In the beginning, the world was very simple in the public mind: Liberals were for government—borrowing as needed—and conservatives were for what they called “fiscal responsibility.” Ronald Reagan, of course, said it most memorably, in 1981 in his first inaugural address: “You and I, as individuals, can, by borrowing, live beyond our means, but for only a limited period of time. Why, then, should we think that collectively, as a nation, we are not bound by that same limitation?” The answer is that a better metaphor for the government deficit is that of a corporation. A corporation can indeed borrow indefinitely, regularly rolling over its debts and in fact borrowing more each year. That’s provided that the corporation is using the money for productive investments that will generate enough profits to pay the money back—even if the corporation never actually has to do this.

Some people say, using this analogy, that it’s fine for the government to borrow indefinitely, too, as long as it’s making public investments at the same time: bridges and highways, medical research, anything that is costly today but will pay off in the long run. There are two problems with this way of thinking, however. First, almost anything can be portrayed as an investment, not an expenditure. Health care? Education? Second, these may be real investments for society, which pay off more than they cost, but the payoff almost never comes back to the government.

In fact, the whole question posed by Reagan in 1981 is highly theoretical, because Reagan famously did nothing to reduce the amount the government was borrowing. In fact, he raised government borrowing to what were then historically high levels. Like “impressionism” in the art world, “Reaganomics” at first was a term of ridicule. As the ’80s boom continued, it began to be taken seriously to mean, roughly, “I don’t know how the hell he does it, but it seems to be working.” For many years, Republicans just lived with the contradictions: babbling about borrowing and the dangers of debt, while running up a giant tab. The only president during this period to show fiscal responsibility was Bill Clinton, a Democrat, who ran several years of surplus. The monuments to deficit spending during these years include Secretary of Defense Caspar Weinberger’s defense buildup, two Gulf wars by two sequential Presidents Bush, and Bush II’s prescription drug benefit, tacked onto Medicare with no provision to pay for it.

Then early in the term of Bush II, a strange thing happened. Republicans stopped talking about fiscal responsibility and balanced budgets. In fact, they more than stopped talking about it: They openly ridiculed the idea. They called it “Rubinomics,” in dishonor of Clinton’s treasury secretary. They called it a “fixation.” They ridiculed it as “nonsense.” Vice President Dick Cheney said point-blank, “Deficits don’t matter.” Or at least they shouldn’t be allowed to spoil the fun in Iraq.

Illustration by Jim Stoten

But then in 2008, when President Barack Obama took over from Bush the Younger, the parties switched roles once again. Needing a large deficit to stimulate a dead economy back to life, the Democrats started saying “deficits don’t matter,” while Republicans re-donned the robes of fiscal responsibility, which they’d done nothing to earn. It’s an irony, as well as a great pity, that Republicans are now, once again, thought of as the party that wants to stop the other party from raiding your wallet. “Austerity” is the word we use now, and the faces of austerity are folks like Mitch McConnell and Paul Ryan. Democrats, meanwhile, have returned to their public image as “big spenders.” So in the public mind, Democrats are the big spenders and Republicans are the penny-pinchers, even though there is no factual basis for either conclusion. This is unfortunate, if you’re a Democrat, because this particular insincerity comes closer to the Republican view of things than the Democratic one.

Austerity was set back earlier this month when three economists at UMass Amherst found flaws in a spreadsheet published several years ago by two professors at Harvard. This spreadsheet, and the accompanying article, had been quite influential because it appeared to demonstrate that the government’s debts start to hurt the economy when they reach a “tipping point” of 90 percent of GDP.

Ever since the beginning of the last (current?) financial crisis, economists and other policy types have been debating whether the proper response is a big, Keynesian-style boost in government spending or “austerity” to reduce the risk of terrible things happening if governments start going bankrupt. The correct answer is also an impossible one: We need to do both. But since we can’t do both, we have to choose some combination or sequential use of stimulus followed by austerity—there really is remarkable agreement about this, despite the bitterness of the debate—and the question is, how much of each? It would be bad sportsmanship for people who have more or less taken the austerity view of things to say now that the question of whether or not there is a “tipping point” at 90 percent of GDP is not very interesting or important (though that, I think, is the truth). They were happy enough to cite this study before it was discredited. Let Paul Krugman (captain of the anti-austerity team) have his victory lap.

But the discrediting of this one study does not invalidate questions like, “So why have taxes at all if the deficit can be as large as we wish with no ill effects?” And: “Can it really be true that the solution to the problem of debt is ‘hair of the dog’? That is, more debt? It can’t be that easy, can it?” And: “If running up the deficit even higher is such an obviously terrible idea, why are all these people for it? Krugman explains (often) the harm austerity is doing to working folks. But what is in it for the plutocrats who support it?” These used to be questions for Republicans. Now they’re questions for Democrats again.