ABSTRACT
On the whole, major political parties, even less than people, are loath to commit suicide.
Yet, after a decade of economic difficulties, the Democrats tried to win an election by promising to raise taxes! After the New Deal and the Fair Deal, after the New Frontier
and the Great Society-they offered the Balanced Budget! Previously liberals had argued
that deficits mattered very little, certainly less than full employment, social justice or rapid growth. Even President Nixon learned the lesson well enough to expand the
economy before the election of 1972, and he was willing to use controls to prevent
inflation getting out of hand. By 1984, or even earlier, everyone favored austerity and cutbacks. What led liberals to adopt a policy stance that was a proven loser? And how did
public opinion go from Nixon’s position to a widespread agreement that Keynesian
economics is outmoded, passé, if not just plain mistaken?
