A divide is re-emerging within the Democratic Party between those who want to invest in long-neglected priorities, such as healthcare, poverty and education, and those that believe America’s first fiscal goal must be balancing the budget. John Edwards falls in the former camp and Hillary Clinton and her advisors in the latter. [See Jamie Galbraith’s Nation article “What Kind of Economy” for more.]

At a speech yesterday to the Economic Policy Institute, Nobel Prize-winning economist Joseph Stiglitz, chairman of President Clinton’s Council of Economic Advisors, broke ranks with his former colleagues. The Clinton economic boom, Stiglitz said, was a “peculiar situation” resulting from a number of factors, not the direct effect of closing the deficit. Moreover, after six years of Republican rule, Stiglitz agrees with Edwards that the country has urgent needs (making globalization work, providing universal healthcare, curbing global warming) and “meeting these will require spending money…If spent well, it’s worth doing, even if it increases the deficit.”

Stiglitz recognizes that this is not an either/or game. A future president can reduce the deficit and promote ambitious spending policies, if done wisely. But it will require making some tough (and potentially risky political choices), he says, such as ending the war in Iraq and cutting defense expenditures for “weapons that don’t work against enemies that no longer exist,” and restoring a progressive tax code that increase taxes on the rich and provides relief for middle and lower-income Americans.

Of the major presidential candidates, Edwards is closest to Stiglitz’s views. “Those are higher priorities to me than the elimination of the deficit,” he told voters in Des Moines in December. Yet even Edwards won’t go as far as Stiglitz in calling for a smarter and less bloated defense budget or a fairer, simpler tax code. I suppose there’s a reason Stiglitz is in academia and not politics.