On fiscal policy, we need to keep spending growth below economic growth. Doing so would ensure that the tax base keeps pace with demands on the public purse. If we follow this rule, debt as a share of GDP will fall over time. We don’t need to necessarily balance the budget right away to get back to a sustainable fiscal trajectory. Except during a national emergency, such as the early part of the pandemic, it should be much harder for Congress to ratchet up spending.
On the monetary side, we need to narrow the Fed’s mandate to price stability alone and impose penalties when central bankers goof. Monetary policymakers can’t achieve full employment except by keeping the dollar’s purchasing power predictable, so there’s no need for an employment component in the mandate. Repeated bungling by Fed officials should come with professional consequences.
But if there is anything especially distinctive about American conservatism, it is the emphasis on the ongoing genius of the constellation of ideas that came together at the American founding — something that produced a political economy that emphasized free enterprise, dynamic competition, and trade at home and abroad. Michael Novak’s posthumous challenge to market-skeptic conservatives is to demonstrate how they reconcile their economic views with the broad economic ideal that emerged from the American founding, and what that means for their identity as American conservatives.