When do conservative administrations run big budget deficits? One answer might be that they face almost inevitable electoral defeat and wish to leave the pantry bare to restrict the options of future less conservative administrations. That's Paul Krugman's view of the rationale for the Bush tax cuts and the resulting huge US government deficits. A Machiavellian might apply the same reasoning to John Howard's huge tax cut offers in the face of electoral defeat at the last Federal election.
Of course Howard left Rudd with a huge budget surplus - not a deficit - but forced Rudd to match his tax cut policies in an environment where inflation and interest rates were accelerating and where Howard knew Laborite stupidity towards restricting markets for labour would complement inflationary pressures in driving higher unemployment.
The prospects for a Labor-induced recession might have looked good to Howard with, at best, a short vacation from office for the Coalition. The issue is whether politicians exhibit this foresight?
Update: Gregory Mankiw discusses the same issue in an entertaining 'Starve the Beast' post. there is a long discussion over at Catallaxy.