Macroeconomics and Political Ideology

The left -- right (progressive -- conservative) political spectrum still shows some divisions among  macroeconomic theorists. 

On the Right, the macroeconomists involved in government policy and business forecasting are almost all Keynesians, but they tend favor tax-cuts over government spending and their spending priorities are different from those of the Left:
Keynesian: Conservative Keynesians have dominated economic policy for almost every Republican president and Republican candidate (post primary).  They have tended to focus on cutting taxes as an economic stimulus rather than on raising spending.  For example, both McCain's chief economic adviser, (Doug Holtz-Eakin) and Romney's (Glenn Hubbard) are Keynesians.  Everyone I recognize on the list of past presidential economic advisors are Keynesians too going back to at least the Ford administration.  Conservative Keynesians tend to favor government spending for different priorities than progressives.  For example, they are a bit more likely to promote military spending as a stimulus, but military Keynesianism is also fairly popular on the Left.  The American Conservative Magazine wrote that, "An astonishing number of the Republicans’ most cherished economic thinkers can be called Keynesians." 

What is a conservative Keynesian? While there may not be a formal definition—mainstream Keynesianism has many nuanced variations—it is fair to say that a conservative Keynesian 1.) looks at the world in terms of macroeconomic aggregates, that is, total output, total employment, and most especially aggregate demand; 2.) sees government fiscal policy as a way to improve those aggregates; and 3.) embraces or at least tolerates deficit spending and inflation in the short run. That much is pretty close to standard Keynesianism. What makes one a Keynesian of the Right is a preference for tax cuts over government spending, although the intention is the same: to put money into the hands of consumers as a way to increase aggregate demand during recessions.

Monetarism:  This school was based on Milton Friedman's ideas in the 1970s.  It substantially ceased to exist as a separate school by the 1990s because Friedman won and his ideas merged with Keynesianism.  The main effect has been to put greater priority upon monetary policy than fiscal policy both for fighting recessions and especially for reducing inflation.  Ironically, Friedman drew upon some of Keynes' monetary ideas that Keynes' intellectual followers had been ignoring.  Some libertarians on the right like to portray Keynesian economics as 'central planning' in which fiscal policy is 'socialism'.  They see monetarism as a free-market alternative.  Milton Friedman had this leaning although I don't think he ever said it so bluntly.  But monetarism is also a form of central planning in which the government planners at the central bank adjust the most fundamental price in the economy, the price of money, to fine tune the economy.  They fine-tune interest rates and inflation in order to stabilize unemployment and economic growth.  Fiscal policy seems to be more politically contentious, but monetary policy is also a kind of central planning. 
Real Business Cycle (RBC):  Also known as the "new classical school", freshwater economics, liquidationists, etc.  RBC scholars tend to be libertarians who believe that recessions are natural and inevitable and that government policy changes can only make them worse. 
Austrian Business Cycle:  This theory is "now rarely discussed by mainstream economists, but was more actively debated" before the end of the Great Depression.  Even Hayek gave up on working on it by the end of the Depression.  At the PhD level, the last university in the world that still focused on the Austrian theories was Auburn University, but it was disbanded in 1999 and they never had anyone who taught macroeconomics! The Austrians rejected the RBC mathematical methods, but they agreed with the conclusions of the RBC theorists.  They think that recessions are naturally the best of all possible worlds and nothing can or should be done to try to lessen them. 
Austerians: A term of derision for Austrian and RBC economists who think that the government should fight the recession through the opposite of Keynesian (and monetarist) policies.  Austerity is reducing deficits and the money supply.  Austerians think that the recession is being prolonged because people have lost confidence in the government (worries about government inability to pay back debt) and in our money (worries about inflation). Only a small percentage of economists are Austerians, but this ideology has wide populist appeal outside of the economics profession.  Some of the leaders of elite institutions like the European Central Bank, the Bank of International Settlement, and the OECD are Austerians. 

Left:
Keynesian:   The main schools are the new-Keynsians and the old-Keynesians (or neoclassical Keynesians), but both are more favorably predisposed to government spending than conservative Keynesians who are more likely to favor tax cuts as an economic stimulus.  There are a lot of sub-categories of Keynesians on the left, but their policies are all broadly similar:

Neo-Keynesian, Old-Keynesian, or Neoclassical Keynesian:  This was mainstream macroeconomics from 1936-1980.  It is based on Hicks' IS-LM model and the Phillips curve. 
New-Keynesian: Use the same mathematical modelling techniques as RBC, but add 'frictions' like sticky prices to get very similar results as the old Keynesians. They just use different methods to come to very similar conclusions. 
Post-Keynesians: They claim to be very close to the Keynes' original ideas which they say were warped by the neoclassical Keynesians.  
Monetarist:  Friedman won the intellectual debates over the role of monetary policy and almost all economists on the left embrace monetarist solutions as the primary tool for macroeconomic management and they also support fiscal (Keynesian) measures as well.  In Keynes himself supported monetary stimulus.

Agnostic-Apathetic School:  There are a few economists on the left who simply have little opinion about macroeconomic debates because they did not study recessions in graduate school.   They either focused on  microeconomics or they believed that recessions are not important in comparison with  studying economic growth, international trade, or finance.  I would put Jeffrey Sachs in this camp.  He is a brilliant development economist who keeps saying stupid things about the recession because he clearly has not put much thought into it.  His priorities simply lie elsewhere.  Unfortunately,  Obama has economic advisers who are in this camp.  They went along with calls for austerity because they thought it was politically popular and they did not prioritize fighting unemployment.  The big divide on the left is between Keynesian-monetarist economists and the apathetic economists. 

Today the three main macroeconomic schools of thought to know are:

1. Keyensians
2. Monetarists
3. Real Business Cycle (New Classical)

The monetarists and Keynesians have very similar ideas and make similar predictions about the world.  The big ideological divide in macroeconomics is between them and the RBC economists who make radically different predictions and think that the government cannot do anything to reduce recessions.  The monetarist-Keynesian ideological divide is mostly one of priority.  Economists who call themselves Keynesians put more priority on fiscal stimulus and think that works better.  Economists who call themselves monetarists put more priority on monetary stimulus and think that works better.  A few Keynesians think that monetary policy does not work at all in some situations and a few Monetarists think that fiscal policy does not work at all in some situations but most mainstream Keynesians endorse monetarism and vice versa.

Although RBC is important in some prominent graduate schools, almost all the undergraduate Macro textbooks ignore it in favor of the Keynesian-monetarist synthesis.  Personally, I am both a monetarist and Keynesian.  I think they are two great tastes that go great together.  Massive unemployment and idle capital is a waste and a tragedy and we should use all available tools to reduce the tragic waste of unemployed labor and capital.