In the mid 1960s, Richard Nixon famously (infamously, in some circles) declared "We are all Keynesians now." Since our schools seem to have transformed John Maynard Keynes into a non-person, younger readers may want to skim the first paragraph of his Wikipedia entry.
Is anyone a Keynesian now? Would even Dennis freaking Kucinich feel comfortable so identifying himself? Who is more liberal: Dick or Dennis? How did the 50 yard line move so far to the right side of the field?
The question has some relevance, since many predict harsh economic times ahead. Keynes argued that the government should function as the employer of last resort during recessions, even if doing so means running up large debts. Since none of us are Keynesians now, we run up massive debts during normal times, a strategy everyone considers more sensible.
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Nixon, of course, actually meant he and everyone were all NEO-Keynesians 'now' (then). Just as the consensus then was not quite Keynes' original prescription, but a linear adaptation, so too now, he lurks around, and his economic theory continues to form part of the bedrock of economic analysis.
When W preached his message of tax cuts, once the recession was on and he was no longer able to sell it as distributing back the alleged surplus, that was a Keynesian prescription, to boost demand. Keynes noted that either the government could do more spending, or intentionally cut taxes so consumers could spend more. Same idea, change of policy mix emphasis, same results.
When Greenspan dropped the Fed-controlled short term interest rates in the early '90s, and then in the early '00s, to extremely low rates, that again was Keynesian. (As the wiki summary explains, the government can use either fiscal or monetary policies for expansionary effects.)
The government still maintains some counter-cyclic fiscal policies (spending more as unemployment rises in unemployment compensation, for example). That it doesn't do more and more aggressively on the fiscal side of things, actively spending money itself, may not even be true. The Reagan recovery and expansion has been referred to as military spending Keynesianism.
The monetarist critique of Keynesianism wasn't exactly that the demand side theory wasn't true, or that the mechanisms of how to increase demand weren't true. Rather, they (Milton Friedman, e.g.) said the markets would alter their behavior based on what they knew of the government's fiscal loosening, fearing inflation, driving up interest rates, and basically undoing the increased demand that such increased spending would normally create. That was what Greenspan explained to Clinton, that anything he tried to do with traditional fiscal stimulus would be undone by a point move in the interest rates, and that he had to cut the deficit more aggressively than he had planned (getting rid of the investment spending he had wanted), so that the monetary side of policy could do the job (although perhaps more gradually, through the market psychology changing).
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