Red Ink: Inside the High-Stakes Polities of the Federal Budget.

• Author: Mitchell, Daniel J.
• Position: Book review

Red Ink: Inside the High-Stakes Polities of the Federal Budget

David Wessel

New York: Crown Business, 2012, 224 pp.

If you want a primer on fiscal policy issues that gives you an establishment perspective, David Wessel's Red Ink should be your cup of tea. If you thought the 1990 budget deal was a good thing and if you want something similar today, you should read Red Ink to have your views reinforced.

But if you want to understand anything about the economics of fiscal policy, and you get irked by mistakes that conveniently promote a more statist narrative, then you probably shouldn't read the book.

Let's start with the good news. Red Ink is very readable, logically organized, and it includes numerous interesting vignettes (I didn't realize that the social disaster we call Prohibition was made possible in the 1920s only because the economic disaster we call the income tax was imposed in 1913).

Moreover, if you read Red Ink, you will be better informed than 98 percent of the population. You will know lots of details about defense spending, tax collections, entitlement programs, and the 1974 Congressional Budget Act. I'm not sure that will make you a welcome guest at dinner parties, but at least you'll sort of understand how much the government is spending and how fiscal policy is decided in Washington.

Wessel is not polemical. There's no shrillness and you won't feel that he's trying to enlist you in a campaign. But here's the bad news: You won't have much understanding of good fiscal policy after you finish the book. Indeed, you may be lured into thinking that the main problem is excessive deficits and that raising taxes is the "responsible" solution. Except, of course, when deficits are too small and spending should be increased.

For better or worse, Red Ink reflects the establishment consensus. Based on what Wessel has written, he would make a perfect press spokesman for the Congressional Budget Office, the Committee for a Responsible Federal Budget, or the International Monetary Fund.

Best of all, the press releases almost write themselves. If the economy is weak, you simply insert phrases such as "targeted spending increases to stimulate the economy." And you'll never go wrong if you use terms such as "revenue enhancement for fairness and balance." The fact that establishment thinking has not worked very well--whether in Japan, Europe, or the United States--doesn't seem to matter.

Is this an unfair portrayal? Well, let's just examine...