Probably misspeaking. He kept saying dividends yesterday, rather than deductions when he was talking about taxes. Something about raising dividends for children when filing taxes, if I remember correctly.

Fiscal:

1. having to do with the public treasury or revenues
2. financial

Sorry. McCain's an ignorant douche, but dinging him for using "fiscal" and "financial" as synonyms is silly.

I kept wondering if McCain's hounding on spending didn't sound a little tone-deaf to the American people. They've been losing houses and jobs and the economy is veering towards depression and the best McCain can offer is to cut spending in the federal government?

He's not mixing terms up, he's not getting ahead of himself, he's not tired from his rescue efforts in DC. If anything, after his campaign "suspension," he should be refreshed!

You see, John just doesn't get it.

"Cutting spending" is one of those GOP memes that their base has bought into. Once a member of the base hears that then they're satisfied.

So, fiscally, McCain advocates an unrealistic assertion that the US government should just "cut the shit" and stop spending. Period. "Spending freeze." How's that for fiscal policy?

It's unrealistic but appeals to low-info voters who get their worldview from comic books/graphic novels, action movies, Ayn Rand, and hang on every word uttered by Limbaugh. They'd love nothing more than to "just dump all liberals into the sea or load them into a rocket and shoot them into space."

I think McCain views the terms as interchangeable (or as Sarah Palin might say-incorrectly- "fungible"). It should be noted that the second definition of "fiscal" that you linked to simply reads "financial."

You might engage more readers if you spelled out the difference between fiscal and financial crisis in your post. As for McCain promising to cut spending, I recall Lehrer asking to what extent the financial crisis would hamstring the next president and what would have to be cut to balance the $700b bailout.

"But if he thinks this is a fiscal crisis, then he really, really doesn't understand it at all."

The other conclusion is that Hilzoy does not understand the crisis. One does not need to go that far back to see what happened under Bill. Government share dropped from 23% (Reagan's peak of government expansion) to 18% (Clinton's peak of a revitalized private sector).

What happened to the 5%? It existed in the form of real goods, now trading in the private sector vs. the government sector, and the economy boomed, poor people doing better. That implied that something closer to 18%, not 23% is the optimal size of govenrment. (19.7% seems to be optimal)

In the current crisis, we will look back to this point and discover that government share has resumed growing dramatically. (My speculation) At that point we will say, McCain was right, it is a fiscal crisis. Remember the budget deficit is around $500 billion.

McCain has the wrong solution. The solution to a federal over spending is to raise the price of government services, not reduce the price.

Mid-campaign is a lousy time to learn new stuff. It's the very apex of superficiality.

McCain attacks every problem with a political version of Refrigerator Poetry Magnets™, and one he bought 20 years or more ago, where you re-assemble a limited stock of tools, concepts, statutes, etc. in sorta-new ways, but nothing not in the kit exists, never mind can be tried. And he doesn't know or doesn't care that his hands are tied.

Obama's pretty constrained in that regard, too -- politicians are specialists at being generalists, and he's been campaigning for almost two years -- but I get the impression that as a worst case, he's got the 2004 edition of the magnets plus a few add-on kits. More importantly, I think he knows it. And having to find people with other ideas may be something he does reluctantly, I don't know, but at least he's not freaked out by the mere idea of finding them.

As Tip said of Reagan so could it be said of McCain: "It's not what he knows that scares me. It's not what he doesn't know that scares me. It's what he knows for sure that isn't so that scares me."

It certainly doesn't help things that we do have a long-running fiscal (sense 1) problem approaching crisis status.

Cutting spending on social programs; SS, Medicare, ADC, Medicaid, etc.; and cutting taxes for wealthy people and big corporations are McCain’s fiscal policy or financial policy. (Dictionary.com’s second definition for fiscal is financial.)

I believe the business term for what McCain proposes is "natural depreciation". Don't throw good money after bad. Just let it die.

If all you have is a hammer...

(19.7% seems to be optimal) - Matt (10:08)

Let me point you to a nice conservative source to disprove your theory. If you click on each of the countries from this Heritage Foundation study, you will find a very interesting pattern. Countries with higher tax and spend polices are very consistent with countries with high standard of living, and vise versa. In fact they dovetail very nicely with per capital income rates as well. Now it certainly makes a difference where you tax and how you spend, but it is wrong to conclude that simply less government equals better economy.

The second definition of 'fiscal' in the 2 sources I checked is 'financial'. Do you really thinks these distinctions are the key to victory or are you just showing off? Palin got nailed on 'entitlements' the other day and I'm not sure it was legitimate. Beltway definitions are not always the dominant or relevant ones, especially when trying to get elected.

Toast et al: as standardly used by people who discuss this stuff, a fiscal crisis is a crisis involving the government's budget: e.g., the government is spending more than it is taking in, and at a level that has become impossible to continue. The response to it is to raise taxes or cut spending, to bring the budget into balance.

This is not a fiscal crisis. And if McCain is just learning these words now by consulting the dictionary, we're all in trouble. Pointing to the second (far less common) definition is like explaining away someone's claim that a strike in baseball is actually a good thing by pointing to the fact that e.g. striking gold is.

Moreover, this doesn't get at the second point: that McCain's prescription for solving this problem is both completely wrong and completely explained by the fact that he thinks this is a fiscal (ordinary sense) crisis.

Actually their is a fiscal crisis, but it is on the revenue side. The Bush tax cuts have created a systemic revenue shortfall. Tax increases, reductions in defense spending and less borrowing will all be neccessary to correct the excessess of the last eight years. We have dug a very deep hole.

Is it just me or did Lehrer let McCain have the last word 90% of the time. If there was a loser it was Lehrer -- he did a terrible time moderating.

On a side note, it's weird not having to say "orange" before I post.

'Pointing to the second (far less common) definition'

define 'common'. I bet your definition of it is not very.

Talk about riled and unpresidential. McCain whispers "horseshit" when Obama calls him on his prime minister of Spain gaffe:

http://andrewsullivan.theatlantic.com/the_daily_dish/2008/09/horseshit.html

I think McCain doesn't know the difference, and I think he really DOES think it is a fiscal crisis. So does the right wing of the GOP. He is channelling not just Herbert Hoover but Henry Morgenthau, Roosevelt's Sec of the Treasury who persuaded him to turn off the "pump priming" in 1936 and precipitated a recession. And that's just what McCain's policies would do if he were elected. Thankfully, that looks less likely after last night.

Seriously, the Dems in the House passed a stimulus bill that is what the country needs, but Senate GOPers are going to filibuster and Bush says he would veto it. Didn't they learn anything? If we had given tax cuts to the middle class in 2001 and 2003 and 2006 instead of to the rich, we wouldn't be in such dore straits now.

I think McCain doesn't know the difference, and I think he really DOES think it is a fiscal crisis. So does the right wing of the GOP. He is channelling not just Herbert Hoover but Henry Morgenthau, Roosevelt's Sec of the Treasury who persuaded him to turn off the "pump priming" in 1936 and precipitated a recession. And that's just what McCain's policies would do if he were elected. Thankfully, that looks less likely after last night.

Seriously, the Dems in the House passed a stimulus bill that is what the country needs, but Senate GOPers are going to filibuster and Bush says he would veto it. Didn't they learn anything? If we had given tax cuts to the middle class in 2001 and 2003 and 2006 instead of to the rich, we wouldn't be in such dire straits now.

The early key point that I almost forgot about until I read the above comments was Obama's rebuttle to the spending freeze.

There are hundreds of millions of people out there who if they have any clue at all must have thought "holy shit this McCain guy just wants to wage war and are kids, roads, etc etc etc. be damned..."

This happened within the first 10 minutes. It was also weird becaus McCain had said he wanted to slash Pentagon spending. It could be argued you could do both but you don't cut spending to the Pentagon and cut early childhood education spending. His machine gun approach didn't add up at times.

Obama in his first 2 minute segment reiterated his talking points about middle class families quite well. If people were tuning in for the first or second time see what Obama was like then his very first answer might have told them what they needed. If the immediate polls after can be believed then that is the case.

I know just barely enough about the topic for my B.S. detector to go off when I hear the term "economics 101," but this is really an example where I think the term fits.

Just once I'd like to see a politician take a minute to explain it to people. "Here's chart. This is what unemployment looked like before the government learned to manage the economy. This is what it looks like since. This is a depression. This is another one. This is another one." Etc. Just once.

Michael7843853,
You can check this out yourself with a few Google searches and some simple math. Here's some raw data:

Fiscal: 135 million hits
Financial: 608 million hits

Fiscal and Government: 56.9 million hits
Financial and Government: 40.6 million hits

If you normalize one of the [term]+government figures using the base frequencies, you can get a comparable figure, like this:

608/135 * 56.9 = 256.220

Then divide again to find out how much more (or less) likely the term "fiscal" is to occur in documents containing the term "government", like this:

256.220 / 40.6 = 6.31

"Fiscal" is six times more likely to occur in docs containing the word "government". It might be prudent to read the billion or so documents behind these figures before jumping to conclusions, but I'm going to take the lazy way out and just say that hilzoy is right. If you decide to cross-check, let us know what you find.

It would be more convincing if you provided clarification of what you see as the difference between fiscal and financial. McCain did poorly last night, but unless you can demonstrate your superior knowledge, you might want to back off being pompous about financial versus fiscal.

I'd turn to McCain and ask him- "After you cut all earmarks, tell us what you're going to do with the 18 Billion?" "Where would you apply it to have a significant impact upon our economy as you suggest it would?" Here we have ongoing discussion about 700 Billion and McCain tries to get away with making points about this.Maybe he wants it to fund another month and a half in Iraq.

DanP says:

"Countries [from the Heritage Country List] with higher tax and spend polices are very consistent with countries with high standard of living,"

I did the background on this, looking up the Heritage Foundation stuff. I always do, and I have been following the heritage list for years.

In short, rather than go through all the background, let me say that DanP is wrong about the top seven on the competitive list. Ireland and New Zealand made it to the top ten by reducing government share and their growth in standard of living increased.

As to DanP's point, that we can arbitrarily set equilibrium point for government share is plain wrong. The politics that set the ultimate equilibrium point was determined hundreds of years ago in our history, and is not likely to change. To try and arbitrarily set that point by electing new people never works, and generally just adds constraints in our path toward equilibrium in government share.

Our financial crisis is simply the third or fourth appearance of a bubble created by trying to aggregate more into government than the economy can support. That is, a fiscal crisis.

McCain is right in diagnosis but wrong in therapy.

BTW, I was really responding the the Lehrer thing, not the "fiscal" thing.

"Fiscal" comes from "fisc" - the public treasury of ancient Rome - commonly used to refer to any state treasury. In medieval France under the Merovingians and Carolingians it referrred to those royal estates that provided the money to keep the royal treasure going and finance royal expenditure. It is "financial" in the sense that it has to do with money - but it's meaning has specifically to do issues relating to the public finances - issues of taxation and expenditure.

It is "financial" in the same sense that "Jesus is my favorite philosopher because he changed my life" was given by Bush in a debate as the answer to what "political philosopher" had most influenced his views. The word is in there, in some extremely broad sense there is a connection - but it has absolutely nothing to do with the meaning of the question being asked.

Anybody who tries to argue that referring to a "fiscal crisis" is the same as discussing the current "financial crisis" is playing the same fraudulent game that Bush and his cronies played. I thought that McCain (and his supporters) are trying to present themselves as different from Bush. Obviously not.

That McCain statement shows a major confusion conservatives have: they think that for the government to spend $x is a zero-sum game, the money is just "lost". Ergo, to not spend it is perforce a net savings for all time. But that's idiotic, since apt (by definition) spending, such as on infrastructure, quality education, preventive health care, renewable energy, etc. saves or creates more utility and capability later. Really, it's idiotnomics. McAntic, and per latest about debate: McContempt

Jassalasca Jape, I concede, he shouldn't have used 'fiscal' unless he meant the more precise definition; unless he really thinks the government caused the crisis by spending too much on non-military things. Maybe he does, but fortunately, I don't think many are going to buy it. Attacking the government for spending is reflexive for the right, reducing it would be a reasonable response to solar flares for them.

Hilzoy and Felix Salmon are pointing to the fundamental difference between a financial and a fiscal crisis. Reread Hilzoy's quote from Salmon: "But from a technocratic standpoint, the fact that McCain twice referred to the financial crisis as a "fiscal crisis" is telling. It means (a) that he doesn't really understand it, and (b) that insofar as he does, he thinks that government is at least as much part of the problem as it is part of the solution."

Salmon is a widely read commentator on financial matters, and his point is that it is important to know that the immediate crisis under discussion in Congress is financial -- private banks are undercapitalized because of huge losses and they don't trust the ability to repay of the counterparties they normally would lend to, so they are hoarding their cash and not lending (and the fear is that eventually the real economy will grind to a halt).

The cause of the immediate crisis is not fiscal -- i. e., having to do with the government's finances -- although it certainly could soon get there if we throw $700B at the banks, as Paulson originally proposed.

If McCain doesn't understand the immediate problem (or chooses to mislead by calling it a government finance problem), which is restoring confidence in the (private) financial system, then he isn't much help in solving it.

Its been a while since I studied economics but here goes .....

The financial crisis is the disequilibrium in the banking and finance industry.

A fiscal (government spending and taxation) crises would be a crises in the federal budget.

The economic crises has to do with the spill over of the financial crises into the real economy, i.e. good companies cannot get loans, causing a recession.

Not sure what Matt is referring to when he says "Our financial crisis is simply the third or fourth appearance of a bubble created by trying to aggregate more into government than the economy can support" but interest rates - monetary policy (Federal Reserve)- drives the equilibrium in competitive financial markets more than fiscal policy.

It seems to me though that the financial crises has more to do with easy monetary policy and lax regulatory enforcement (a failure to keep the markets competitive) than fiscal policy (excess government spending). If the SEC strictly enforced capital requirements, investigated, and prosecuted mortgage fraud earlier before it infected the industry, we'd have much less of a financial crises on our hands.

McCain was "misspeaking" in a number of odd ways last night. The oddest one is that he seemed to consistently refer to tax deductions as "dividends":

"So the point is, I want people to have tax cuts. I want every family to have a $5,000 refundable tax credit so they can go out and purchase their own health care. I want to double the dividend from $3,500 to $7,000 for every dependent child in America."
.
.
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"Let's give every American a choice: two tax brackets, generous dividends, and, two -- and let Americans choose whether they want the -- the existing tax code or they want a new tax code."

Its a really odd mistake, and not one that you'd expect someone to make twice if had any concept of what they were talking about.

As to DanP's point, that we can arbitrarily set equilibrium point for government share is plain wrong. - matt (11:34)

That was not my argument. The Heritage Foundation measures Economic Freedom using 10 criteria, including corruption, strength of currency, labor restrictions, etc. The two that I focused on were Fiscal Freedom (FF-tax policies) and Freedom from Government (FG-spending). A high score means low tax rates and gov't expenditures. For example, the US gets a score of 68.3 FF and 59.8 FG. Russia does much better by Heritage scoring 79.2 FF and 69.5 FG, meaning lower taxes and less spending. China gets 66.4FF and 89.7 FG. India 75.7 FF and 73.5 FG. Canada gets only 75.5 FF and 53.7 FG. Australia 59.2 FF and 62.8 FG. Iran 81.1 FF and 84.5 FG. Venezuela 74.5 FF and 79.7 FG.

As for the top 7, Nos. 1&2 (Hong Kong and Singapore) are city states. You can be very efficient when you have no space and no army. The remaining seven are Ireland, Australia, US, New Zealand, and Canada. In each case their scores on FF and FG weigh down their overall scores. They are all worse than Russia, China, Iran, India and Venezuela in these two categories.

Meanwhile how is our financial crisis "a bubble created by trying to aggregate more into government than the economy can support"?

"They'd love nothing more than to "just dump all liberals into the sea or load them into a rocket and shoot them into space.""
Yep!!! And the next rocket would have conservatives on it. If any one actually belives we are going to borrow our way out of this. they should be on the third rocket. One of the low info retired individuals said that

Once again we see that McCain is stupid and out of touch.
C.... John read a newspaper occasionally.

Somebody needs to tell him that the current financial crash is about the subprime debacle that his buddy Grham and other Repocons dreamed up.
It is almost completely seperatae from government overspending and under taxing.

Small wonder that Palin parrots the same nonanswers over and over. They are both clueless.

fiscal/finacial; dividends/deductions; sunni/shia; iraq/iran; strategy/tactics -- come on. Give an old guy a break.

He didn't have any dividends OR deductions for five years.

I think Obama needs to hit McCain harder, too, on his outrageous proposal to tax employer-sponsored health benefits.

This would actually make the health care crisis WORSE. And coupled with a "tax credit" (only meaningful to people who actually PAY income tax) it would be disastrous for the poor who work for minimum wage (St. John voted against raising it 19 times) and no benefits at all.

The absolutely most important health care reform, IMHO, is to prevent insurance companies from using "pre-exisiting conditions" to avoid insuring the people that actually NEED health care.

Many Republicans don't like the laws Franklin Roosevelt used to save America.

Many don't believe Social Security is a good thing. They constantly chaff at Roosevelt's New Deal programs and regulations. During the 1996 presidential race Republican Senator Robert Dole said Social Security was a failure and should be eliminated. President Bush also asked for Social Security funds to be put into private retirement accounts to be invested on Wall Street.

John McCain has said he ALWAYS favors deregulating.

But, it was the deregulation done in 2000 by the Republican Congress which got us into our current financial mess. The Senator who did away with the FDR regulations has been John McCain's economics adviser.

We can't afford complete deregulation.

There's a difference between "small government" and deregulating. There's a law which says you can only cross a street at a crosswalk. It doesn't require a massive government program and billions of dollars. It's one of many small ways government restrains us from dangerous activities and really protects us (both the pedestrian who might be hurt walking across a street and the car driver who isn't expecting a pedestrian on the street).

A little common sense please!

Most Republicans, and a fair number of Democrats, scream about excessive spending and 'big government'. I am one of those. Obviously we can't afford to continue spending so much. We have to restrain ourselves. What we need are regulations which are like a stop sign -- they cost little, but save lives. It's affordable regulation. It's common sense.

Deregulation gone wild is what Republicans offer now.

John McCain and the other Republican politicians want to knock down all the stop signs and let Wall Street go wild and knock down all our home town banks and home mortgages in the name of 'deregulation'. That's an idea which will destroy us all. We need affordable regulation. We need the kinds of regulations FDR put in place in the 1930s and which have protected us right up to the time when Republicans removed them!

Let's get back to what works.

Reminds me of the long-standing mispronunciation in Kentucky of the group of commissioners who oversee the county budget: most people call this "Fiscal Court" the "Physical Court."

I believe it's more than mispronunciation - I think it's a clear expression of people's failure to grasp the purpose and responsibility of the Fiscal Court.