View source for Fiscal conservatism

{{short description|Political and economic philosophy}}
{{about|the economic ideology within conservatism in the United States|the overlapping economic philosophy in Europe and elsewhere|Economic liberalism}}
{{Use mdy dates|date=July 2022}}
{{conservatism US|schools}}
{{Liberalism US|principles}}
In [[Politics of the United States|American political theory]], '''fiscal conservatism''' or '''economic conservatism'''<ref>{{cite journal |last=Everett |first=Jim A. C. |date=December 11, 2013 |title=The 12 Item Social and Economic Conservatism Scale (SECS) |journal=PLOS ONE|volume=8 |issue=12 |pages=e82131 |doi=10.1371/journal.pone.0082131 |pmid=24349200 |pmc=3859575 |bibcode=2013PLoSO...882131E |doi-access=free }}</ref> is a [[Political philosophy|political]] and [[economic philosophy]] regarding [[fiscal policy]] and [[fiscal responsibility]] with an ideological basis in [[capitalism]], [[individualism]], [[limited government]], and ''[[laissez-faire]]'' economics.<ref name="google">{{Cite book |url=https://books.google.com/books?id=sq-1z8VMhDEC&dq=Modern%20Political%20Philosophy&pg=PA37 |title=''Modern Political Philosophy'' (1999), Richard Hudelson, pp. 37–38 |isbn=9780765600219 |access-date=November 23, 2021 |archive-date=February 1, 2015 |archive-url=https://web.archive.org/web/20150201215914/http://www.google.com/books?id=sq-1z8VMhDEC&lpg=PP1&dq=Modern%20Political%20Philosophy&pg=PA37 |url-status=live |last1=Hudelson |first1=Richard |year=1999 |publisher=M.E. Sharpe }}</ref><ref name="dickerson">M. O. Dickerson et al., ''An Introduction to Government and Politics: A Conceptual Approach'' (2009) p. 129.</ref> Fiscal conservatives advocate [[tax cut]]s, reduced [[government spending]], [[free market]]s, [[deregulation]], [[privatization]], [[free trade]], and minimal [[government debt]].{{sfn|Coates|2012|p=392}} Fiscal conservatism follows the same philosophical outlook as [[classical liberalism]]. This concept is derived from economic liberalism.{{sfn|Ghosh|2006|p=56}}

The term has its origins in the era of the American [[New Deal]] during the 1930s as a result of the policies initiated by [[social liberals|modern liberals]], when many classical liberals started calling themselves [[Conservatism in the United States|conservatives]] as they did not wish to be identified with what was passing for [[liberalism in the United States]].{{sfn|Grigsby|2004|p=99}} In the United States, the term ''[[Modern liberalism in the United States|liberalism]]'' has become associated with the [[welfare state]] and expanded [[regulatory]] policies created as a result of the New Deal and its offshoots from the 1930s onwards.{{sfn|Fujii|2013|p=541}}

Fiscal conservatives formed one of the three legs of the traditional American [[Movement conservatism|conservative movement]] that emerged during the 1950s together with [[Social conservatism in the United States|social conservatism]] and [[national defense]] conservatism.{{sfn|Coates|2012|p=393}}<ref name="New Fusionism">{{Cite journal |last1=Ashbee |first1=Edward |last2=Waddan|first2=Alex|date=13 December 2023 |title=US Republicans and the New Fusionism |journal=[[The Political Quarterly]] |volume=95 |pages=148–156 |language=en |doi=10.1111/1467-923X.13341 |s2cid=266282896 |issn=1467-923X }}</ref> Many Americans who are classical liberals also tend to identify as [[Libertarianism in the United States|libertarian]],{{sfn|Grigsby|2004|p=100}} holding more [[cultural liberal]] views and advocating a [[non-interventionist]] foreign policy while supporting lower taxes and less [[government spending]].{{sfn|Coates|2012|p=393}} As of 2020, 39% of Americans polled considered themselves "economically conservative".<ref name="On Social Ideology, the Left Catches Up to the Right">{{cite web|last=Brenan|first=Megan|date=May 20, 2020|url=https://news.gallup.com/poll/311303/americans-remain-liberal-socially-economically.aspx|title=Americans Remain More Liberal Socially than Economically|publisher=Gallup|access-date=August 19, 2020|archive-date=June 26, 2020|archive-url=https://web.archive.org/web/20200626225852/https://news.gallup.com/poll/311303/americans-remain-liberal-socially-economically.aspx|url-status=live}}</ref>

Because of its close proximity to the United States, the term has entered the lexicon in Canada.{{sfn|Farney|Rayside|2013|p=12}} In many other countries, economic liberalism or simply [[liberalism]] is used to describe what Americans call fiscal conservatism.{{sfn|Johnston|2011|p=210}}{{sfn|Fujii|2013|pp=541–542}}

{{Capitalism sidebar}}

== Overview ==
=== Principles ===
{{economic liberalism sidebar|ideas}}
Fiscal conservatism is the economic philosophy of prudence in government spending and debt. The principles of [[capitalism]], [[limited government]], and ''[[laissez-faire]]'' economics form its ideological foundation.<ref name="google"/><ref name="dickerson"/> Fiscal conservatives advocate the avoidance of [[deficit spending]], the [[tax cut|lowering of taxes]], and the reduction of overall [[government spending]] and [[national debt]] whilst ensuring [[balanced budget]]s. In other words, fiscal conservatives are against the government expanding beyond its means through debt, but they will usually choose debt over tax increases.<ref>{{cite book|url=https://books.google.com/books?id=B10JkvO82x8C&pg=PA109|title=Correctional Organization and Management: Public Policy Challenges, Behavior, and Structure|first=Robert M.|last=Freeman|publisher=Elsevier|year=1999|page=109|isbn=978-0-7506-9897-9}}</ref> They strongly believe in [[Libertarian conservatism|libertarian]] principles such as [[individualism]] and [[free enterprise]], and advocate [[deregulation]], [[privatization]], and [[free trade]].{{sfn|Coates|2012|p=392}}

In his ''[[Reflections on the Revolution in France]]'', [[Edmund Burke]] argued that a government does not have the right to run up large debts and then throw the burden on the taxpayer, writing "it is to the property of the citizen, and not to the demands of the creditor of the state, that the first and original faith of civil society is pledged. The claim of the citizen is prior in time, paramount in title, superior in equity. The fortunes of individuals, whether possessed by acquisition or by descent or in virtue of a participation in the goods of some community, were no part of the creditor's security, expressed or implied. ... [T]he public, whether represented by a monarch or by a senate, can pledge nothing but the public estate; and it can have no public estate except in what it derives from a just and proportioned imposition upon the citizens at large".<ref>{{cite book|title=Reflections on the Revolution in France|last=Burke|first=Edmund|publisher=Arlington House|year=1965|location=New York}}</ref>

=== Factions or subgroups ===
Although all fiscal conservatives agree generally on a smaller and less expensive government, there are disagreements over priorities.{{sfn|Coates|2012|p=393}} There are three main factions or subgroups, each advocating for a particular emphasis. [[Deficit hawk]]s emphasize balancing government budgets and reducing the size of government debt, viewing government debt as economically damaging and morally dubious since it passes on obligations on to future generations who have played no part in present-day tax and spending decisions.{{sfn|Coates|2012|p=393}} Deficit hawks are willing to consider tax increases if the additional revenue is used to reduce debt rather than increase spending.{{sfn|Coates|2012|p=393}}

A second group put their main emphasis on [[Tax cut#Tax cuts in the United States|tax cuts]] rather than spending cuts or debt reduction. Many embrace [[supply-side economics]], arguing that as high taxes discourage economic activity and investment, tax cuts would result in economic growth leading in turn to higher government revenues.{{sfn|Coates|2012|p=393}} According to them, these additional government revenues would reduce the debt in the long term. They also argue for reducing taxes even if it were to lead to short term increases in the deficit.{{sfn|Coates|2012|p=393}} Some supply-siders have advocated that the increases in revenue through tax cuts make drastic cuts in spending unnecessary.{{sfn|Coates|2012|p=393}} However, the [[Congressional Budget Office]] has consistently reported that income tax cuts increase deficits and debt and do not pay for themselves. For example, the CBO estimated that the [[Bush tax cuts]] added about $1.5 trillion to deficits and debt from 2002 to 2011<ref name=CBO_Change2012>{{cite web|url=https://www.cbo.gov/publication/41463|title=CBO Changes in CBO's Baseline Projections Since January 2001|publisher=CBO|date=June 7, 2012|access-date=July 13, 2019|archive-date=June 4, 2020|archive-url=https://web.archive.org/web/20200604025930/https://www.cbo.gov/publication/41463|url-status=live}}</ref> and it would have added nearly $3 trillion to deficits and debt over the 2010–2019 decade if fully extended at all income levels.<ref name=CBO_2009>{{cite web|url=https://www.cbo.gov/publication/41753|title=CBO Budget and Economic Outlook 2009–2019|publisher=CBO|date=January 7, 2009|access-date=July 13, 2019|archive-date=November 12, 2016|archive-url=https://web.archive.org/web/20161112181329/https://www.cbo.gov/publication/41753|url-status=live}}</ref>

A third group makes little distinction between debt and taxes. This group emphasizes reduction in [[Government spending|spending]] rather than tax policy or debt reduction.{{sfn|Coates|2012|p=394}} They argue that the true cost of government is the level of spending not how that spending is financed.{{sfn|Coates|2012|p=393}} Every dollar that the government spends is a dollar taken from workers, regardless of whether it is from debt or taxes. Taxes simply redistribute purchasing power; it does so in a particularly inefficient manner, reducing the incentives to produce or hire and borrowing simply forces businesses and investors to anticipate higher taxes later on.{{sfn|Coates|2012|p=394}}

== History ==
=== Classical liberalism ===

[[Classical liberalism in the United States]] forms the historical foundation for modern fiscal conservatism. Kathleen G. Donohue argues that classical liberalism in the 19th century United States was distinct from its counterpart in Britain:
<blockquote>[A]t the center of classical liberal theory [in Europe] was the idea of ''laissez-faire''. To the vast majority of American classical liberals, however, ''laissez-faire'' did not mean no government intervention at all. On the contrary, they were more than willing to see government provide tariffs, railroad subsidies, and internal improvements, all of which benefited producers. What they condemned was intervention in behalf of consumers.<ref name="donohue">{{cite book|author=Kathleen G. Donohue|title=Freedom from Want: American Liberalism and the Idea of the Consumer|url=https://books.google.com/books?id=ud7TN4Asro8C&pg=PA2|year=2005|publisher=Johns Hopkins University Press|page=2|isbn=9780801883910}}</ref></blockquote>

Economic liberalism owes its ideological creation to the [[classical liberalism]] tradition in the vein of [[Adam Smith]], [[Friedrich Hayek]], [[Milton Friedman]], [[Ayn Rand]], and [[Ludwig von Mises]].<ref name="donohue"/> They provided moral justifications for free markets. Liberals of the time, in contrast to modern ones, disliked government authority and preferred [[individualism]]. They saw free market [[capitalism]] as the preferable means of achieving economic ends.<ref name="google"/><ref name="dickerson"/>

=== Early to mid 20th century ===
In the early 20th century, fiscal conservatives were often at odds with [[Progressivism in the United States|progressives]] who desired economic reform. During the 1920s, [[Republican Party (United States)|Republican]] [[President of the United States|President]] [[Calvin Coolidge]]'s pro-business economic policies were credited for the successful period of economic growth known as the [[Roaring Twenties]]. However, his actions may have been due more to a sense of [[Federalism in the United States|federalism]] than fiscal conservatism as [[Robert Sobel]] notes: "As Governor of Massachusetts, Coolidge supported wages and hours legislation, opposed child labor, imposed economic controls during World War I, favored safety measures in factories, and even worker representation on corporate boards".<ref>{{cite web|url=http://coolidgefoundation.org/resources/essays-papers-addresses-35/|title=Coolidge and American Business|last=Sobel|first=Robert|publisher=Coolidge Foundation|year=1988|access-date=July 13, 2019|archive-date=May 12, 2016|archive-url=https://web.archive.org/web/20160512074658/https://coolidgefoundation.org/resources/essays-papers-addresses-35/|url-status=live}}</ref>

[[File:Hoover Campaign.jpg|thumb|left|[[Herbert Hoover]] addresses a large crowd in his 1932 presidential campaign.]]
Contrary to popular opinion, then-Republican President [[Herbert Hoover]] was not a fiscal conservative. He promoted government intervention during the early [[Great Depression]], a policy that his successor, [[Democratic Party (United States)|Democratic]] President [[Franklin D. Roosevelt]], continued and increased<ref>{{Cite web|date=September 29, 2011|title=Herbert Hoover: Father of the New Deal|url=https://www.cato.org/briefing-paper/herbert-hoover-father-new-deal|access-date=April 23, 2021|website=Cato Institute|language=en|archive-date=April 23, 2021|archive-url=https://web.archive.org/web/20210423164429/https://www.cato.org/briefing-paper/herbert-hoover-father-new-deal|url-status=live}}</ref> despite campaigning to the contrary.<ref>{{Cite web|title=Campaign Address on the Federal Budget at Pittsburgh, Pennsylvania {{!}} The American Presidency Project|url=https://www.presidency.ucsb.edu/documents/campaign-address-the-federal-budget-pittsburgh-pennsylvania|access-date=April 23, 2021|website=www.presidency.ucsb.edu|archive-date=September 6, 2021|archive-url=https://web.archive.org/web/20210906182548/https://www.presidency.ucsb.edu/documents/campaign-address-the-federal-budget-pittsburgh-pennsylvania|url-status=live}}</ref> Coolidge's economic policies are often popularly contrasted with the [[New Deal]] deficit spending of Roosevelt and Republican Party opposition to Roosevelt's government spending was a unifying cause for a significant caucus of Republicans through even the presidencies of [[Harry S. Truman]] and [[Dwight D. Eisenhower]]. [[Barry Goldwater]] was a famous champion of both the socially and fiscally conservative Republicans.<ref name="boyer">{{Cite book|author=Paul S. Boyer|title=The Enduring Vision: A History of the American People|url=https://books.google.com/books?id=SoR98M6c-t0C&pg=PA934|year= 2007|publisher=Cengage Learning|page=934|display-authors=etal|isbn=978-0618801596}}</ref>

In 1977, Democratic President [[Jimmy Carter]] appointed [[Alfred E. Kahn]], a professor of economics at [[Cornell University]], to be chair of the [[Civil Aeronautics Board]] (CAB). He was part of a push for [[deregulation]] of the industry, supported by leading economists, leading think tanks in Washington, a civil society coalition advocating the reform (patterned on a coalition earlier developed for the truck-and-rail-reform efforts), the head of the regulatory agency, Senate leadership, the [[Carter administration]] and even some in the airline industry. This coalition swiftly gained legislative results in 1978.<ref>{{cite book |title=Contrived Competition: Regulation and Deregulation in America |last=Vietor |first=Richard H. K. |publisher=Harvard University Press |isbn=978-0-674-43679-4 |oclc=897163998}}</ref>

The [[Airline Deregulation Act]] ([[Act of Congress|Pub.L.]] [http://legislink.org/us/pl-95-504 95–504]) was signed into law by President Carter on October 24, 1978. The main purpose of the act was to [[Airline deregulation|remove government control]] over fares, routes and market entry of new airlines from [[commercial aviation]]. The CAB's powers of regulation were to be phased out, eventually allowing market forces to determine routes and fares. The Act did not remove or diminish the [[Federal Aviation Administration]]'s regulatory powers over all aspects of airline safety.<ref>Cannon, James R.; Richey, Franklin D. (2012). ''Practical Applications in Business Aviation Management''. Government Institutes. {{ISBN|978-1605907703}}.</ref>

In 1979, Carter deregulated the American beer industry by making it legal to sell [[malt]], [[hops]] and [[yeast]] to American [[Homebrewing|home brewers]] for the first time since the effective 1920 beginning of [[Prohibition in the United States]]. This Carter deregulation led to an increase in home brewing over the 1980s and 1990s that by the 2000s had developed into a strong craft [[microbrew]] culture in the United States, with 3,418 micro breweries, brewpubs and regional craft breweries in the United States by the end of 2014.<ref>[https://www.brewersassociation.org/press-releases/small-and-independent-brewers-see-sustained-growth-in-2017/ "Small and Independent Brewers See Sustained Growth in 2017"] {{Webarchive|url=https://web.archive.org/web/20210510144507/https://www.brewersassociation.org/press-releases/small-and-independent-brewers-see-sustained-growth-in-2017/ |date=May 10, 2021 }}. Brewers Association. March 27, 2018. Retrieved February 16, 2019.</ref>

[[File:JimmyCarterPortrait2.jpg|thumb|upright|[[Jimmy Carter]], who reduced the [[debt-to-GDP ratio]] in the 1970s]]
[[List of countries by public debt|Public debt as a percentage of GDP]] fell rapidly in the post-World War II period and reached a low in 1974 under [[Richard Nixon]]. [[Debt-to-GDP ratio|Debt as a share of GDP]] has consistently increased since then, except under Carter and [[Bill Clinton]]. The [[United States national debt]] rose during the 1980s as [[Ronald Reagan]] cut tax rates and increased military spending. The numbers of public debt as a percentage of GDP are indicative of the process:<ref>{{cite web|url=https://www.usgovernmentspending.com/spending_chart_1900_2020USp_XXs2li011tcn_H0sH0lH0f_Combined_Gross_Public_Debt|title=Combined Gross Public Debt United States 1900–2020|website=US Government Spending|date=2020|access-date=June 28, 2020|archive-date=July 31, 2020|archive-url=https://web.archive.org/web/20200731170126/https://www.usgovernmentspending.com/spending_chart_1900_2020USp_XXs2li011tcn_H0sH0lH0f_Combined_Gross_Public_Debt|url-status=live}}</ref><ref>{{cite web|url=https://fred.stlouisfed.org/series/GFDEGDQ188S|title=Federal Debt: Total Public Debt as Percent of Gross Domestic Product [GFDEGDQ188S]|website=FRED, Federal Reserve Bank of St. Louis|others=Federal Reserve Bank of St. Louis and U.S. Office of Management and Budget|date=May 3, 2020|access-date=May 4, 2020|archive-date=February 20, 2017|archive-url=https://web.archive.org/web/20170220171902/https://fred.stlouisfed.org/series/GFDEGDQ188S|url-status=live}}</ref>

{{Graph:Chart|thumb=right|
 | width=400
 | height=500
 | xAxisTitle=Year
 | yAxisTitle=Public Debt (as % of GDP)
 | type=rect
 | x=1910,1920,1930,1940,1950,1960,1970,1980,1990,2000,2010,2020
 | y=7.89,29.1,17.6,49.3,85.7,53.6,35.5,31.9,53.8,54.9,90.2,107.6
}}


=== Reagan era ===
{{main|Reaganomics}}
[[File:Federal Spending by President - Carter to Obama - v1.png|thumb|left|350px|[[Ronald Reagan]] spent the most of any recent President (Carter to Obama) as measured by annual average percentage of the GDP.<ref>[https://www.cbo.gov/about/products/budget-economic-data#2 "CBO Historical Budget Data April 2018"] {{Webarchive|url=https://web.archive.org/web/20181117191924/https://www.cbo.gov/about/products/budget-economic-data#2 |date=November 17, 2018 }}. Retrieved June 25, 2018.</ref>]]
Fiscal conservatism was rhetorically promoted during the presidency of Republican [[Ronald Reagan]] (1981–1989). During Reagan's tenure, the top personal income [[tax bracket]] dropped from 70% to 28%<ref name="The Historical Lessons of Lower Tax Rates">{{cite web|url=http://www.heritage.org/Research/Taxes/BG1086.cfm|title=The Historical Lessons of Lower Tax Rates|last=Mitchell|first=Daniel J.|publisher=The Heritage Foundation|date=July 19, 1996|access-date=July 13, 2019|archive-date=May 30, 2007|archive-url=https://web.archive.org/web/20070530071923/http://www.heritage.org/Research/Taxes/BG1086.cfm|url-status=dead}}</ref> while payroll taxes and the effective tax rates on the lower two income quintiles increased.<ref>{{cite web|url=http://www.ssa.gov/OACT/ProgData/taxRates.html|title=Social Security and Medicare Tax Rates|publisher=Social Security Administration|date=July 10, 2007|access-date=July 13, 2019|archive-date=April 10, 2021|archive-url=https://web.archive.org/web/20210410234753/http://www.ssa.gov/oact/ProgData/taxRates.html|url-status=live}}</ref><ref>{{cite web|url=http://www.cbo.gov/ftpdoc.cfm?index=5324&type=0&sequence=0|title=Effective Federal Tax Rates: 1979–2001|publisher=Bureau of Economic Analysis|date=July 10, 2007|access-date=July 13, 2019|archive-date=May 9, 2007|archive-url=https://archive.today/20070509233656/http://www.cbo.gov/ftpdoc.cfm?index=5324&type=0&sequence=0|url-status=live}}</ref> Reagan cut the maximum capital gains tax from 28% to 20%, though in his second term he raised it back up to 28%. He successfully increased defense spending, but conversely liberal Democrats blocked his efforts to cut domestic spending.<ref>Steven F. Hayward, ''The Age of Reagan: The Conservative Counterrevolution 1980–1989'' (2009), p. 477.</ref> Real [[Economic growth|GDP growth]] recovered strongly after the 1982 recession, growing at an annual rate of 3.4% for the rest of his time in office.<ref name="Gross Domestic Product">{{cite web|url=https://www.bea.gov/national/xls/gdpchg.xls|title=Gross Domestic Product|publisher=Bureau of Economic Analysis|date=May 31, 2007|access-date=July 13, 2019|archive-date=August 26, 2009|archive-url=https://web.archive.org/web/20090826171407/https://www.bea.gov/national/xls/gdpchg.xls|url-status=dead}}</ref> Unemployment dropped after peaking at over 10.7% percent in 1982, and inflation decreased significantly. Federal tax receipts nearly doubled from $517 billion in 1980 to $1,032 billion in 1990. Employment grew at about the same rate as population.<ref>{{cite encyclopedia|url=http://encarta.msn.com/encyclopedia_761560259_2/Ronald_Reagan.html|title=Ronald Reagan|publisher=Microsoft Corporation|year=2007|access-date=July 27, 2007|archive-url=https://web.archive.org/web/20091028203509/http://encarta.msn.com/encyclopedia_761560259_2/Ronald_Reagan.html|archive-date=October 28, 2009|url-status=dead}}</ref>

According to a [[United States Department of the Treasury]] nonpartisan economic study, the major tax bills enacted under Reagan caused federal revenue to fall by an amount equal to roughly 1% of GDP.<ref name=taxtable>{{cite journal|url=https://www.treasury.gov/offices/tax-policy/library/ota81.pdf|title=Revenue Effects of Major Tax Bills|publisher=[[United States Department of the Treasury]]|journal=2003, Rev. Sept 2006|id=Working Paper 81, Table 2|access-date=July 13, 2019|url-status=dead|archive-url=https://web.archive.org/web/20101122024120/http://www.ustreas.gov/offices/tax-policy/library/ota81.pdf|archive-date=November 22, 2010}} [https://www.treasury.gov/resource-center/tax-policy/tax-analysis/Documents/WP-81.pdf Revised September 2006 edition] {{Webarchive|url=https://web.archive.org/web/20200225053543/https://www.treasury.gov/resource-center/tax-policy/tax-analysis/Documents/WP-81.pdf |date=February 25, 2020 }}.</ref> Although Reagan did not offset the increase in federal government spending or reduce the deficit, his accomplishments are more notable when expressed as a percent of the gross domestic product. Federal spending fell from 22.2% of the GDP to 21.2%.<ref>Chris Edwards, "Reagan's Budget Legacy," [http://www.cato.org/research/articles/edwards-040608.html ''CATO Institute'' June 8, 2004] {{webarchive|url=https://web.archive.org/web/20101206213013/http://www.cato.org/research/articles/edwards-040608.html |date=December 6, 2010 }}</ref> By the end of Reagan's second term, the national debt held by the public increased by almost 60% and the total debt equalled $2.6 trillion. In fewer than eight years, the United States went from being the world's largest creditor nation to the world's largest debtor nation.<ref>{{cite news|url=https://www.washingtonpost.com/wp-dyn/articles/A26402-2004Jun8.html|title=Reagan Policies Gave Green Light to Red Ink|newspaper=The Washington Post|date=June 9, 2004|access-date=July 13, 2019|archive-date=June 14, 2018|archive-url=https://web.archive.org/web/20180614121249/http://www.washingtonpost.com/wp-dyn/articles/A26402-2004Jun8.html|url-status=live}}</ref>

=== Ross Perot ===
{{main|1992 Ross Perot presidential campaign}}
In the 1992 presidential election, [[Ross Perot]], a successful American businessman, ran as a third-party candidate. Despite significant campaign stumbles and the uphill struggles involved in mounting a third-party candidacy, Perot received 18.9% of the popular vote (the largest percentage of any third-party candidate in modern history), largely on the basis of his central platform plank of limited-government, balanced-budget fiscal conservatism.<ref>{{cite book|last1=Rapoport|first1=Ronald B.|last2=Stone|first2=Walter J.|title=Three's a Crowd: The Dynamic of Third Parties, Ross Perot, and Republican Resurgence|date=December 21, 2007|publisher=University of Michigan Press|isbn=978-0-472-03099-6}}</ref>

=== Clinton era ===
{{main|Clintonomics}}
[[File:Average US Federal Tax Rates 1979 to 2013.png|thumb|350px|This table shows that [[Bill Clinton]]'s [[Omnibus Budget Reconciliation Act of 1993]] which increased the average federal tax rates for the top 1% while lowering average tax rates for the middle class was followed by President [[Barack Obama]] starting in 2013 through the partial expiration of the [[Bush tax cuts]] and that both tax increases lowered deficits relative to [[Congressional Budget Office]] policy baselines without them.]]
While the mantle of fiscal conservatism is most commonly claimed by [[Republican Party (United States)|Republicans]] and [[Libertarianism in the United States|libertarians]], it is also claimed in some ways by many [[Democratic Party (United States)#Centrists|centrist]] or [[Factions in the Democratic Party (United States)#Moderate Democrats|moderate]] [[Democratic Party (United States)|Democrats]] who often refer to themselves as [[New Democrats (United States)|New Democrats]]. Although not supportive of the wide range tax cut policies that were often enacted during the Reagan and Bush administrations,<ref>{{cite news|url=https://www.chicagotribune.com/1993/07/22/clinton-wont-restore-punitive-taxation-not-today/|title=Clinton Won't Restore Punitive Taxation-not Today|last=Chapman|first=Stephen|newspaper=Chicago Tribune|date=July 22, 1993|access-date=July 13, 2019|archive-date=March 28, 2014|archive-url=https://web.archive.org/web/20140328231554/http://articles.chicagotribune.com/1993-07-22/news/9307220038_1_income-tax-rolls-tax-code-top-rate|url-status=live}}</ref><ref name="ippqvab">{{cite news|url=https://newrepublic.com/article/108724/brief-history-trickle-down-government|title=A Brief History Of "Trickle-Down Government"|last=Nolan|first=Timothy|newspaper=The Christian Science Monitor|date=October 17, 2012|access-date=July 13, 2019|archive-date=May 2, 2021|archive-url=https://web.archive.org/web/20210502070641/https://newrepublic.com/article/108724/brief-history-trickle-down-government|url-status=live}}</ref> the New Democrat coalition's primary economic agenda differed from the traditional philosophy held by liberal Democrats and sided with the fiscal conservative belief that a balanced federal budget should take precedence over some spending programs.<ref name="ippqvab"/>

Former President [[Bill Clinton]], who was a New Democrat and part of the somewhat fiscally conservative [[Third Way]] advocating [[Democratic Leadership Council]], is a prime example of this as his administration along with the Democratic-majority congress of 1993 passed on a party-line vote the [[Omnibus Budget Reconciliation Act of 1993]] which cut government spending, created a 36% individual income tax bracket, raised the top tax bracket which encompassed the top 1.2% earning taxpayers from 31% to 39.6% and created a 35% income tax rate for corporations.<ref name="Bill Clinton's economic legacy">{{cite news|url=http://news.bbc.co.uk/2/hi/business/1110165.stm|title=Bill Clinton's economic legacy|author=Steve Schifferes|agency=BBC News|location=London|date=January 15, 2001|access-date=July 13, 2019|archive-date=February 8, 2019|archive-url=https://web.archive.org/web/20190208023756/http://news.bbc.co.uk/2/hi/business/1110165.stm|url-status=live}}</ref> The 1993 Budget Act also cut taxes for fifteen million low-income families and 90% of small businesses. Additionally during the Clinton years, the [[PAYGO]] (pay-as-you-go) system originally introduced with the passing of the [[Budget Enforcement Act of 1990]] (which required that all increases in direct spending or revenue decreases be offset by other spending decreases or revenue increases and was very popular with [[deficit hawk]]s) had gone into effect and was used regularly until the system's expiration in 2002.<ref name="troy">{{cite book |last1=Troy |first1=Gil |title=The Age of Clinton: America in the 1990s |date=2015 |publisher=Thomas Dunne Books |isbn=9781250063724}}</ref>

In the [[1994 United States elections|1994 midterm elections]], Republicans ran on a platform that included fiscal responsibility drafted by then-Congressman [[Newt Gingrich]] called the [[Contract with America]] which advocated such things as balancing the budget, providing the President with a [[line-item veto]] and [[Personal Responsibility and Work Opportunity Act|welfare reform]]. After the [[Republican Revolution|elections]] gave the Republicans a majority in the [[United States House of Representatives|House of Representatives]], newly minted [[Speaker of the United States House of Representatives|Speaker of the House]] Gingrich pushed aggressively for reduced government spending which created a confrontation with the White House that climaxed in the [[United States federal government shutdown of 1995 and 1996|1995–1996 government shutdown]]. After Clinton's re-election in 1996, they were able to cooperate and pass the [[Taxpayer Relief Act of 1997]] which lowered the top [[capital gains tax]] rate from 28% to 20% and the 15% rate to 10%.<ref name="troy"/>

After this combination of tax hikes and spending reductions, the United States was able to create [[budget surplus]]es from fiscal years 1998–2001 (the first time since 1969) and the longest period of sustained [[economic growth]] in United States history.<ref name="President Clinton announces another record budget surplus">{{cite news|url=https://edition.cnn.com/2000/ALLPOLITICS/stories/09/27/clinton.surplus/|title=President Clinton announces another record budget surplus|last=Wallace|first=Kelly|agency=CNN|date=September 27, 2000|access-date=July 13, 2019|archive-date=October 13, 2021|archive-url=https://web.archive.org/web/20211013021228/http://edition.cnn.com/2000/ALLPOLITICS/stories/09/27/clinton.surplus/|url-status=live}}</ref><ref name="Clinton announces record payment on national debt">{{cite news|url=https://edition.cnn.com/2000/ALLPOLITICS/stories/09/27/clinton.surplus/|title=President Clinton announces record payment on national debt|last=King|first=John|agency=CNN|date=May 1, 2000|access-date=July 13, 2019|archive-date=October 13, 2021|archive-url=https://web.archive.org/web/20211013021228/http://edition.cnn.com/2000/ALLPOLITICS/stories/09/27/clinton.surplus/|url-status=live}}</ref><ref>{{cite web|url=http://www.factcheck.org/2008/02/the-budget-and-deficit-under-clinton|title=The Budget and Deficit Under Clinton|last=Jackson|first=Brooks|website=FactCheck|date=February 3, 2008|access-date=July 13, 2019|archive-date=December 7, 2021|archive-url=https://web.archive.org/web/20211207044258/https://www.factcheck.org/2008/02/the-budget-and-deficit-under-clinton/|url-status=live}}</ref>

=== Modern fiscal conservatism ===
[[File:CBO Forecast Comparison - Obama and GW Bush - v1.png|thumb|450px|Comparison of annual federal deficits (CBO 10-year forecast from prior to inauguration vs. the actual amount) during the Obama and Bush presidencies showcasing how [[George W. Bush]] added far more to the debt relative to the CBO 2001 forecast than Obama added relative to the CBO 2009 forecast]]
American businessman, politician and former [[Mayor of New York City]] [[Michael Bloomberg]] considers himself a fiscal conservative and expressed his definition of the term at the 2007 [[Conservative Party (UK)|British Conservative Party]] Conference, stating:
<blockquote>To me, fiscal conservatism means balancing budgets – not running deficits that the next generation can't afford. It means improving the efficiency of delivering services by finding innovative ways to do more with less. It means cutting taxes when possible and prudent to do so, raising them overall only when necessary to balance the budget, and only in combination with spending cuts. It means when you run a surplus, you save it; you don't squander it. And most importantly, being a fiscal conservative means preparing for the inevitable economic downturns – and by all indications, we've got one coming.<ref name="Mayor Bloomberg Delivers Remarks At 2007 Conservative Party Conference">{{cite web|url=http://www.nyc.gov/portal/site/nycgov/menuitem.c0935b9a57bb4ef3daf2f1c701c789a0/index.jsp?pageID=mayor_press_release&catID=1194&doc_name=http%3A%2F%2Fwww.nyc.gov%2Fhtml%2Fom%2Fhtml%2F2007b%2Fpr348-07.html&cc=unused1978&rc=1194&ndi=1|title=Mayor Bloomberg Delivers Remarks At 2007 Conservative Party Conference|publisher=New York City Government|date=September 30, 2007|access-date=July 13, 2019|archive-date=December 14, 2012|archive-url=https://archive.today/20121214013429/http://www.nyc.gov/portal/site/nycgov/menuitem.c0935b9a57bb4ef3daf2f1c701c789a0/index.jsp?pageID=mayor_press_release&catID=1194&doc_name=http://www.nyc.gov/html/om/html/2007b/pr348-07.html&cc=unused1978&rc=1194&ndi=1|url-status=dead}}</ref></blockquote>

While the term "fiscal conservatism" would imply budget deficits would be lower under conservatives (i.e., Republicans), this has not historically been the case. Economists [[Alan Blinder]] and Mark Watson [[U.S. economic performance under Democratic and Republican presidents|reported]] in 2016 that budget deficits since WW2 tended to be smaller under Democratic Party presidents, at 2.1% potential GDP versus 2.8% potential GDP for Republican presidents, a difference of about 0.7% GDP. They wrote that higher budget deficits should theoretically have boosted the economy more for Republicans, and therefore cannot explain the greater GDP growth under Democrats.<ref name="Blinder_Watson_2016">{{cite journal|title=Presidents and the U.S. Economy: An Econometric Exploration |date=April 2016|doi=10.1257/aer.20140913 |last1=Blinder |first1=Alan S. |last2=Watson |first2=Mark W. |journal=American Economic Review |volume=106 |issue=4 |pages=1015–1045 |s2cid=32188412 |doi-access=free }}</ref>

== Rest of the world ==
As a result of the expansion of the welfare state and increased regulatory policies by the Roosevelt administration beginning in the 1930s, in the United States the term liberalism has today become associated with modern rather than classical liberalism.{{sfn|Fujii|2013|p=541}} In Western Europe, the expanded welfare states created after World War II were created by [[socialist]] or [[social-democratic]] parties such as the British [[Labour Party (UK)|Labour Party]] rather than liberal parties.{{sfn|Fujii|2013|p=541}} Many liberal parties in Western Europe tend to adhere to [[classical liberalism]], with the [[Free Democratic Party (Germany)|Free Democratic Party]] in Germany being one example.{{sfn|Fujii|2013|p=541}} The [[Liberal Democrats (UK)|Liberal Democrats]] in the United Kingdom have a [[Orange Book liberalism|classical liberal]] and a [[social liberal]] wing of the party. In many countries, [[liberalism]] or [[economic liberalism]] is used to describe what Americans call fiscal conservatism.{{sfn|Johnston|2011|p=210}}{{sfn|Fujii|2013|p=541}}{{sfn|Fujii|2013|p=542}}

Fiscal conservatism in the United Kingdom was arguably most popular during the premiership of [[Conservative Party (UK)|Conservative]] [[Margaret Thatcher]]. After a number of years of deficit spending under the previous Labour government, Thatcher advocated spending cuts and selective tax increases to balance the budget. As a result of the deterioration in the United Kingdom's public finances—according to fiscal conservatives caused by another spate of deficit spending under the previous Labour government, the [[late-2000s recession]] and by the [[European sovereign debt crisis]]—the [[Cameron–Clegg coalition]] (Conservative–Liberal Democrats) embarked on an [[United Kingdom government austerity programme|austerity programme]] featuring a combination of spending cuts and tax rises in an attempt to halve the [[Government budget deficit|deficit]] and eliminate the [[structural deficit]] over the five-year parliament.<ref name="Rice 2010">{{cite web|url=http://www.fundstrategy.co.uk/markets/britain/budget-structural-deficit-to-be-balanced-by-2015/1013834.article|title=Budget: Structural deficit to be balanced by 2015|last=Rice|first=Nick|publisher=Fund Strategy|date=June 22, 2010|access-date=November 22, 2010|archive-url=https://web.archive.org/web/20100713000832/http://www.fundstrategy.co.uk/markets/britain/budget-structural-deficit-to-be-balanced-by-2015/1013834.article|archive-date=July 13, 2010|url-status=dead}}</ref>

In Canada, the rise of the socialist [[Co-operative Commonwealth Federation]] pushed the [[Liberal Party of Canada|Liberal Party]] to create and expand the welfare state before and after World War II.{{sfn|Fujii|2013|p=541}} Fiscal conservatism in Canada is generally referred to as [[blue Toryism]] when it is present within the [[Conservative Party of Canada]].<ref name="wolak">{{cite book|title=The Development of Managerial Culture: A Comparative Study of Australia and Canada|first=Arthur|last=Wolak|publisher=Springer|year=2014|page=199}}</ref> In Alberta, fiscal conservatism is represented by the [[United Conservative Party]].<ref>{{cite news|url=http://nationalpost.com/news/canada/alberta-election-pits-pcs-red-versus-wildroses-blue-conservatives-experts-say|title=Alberta election pits PC's 'red' versus Wildrose's 'blue' conservatives, experts say|last=Kleiss|first=Karen|newspaper=National Post|date=April 9, 2012|access-date=July 13, 2019}}</ref> In Ontario, fiscal conservatism is represented by the [[Progressive Conservative Party of Ontario]].<ref name="wolak"/>

The term is sometimes used in South Korea, where left-liberal [[Democratic Party (South Korea, 2015)|Democratic Party of Korea]] (DPK) and conservative [[People Power Party (South Korea)|People Power Party]] (PPP) are the two main parties.<ref>{{Cite web|url=https://www.khan.co.kr/economy/economy-general/article/202208011629011 |title=전 정부 '확장재정'은 착시?···코로나19 일시 지출 빼면 이미 윤 정부 건전성 목표 달성 |quote=전문가들은 국가재정이 보수, 진보 정권 할 것 없이 관료 주도로 보수적으로 운용해 왔다고 지적했다. 하준경 한양대 경제학부 교수는 “정권마다 접근법의 차이가 있어도 기본적으로 기획재정부 주도의 '''재정 보수주의'''가 국내 재정 정책을 지배해왔다”며 “코로나19 대응과 물가 상승 상황에서의 취약 계층 지원, 기술 패권 경쟁에 따른 정부의 역할 확대 등을 고려하면 긴축재정은 시대적 과제에 대응하기 어렵다”고 말했다. |work=[[Kyunghyang Shinmun]]|date=1 August 2022}}</ref> Fiscal conservatism is mainly represented by PPP.<ref>{{Cite web|url=https://www.france24.com/en/asia-pacific/20220309-south-korea-votes-in-presidential-election-with-inequality-key-concern |title=South Korea votes in presidential election with inequality key concern |quote=The two parties are ideologically poles apart, and analysts say the key question is whether voters will kick out Moon's dovish Democratic Party and usher in a new hawkish, fiscally-conservative regime under opposition People Power party's Yoon. |work=[[France 24]]|date=9 September 2022}}</ref> South Korea's current president, [[Yoon Suk-yeol]], is known as a "fiscal conservative".<ref>{{Cite web|url=https://www.thejakartapost.com/business/2022/05/27/samsung-commits-356-billion-in-investments-with-80000-new-jobs.html |title=Samsung commits $356 billion in investments with 80,000 new jobs |quote=The two parties are ideologically poles apart, and analysts say the key question is whether voters will kick out Moon's dovish Democratic Party and usher in a new hawkish, fiscally-conservative regime under opposition People Power party's Yoon. |work=[[The Jakarta Post]]|date=27 May 2022}}</ref>

== See also ==
{{cols|colwidth=21em}}
* {{annotated link|Balance of payments}}
* {{annotated link|Balance of trade}}
* {{annotated link|Capitalism}}
* {{annotated link|Citizens Against Government Waste}}
* {{annotated link|Classical liberalism}}
* {{annotated link|Concord Coalition}}
* {{annotated link|Criticism of welfare}}
* {{annotated link|Economic freedom}}
* {{annotated link|Economic liberalism}}
* {{annotated link|Market economy}}
* {{annotated link|Minarchism}}
* {{annotated link|Republican Main Street Partnership}}
* {{annotated link|Right-wing politics}}
* {{annotated link|Trickle-down economics}}
{{colend}}

== Notes ==
{{reflist}}

== References ==
* {{cite book|last=Clark|first=Barry Stewart|year=1998|title=Political Economy: A Comparative Approach|publisher=Greenwood Publishing Group|isbn=0-275-95869-8}}
* {{cite book|last=Coates|first=David|year=2012|title=The Oxford Companion to American Politics|volume=2|publisher=Oxford University Press|isbn=978-0-19-976431-0}}
* {{cite book|last1=Farney|first1=James|last2=Rayside|first2=David|year=2013|title=Conservatism in Canada|chapter=Introduction: The Meanings of Conservatism|publisher=University of Toronto Press|isbn=978-1-442-61456-7}}
* {{cite book|last=Fujii|first=George|year=2013|chapter=Liberalism|title=Encyclopedia of the Cold War|publisher=Routledge|isbn=978-1-135-92311-2}}
*{{cite book|last1=Ghosh|first1=Peter|editor=Lawrence Goldman|year=2006|title=Politics and Culture in Victorian Britain: Essays in Memory of Colin Matthew|url=https://books.google.com/books?id=f6Kne2lSRrgC&dq=Economic+liberalism+%22fiscal+liberalism%22&pg=PA56 |quote=Hence the emphasis today on the study of political economy, and the identification of Gladstone with 'fiscal liberalism', defined above all as the liberalism of free trade.|publisher=OUP Oxford|isbn=9780191514449}}
* {{cite book|last1=Lloyd|first1=Gordon|last2=Davenport|first2=David|year=2013|title=The New Deal & Modern American Conservatism: A Defining Rivalry|publisher=Hoover Press|isbn=978-0-817-91686-2}}
* {{cite book|last=Grigsby|first=Ellen|year=2004|title=Analyzing Politics|publisher=Cengage Learning|isbn=0-534-63077-4}}
* {{cite book|last=Johnston|first=Larry|year=2011|title=Politics: An Introduction to the Modern Democratic State|publisher=University of Toronto Press|isbn=978-1-4426-0533-6|url-access=registration|url=https://archive.org/details/politicsintroduc0000john_l7q9}}

== Further reading ==
{{refbegin|40em}}
* Barber, William J. (1985). ''From New Era to New Deal: Herbert Hoover, the Economists, and American Economic Policy''. Cambridge University Press.
* Beito, David (1989). ''Taxpayers in Revolt: Tax Resistance During the Great Depression.'' University of North Carolina Press.
* Brownlee, W. Elliot (1996). ''Federal Taxation in America: A Short History.'' Cambridge University Press.
* {{cite journal|url=https://www.cambridge.org/core/journals/comparative-studies-in-society-and-history/article/rise-of-conservative-capitalism-ideological-tensions-within-the-reagan-and-thatcher-governments/F8239494F0A42F3FE1191D3B4125F0C8|title=The Rise of Conservative Capitalism: Ideological Tensions within the Reagan and Thatcher Governments|first=Hoover|last=Kenneth R.|date=April 1987|journal=Comparative Studies in Society and History|publisher=Cambridge University Press|volume=29|issue=2|pages=245–268|doi=10.1017/S0010417500014493|s2cid=145076916|access-date=February 24, 2020|archive-date=April 3, 2020|archive-url=https://web.archive.org/web/20200403153515/https://www.cambridge.org/core/journals/comparative-studies-in-society-and-history/article/rise-of-conservative-capitalism-ideological-tensions-within-the-reagan-and-thatcher-governments/F8239494F0A42F3FE1191D3B4125F0C8|url-status=live}}
* Kimmel, Lewis (1959). ''Federal Budget and Fiscal Policy, 1789–1958''. Brookings Institution Press.
* Left, Mark (September 1983). "Taxing the "forgotten man": The politics of Social Security finance in the New Deal". ''Journal of American History''. 70: 359–81. Online in JSTOR.
* Morgan, Iwan W. (1995) ''Deficit Government: Taxing and Spending in Modern America''. Ivan Dee.
* Sargent, James E. (Winter 1980) "Roosevelt's Economy Act: Fiscal conservatism and the early New Deal". ''Congressional Studies''. 7: 33–51.
* Savage, James D. (1988) ''Balanced Budgets and American Politics.'' Cornell University Press.
* Herbert Stein (1994). ''Presidential Economics, 3rd Edition: The Making of Economic Policy From Roosevelt to Clinton''.
* Julian E. Zelizer (2000). "The Forgotten Legacy of the New Deal: Fiscal Conservatism and the Roosevelt Administration, 1933–1938". ''Presidential Studies Quarterly''. '''30''' (2): pp.&nbsp;331. [https://web.archive.org/web/20071018165457/http://www.questia.com/PM.qst?a=o&d=5001752830 Online].
{{refend}}

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