McClean's Interview with Brad DeLong

There's a very good interview of Brad DeLong in Maclean's magazine.

Q: The federal government in Canada has taken a laissez-faire approach and promoted aggressive tax cuts as a solution. Do you have any thoughts on that?

A: I learned my macroeconomics at the knee of Martin Feldstein, back when the Republican Party in the United States was still the party of sound money and fiscal surpluses. I was just running through my class the argument Marty made around 1980: that basic utilitarian calculations suggest the United States should be saving half again as much as it is and investing it into the future. Unfunded tax cuts take what would otherwise be national savings and divert them into government deficits.

While I do see a very small and limited role for tax cuts in a recession to try to prevent mass unemployment, I’m still with Marty—or at least with the old, unmuzzled Marty. Developed countries ought to be running substantial government surpluses because the opportunities for saving and investment are great, because aging populations are going to require debt capacity in the future, and because the technological revolution in medical care is going to produce a huge future demand for governments to spend money keeping people healthy. I have this instinctive, allergic reaction to unfunded tax cuts, even in recessions. And we’re not quite in a recession yet.