It's a bit rare that I cross post here but this post from Christopher Demuth is worth reading in its entirety.
In a nutshell, it exposes the loss of focus of both Keynesianism and supply side economics. Both have been subverted by the political process into a force for moving consumption to today and costs to the future. In effect, we have a political process that competes for how to be irresponsible as opposed to whether to be.
Which brings me to the current fiscal cliff debate, the perfect incarnation of the how to be irresponsible discussion. On one side, we have the Democratic party which is asserting that tax increases on 2% of households and (small) unspecified future spending changes will be sufficient to avert the fiscal crisis we face.
On the other side we have the Republican party which is asserting that future unspecified (but larger) spending reductions are sufficient to address the crisis. I mean, look at these plans in context. Over the next decade, we plan to spend about $45 trillion and tax about $35 to $40 trillion. And our tax and spending plans amount to a change of $2 trillion or so in total, a 2.5% change from the most unbalanced place we've ever been. And that's DC's version of difficult choices.
And that's the debate...a debate about how to be irresponsible...about which irresponsible ideology will prevail. Unfortunately, regardless of the outcome of the debate, the future is the same. We run up debt until we can't anymore. At that point, some combination of future taxpayers and asset holders get well and thoroughly screwed.