The political spectrum of liberals versus conservatives dominates the categorization of political ideology, even though, as many have pointed out, is not entirely accurate because one can be liberal on some issues and conservative on others. In particular, one can be conservative economically by favoring lower taxes, smaller government and free markets or liberal, favoring taxes on the rich, government social services and corporate oversight. One can be socially conservative, opposing abortion, stem cell research and homosexuality or socially liberal, opposing government intervention in personal affairs.

Image Credit: Jasper Golangco

This distinction is also a poor descriptor of political parties. Everyone knows that Democrats are liberals and Republicans are conservative, but there are some groups, like Libertarians, who are economically conservative and socially liberal, and populists, who are economically liberal and socially conservative.

In general, both economic, or fiscal, conservatives and social conservatives have voted Republican in recent years. For social conservatives, this make sense. The positions of the Republican Party are in line with their views on abortion, stem cells, prayer in school and a variety of other issues. Fiscal conservatives stress the importance of government discipline in spending, low taxes, low federal debt and policies that promote economic prosperity.

So why are they voting Republican?

Democratic President Bill Clinton inherited a large federal deficit, 4.7 percent of GDP, in 1993. By the end of his eight years in office, the deficit had been converted into a budget surplus of 2.4 percent. Although Democrats are reputed to be scions of large government and tax-and-spend policies, the federal budget was actually reduced from 22.2 percent of GDP in 1992 to 18.4 percent in 2000.

Entitlement spending fell, free trade was promoted, unemployment fell, and inflation was slowed. Say what you will about Clinton, but the economy clearly prospered while he was in office.

On the other hand, President George W. Bush has not had the same economic success enjoyed by his predecessor. Bush, the supposed fiscal conservative, increased federal spending, largely because of the wars in Iraq and Afghanistan. Total government spending grew by 33 percent in his first term, making him the biggest spending president since Lyndon Johnson.

Since 2001, the private sector has lost 3.3 million jobs, making Bush the first president to lose jobs since Herbert Hoover. The national debt has increased by $2.78 trillion to a total of $9.5 trillion. The 2009 budget is projected to have a budget deficit of $482 billion. This comes after Clinton left a budget surplus of $128 billion!

After looking at the data, it is hard to deny that Clinton acted more in accordance with the principles of fiscal conservatism than Bush. Clinton balanced the budget, reduced the debt, reduced spending and left the government with a surplus, all things that fiscal conservatives advocate. On the other hand, Bush increased spending and the debt, and he is leaving a nearly $500 billion deficit for his successor.

Fiscal conservative, indeed.

Of course, these leaders have had their time in office. Perhaps the next president will return to the stereotype of Democrat as big spender or Republican as fiscal conservative.

Presidential candidates are not always clear about specifics in their economic policies. They have a tendency to promise to lower taxes, balance the budget and increase spending on whatever programs appeal to the audience they’re in front of. That said, here is the rough outline of what Sens. Barack Obama and John McCain plan to do if they reach the White House.

Both men promise to cut taxes (of course). Under Obama’s plan, there would be a tax increase of 11.5 percent for earners of more than $2.87 million per year (not my bracket) and an increase of 8.7 percent on earners of more than $600,000 (still not me). On the other hand, 60 percent of Americans would receive a tax cut, with the largest reductions going to those in the middle class.

McCain’s plan continues the Bush policy of tax cuts for the wealthy while providing no relief for the middle class. Earners of more than $2.87 million a year would get a reduction of 4.4 percent while the 60 percent of Americans earning between $19,000 and $66,000 would get almost no reduction at all. The results are summarized in this chart:

Now let’s compare the tax rates to the rates under Presidents Clinton and Bush 43. Under Bush in 2008, the highest tax bracket was 35 percent, for incomes above $357,700. The middle-class rate, from $32,500 to $78,000 was 25 percent for a single earner. Under Clinton in 1998, the highest bracket was 39.6 percent for earners of more than $278,450, and the middle-class rate was 28 percent, from $25,000 to $61,000.

As a comparison, in 1978, anyone making more than $108,000 paid 70 percent in tax, and even someone making $30,000 a year paid 44 percent in tax.

So here’s the point. Obama would raise the upper tax brackets above what they were in the Clinton years, but make taxes on the middle class lower. McCain would provide even more tax cuts to the rich while leaving everyday Americans to shoulder the fiscal burden of the government’s spending.

According to journalist Ezra Klein, 46 percent of the deficit was due to loss in revenue from tax cuts (and another 37 percent by military spending). He calculates his numbers based on budget projections, which can be inaccurate, but even if the numbers aren’t exact, they still show that the bulk of our massive federal deficit is due to a pair of Bush policies that John McCain supports. Klein’s calculations can be seen in this chart below:

According to Obama economic advisers Furman and Goolsbee, “[t]he McCain plan represents Bush economics on steroids. It has $3.4 trillion more in tax cuts than Bush is proposing, largely directed at corporations and the most affluent.”

The main theory behind fiscal conservativism is being fiscally responsible. Republicans often attack Democrats for spending more than they can afford on government programs, yet now it is the Republicans who are spending the nation into a recession. Cutting taxes is important, but so is balancing the budget and limiting federal spending.

President Clinton followed fiscally conservative policy when he balanced the budget and reduced federal spending during the 1990s. President Bush 43 squandered the economic surplus through irresponsible tax cuts and overblown federal spending.

Obama’s plan harkens back to the prosperous days of President Clinton, while reducing taxes on the hard-working Americans of the middle class.

McCain’s plan is a continuation of Bush’s disastrous economic management, which has increased the deficit and contributed to this country’s recession.

For fiscal conservatives, who for years have voted Republican in hopes of smaller government and responsible economic policy, now might be the time to closely examine the data of the last 16 years and consider making a switch to the more fiscally responsible party. Which, as it turns out, is the Democratic Party.