When the Treasury becomes a campaign chest

National Review this week describes what it calls 'Trump's Midterm Bribery' — the apparent deployment of public resources timed, whether by design or happy coincidence, to the approach of the midterm elections. I will not pretend to remember the precise measures involved, as the details lie beyond my era. But the phenomenon itself is as old as representative government, and the economic questions it raises are neither new nor trivial.

Let me first grant the rational case against my proceeding at all. One might argue that the timing of fiscal action is purely a political matter — that economists should confine themselves to the question of whether the spending is well-designed, and leave the motives to the moralists and the lawyers. There is something to that. A well-targeted transfer to a household under genuine income stress is stimulative whether it arrives in October or in March. The multiplier does not ask why the cheque was signed.

And yet the motive matters enormously for the structure of the spending. Expenditure designed to win votes in the short run tends to be front-loaded, visible, and diffuse — a little to everyone who might waver, concentrated in the weeks before the ballot. What it is rarely designed to be is efficient. Public investment in infrastructure, in skills, in the productive capacity of the economy, is unglamorous precisely because its benefits arrive slowly and spread widely. Political bribery, by contrast, must be felt before the polls close. The result is a systematic bias toward transfers over investment — toward consumption today at the expense of capacity tomorrow. This is, I would suggest, almost the opposite of what a slump-prone economy most requires.

There is a deeper issue here, one I came to appreciate in my own time watching governments spend lavishly on the wrong things for the right electoral reasons. When the public loses confidence that fiscal policy is a tool of macroeconomic management rather than of political management, the legitimacy of the entire instrument is corroded. The next government that genuinely needs to deploy deficit spending to sustain demand in a downturn will find itself disbelieved — its stimulus read as patronage, its borrowing dismissed as indulgence. The political misuse of fiscal capacity today is, in this sense, an investment in fiscal paralysis tomorrow. That is a price far higher than any single election's worth of transfers.

National Review also flags the twenty-fifth anniversary of 11 September, which I note with the gravity it deserves. I have no special standing to speak on the security decisions that followed — those details are far beyond my era. But I will observe, as one who watched the economic consequences of Versailles shape the political catastrophes of the 1930s, that political settlements made under the pressure of emergency and grief are rarely the settlements their authors would choose in calmer hours. The long-run costs of short-run decisions, whether in reparations or in emergency legislation, have a way of arriving precisely when they are least affordable. That is inference on my part, not recollection; but it is the inference that my entire body of work was designed to support.

The durable lesson, then, is this: fiscal policy is too powerful and too consequential to be left to the electoral calendar. Independent scrutiny — from a legislature, from a budget office, from the public press — is not a constraint on good government. It is good government. A state that can spend wisely when the economy demands it must first demonstrate, over many years, that it does not spend foolishly when the ballot demands it. That credibility, once spent, is harder to rebuild than any deficit.