American Democracy and the Problem of Fiscal Deficits

Most theorists of public finance treat budgeting as a technical problem concerned centrally with projecting revenues and expenses. To the contrary, I treat budgeting as a political problem, with technical matters serving to obscure more than illuminate the political economy of budgeting. This essay starts by explaining why persistent budget deficits have little to do with traditional technical matters because they mostly reflect the conflictual character of contemporary political economy. The rest of the essay probes this conflictual character by providing a conceptual framework grounded in the inherently complex character of fiscal systems, and with this complex character contrasting sharply with the image of simplicity advanced by most theorists of public finance. The key point I advance is that democratic budgeting in large national governments will unavoidably operate as a source of turbulence and not as a source of systemic stability.