It is important to understand that the no-deficit rule was a sharp break with tradition. In the postwar years, many economists argued that you did not need to be in the black every year, as long as budgets were balanced over the course of the economic cycle, so that deficits during slumps would be paid off with surpluses in good years. Whatever the economic rationale for that approach, it didn\’t work in the real world of politicians. Once you break the spell–once governments find that they can get away with borrowing instead of taxing to pay the bills–it is almost impossibly tempting for politicians to do it again and again until the debt is out of control.
That \”balance over the economic cycle\” never happened, did it?
For the simple political pressure is to keep spending, to not do the 50% of the Keynesian prescription, which is to run a budget surplus in the good times.
A theory of economic governance which only works 50% of the time for such political reasons isn\’t all that much good to us really. Sure, it\’s better than one which works 0% of the time but shouldn\’t we carry on and find one which works 100% of the time?