at the National Association for Business Economics Economic Policy Conference. And Taylor's presentation exemplified how conservatives mistreat the ratio of federal spending to GDP. The spending-to-GDP ratio is a reflection of our policy priorities, but conservatives act as if it should be a driver of them.

Taylor made arguments that are extremely familiar among conservative economists. Federal spending has risen well above historical averages and will remain above them for decades to come; revenues dipped in the recession but should soon be back in line with or a bit above historical averages. With spending above normal and revenue soon to be about normal, Taylor says it is "common sense" to bring spending back in line. He added (perhaps trying to get me to slam my head through a wall) that this is what a household or corporation would do in a similar situation.