Here is DeLong making the full-ion expansionary austerity case for the 1990s. He is explicitly claiming that the tech boom was directly the result of cutting taxes and reducing government spending. bradford-delong.com/2018/12/clinto… 
This is the pure Treasury View, the most simple-minded crowding out story - there is a fixed supply of saving and every dollar of it that the government doesn't use, turns directly into private investment.
"half the cuts came from social insurance programs." In DeLong's world, taking from the poorest is the Lord's work because every meal that a poor mother doesn't eat, every utility bill she can't pay, turns directly into more fiber optic cable and server farms.
In DeLong's world, the task of Democratic governments is to cut back on public spending in order to create more favorable conditions for private investment.
Of course this ignores the fact that investment varies for all kinds of reasons that have nothing to do with public policy. Nonresidential investment as share of GDP is up almost a point since the end of 2016, after falling the previous 2 years. What Trump policy should we thank?
DeLong's story about budget surpluses redirecting a fixed quantity of saving from the public to private investment ignores aggregate demand. And it ignores the fact that only plausible mediating variable - interest - is a financial and policy variable.
The argument that budget austerity will "redirect funds ... from government debt to funding productive private investment" is the neoliberal pensee unique from Thatcher to Schauble. Are we expected to ignore all the social and economic disasters it's brought in its wake?
People talk about the Democratic establishment believing that it's always 1995, but this is the msot literal example I've seen.
For example, does the man who's written tens of thousands of words about "safe asset shrotage" as the central factor in the crisis of 2008 and the slow recovery afterwards really see no connection with the Clinton administration's decision to greatly reduce supply of safe assets?
Clearly one faction of Dem establishment thinks - sincerely or opportunistically - that the best response to Trump is to double down on fiscal orthodoxy, to dig out from the policy attic all the moldy old standards of deficit reduction and entitlement reform and budget cutting.
It's hard to imagine a worse outcome in Democratic policy circles than for this to become widely accepted -- that the best counter to Trump is a promise of "responsible budgets" and being a better handmaiden for private investment.
One way or another we need to make positive case for bigger and more active public sector. We also need a story that emphasizes distributional conflict, rather than - as here - making produtivity growth necessary and sufficient condition for rising living standards for majority.
