Authors: Stuart Stevens;
The center-right think tank American Enterprise Institute summed up well the Republican pattern of using the deficit and fiscal restraint as a weapon to hit Democrats:
The GOP is just as culpable as Democrats for the dismal fiscal outlook because the party engages in excessive and simplistic bombast on the budget when it is out of power and then wastes its time on distractions when it has the opportunity to make progress with incremental reforms.
In 2017, the Trump administration called for deep cuts in domestic appropriations that were intended to create the perception of fiscal restraint. The Republican-controlled Congress all but ignored the proposed cuts. In the end, Republicans worked with Democrats to raise appropriations for defense and non-defense accounts by a combined $300 billion over two years. This spending isn’t why the government is awash in debt, but the process by which it came about is emblematic of Republican ineptitude on fiscal policy.
Most great governmental disasters are rooted in some large, fundamental misconception, which in politics is usually just another word for lie. The subprime mortgage meltdown was predicated upon the government’s deception that housing prices could only continue to rise. In the category of good intentions gone bad, conservatives accelerated the crisis by pushing the concept of an “ownership society” that would help alleviate poverty as well as the idea that government should lower barriers to home ownership whenever possible. The second Iraq war was driven by the terribly wrong conviction that Iraq had weapons of mass destruction. (I’ve never bought the idea that this was a deliberate lie, if only because the one thing you can say about politicians like Tony Blair and George W. Bush is that they do not like to be proven wrong, and if they believed no weapons of mass destruction would be found, they would not have set themselves up for an inevitable humiliation. But that’s another book.) The 9/11 attacks were rooted in the false sense of security the government fostered and a failure to imagine worst-case scenarios of terrorism. The massive breakdown of disaster relief with Hurricane Katrina was rooted in state and local governmental agencies’ and elected officials’ lying to the public for decades. Read the Brookings Institution’s list “Government’s Most Visible Failures, 2001–2014”; it is a heartbreaking accumulation of avoidable tragedies and misery in just that short period, almost all rooted in some large, fundamental miscalculation.
So it is with the Republican Party’s modern love affair with tax cuts. In the Republican presidential primary of 1980, George H. W. Bush called the Reagan tax plan “voodoo economics,” which fit perfectly the writer Michael Kinsley’s definition that “a gaffe is when a politician tells the truth—some obvious truth he isn’t supposed to say.”
Bush summed up the utterly nutty idea that it was possible to cut taxes and increase spending without adding to the deficit. When Reagan took office, the national debt was $934 billion; when he left, it was $2.7 trillion. It isn’t as if the outcome were some great surprise brought on by unforeseen events. Just two and a half years into the first Reagan administration,
The New York Times
analyzed the successes and failures of “Reaganomics,” and it was clear then that deficits were a critical problem:
Even prominent Republican economists see ominous portents in the deficits. “The biggest mistake so far,” said Rudolph G. Penner, who was the chief economist in the Ford Administration’s budget office, “was to urge this tremendous cut in taxes without reducing spending sufficiently. That is a major mistake that will have profound long run costs.”
captured the concept that tax cuts were more than an economic tool to Reagan and many of his administration:
Reaganomics, however, is something more than a theory of managing a national economy. To the President in particular, it is something spiritual. The changes in the tax laws that he sponsored, such as the reductions of rates in all income brackets and the resulting reduction of capital gains taxes, do indeed benefit the rich far more than the poor. But when asked at his news conference this week whether the often-repeated charge that his policies boiled down to economics for the rich, the President said: “The Rich Don’t Need My Help.”
“No, the rich don’t need my help, and I’m not doing things to help the rich. I think I’m doing things to help all the people. But what I want to see above all is that this country remains a country where someone can always get rich. That’s the thing that we have, and that’s the thing that must be preserved.”
For many in the Reagan administration, this “spiritual” attachment to tax cuts was connected to a cultlike devotion to the libertarian author Ayn Rand, which is odd in that Ayn Rand hated Ronald Reagan. In
Goddess of the Market: Ayn Rand and the American Right,
Jennifer Burns described how Rand toward the end of her life “had one last word of warning to issue. Referring to the upcoming Republican primaries she wrote, ‘I urge you, as emphatically as I can, not to support the candidacy of Ronald Reagan.’ Reagan was a conservative in ‘the worst sense of the word,’ she told her readers.”
But for many in the Reagan circle, that their love of Ayn Rand was unrequited did not preclude their emotional attachment to her vision of strong men fighting against the burdensome yoke of collectivism and government oppression. Ayn Rand defined her beliefs in the context of her native Russia gone mad with Communism, but the Reagan crowd harnessed their inner John Galt to believe they had a moral duty to cut taxes, particularly for the wealthy, who were the most deserving because they were, well, wealthy and had proven themselves superior to those of lesser means. George Gilder, who is seen as one of the key architects of the Reagan economic plan, acknowledged that even though “Ayn Rand devoted much of her last public lecture, a speech at the Ford Hall Forum in Cambridge, Massachusetts, to a case against my ideas[,] I hugely admired Rand.”
A belief in the power of tax cuts is about as close as it can be to a definitional core belief that exists in the Republican Party. In campaign circles, it’s assumed to be a given truth that Walter Mondale lost in 1984 when he said in his Democratic National Convention acceptance speech, “Let’s tell the truth. Mr. Reagan will raise taxes, and so will I. He won’t tell you. I just did.” Reagan’s response was clear: “I will propose no increase in personal income taxes and I will veto any tax bill that would raise personal income tax rates for working Americans or that would fail to make our tax system simpler or more fair.”
And it’s assumed to be a given truth that George H. W. Bush lost his 1992 reelection when he broke the pledge made in his 1988 convention acceptance speech: “Read my lips. No new taxes.” A Clinton campaign ad featured video of Bush making the pledge, with an announcer declaring in ominous tones, “Then George Bush signed the second-biggest tax increase in American history.” The Bush pledge repeated, and the announcer continued, “George Bush increased taxes on the middle class. Bush doubled the beer tax and increased the gas tax by 56 percent. Now George Bush wants to give a $108,000 tax break to millionaires. $108,000! Guess who’s going to pay?”
Both of these “truths” are probably false. Mondale didn’t lose forty-nine states because he promised to raise taxes, and it was the larger negative impression of the Bush economy that had far more impact on helping Clinton win than a single broken promise. Clinton raised taxes and was reelected. In that campaign, I made ads for Senator Bob Dole attacking the Clinton tax increases. But the negative political impact of Clinton’s tax increases, which hurt Democrats badly in the 1994 midterms, was nullified by the colossal stupidity of Newt Gingrich as Speaker of the House. First Gingrich shut down the government for five days when Bill Clinton refused to sign a bill that would have increased premiums on Medicare. It took Gingrich only five days to back down when it became obvious that raising premiums on Medicare sounded a lot like a tax increase on everyone over sixty-five and probably not the hill worth dying on. When it was over, Gingrich tried to blame the shutdown on the ill will created between him and Clinton after a trip to Israel for the funeral of Yitzhak Rabin when Gingrich was asked to exit Air Force One out of the rear doors. “This is petty,” Gingrich said, according to
The Washington Post
. “[But] you land at Andrews [Air Force Base] and you’ve been on the plane for 25 hours and nobody has talked to you and they ask you to get off the plane by the back ramp….You just wonder, where is their sense of manners? Where is their sense of courtesy?” The New York
responded with a screaming front-page headline, “ ‘Cry Baby’ Newt’s Tantrum: He Closed Down the Government Because Clinton Made Him Sit at the Back of the Plane.” The accompanying cartoon of Gingrich crying in a diaper and holding a bottle was a classic. It was during this shutdown, when the White House staff was pared down to basics and interns took over much of the routine of answering phones and staffing the West Wing, that Bill Clinton encountered Monica Lewinsky. So there’s that unintended consequence.
As if to prove he was capable of screwing up even more monumentally, Gingrich shut the government down again a couple of weeks later, this time for twenty-one days over Christmas. Why?
The Washington Post,
in its brief history of all government shutdowns, summed it up like this:
Why did it happen? Republican leaders demanded that the White House propose a seven-year budget plan that balanced when using the CBO’s economic forecasts, rather than the OMB’s, which were more optimistic. The plan Clinton proposed still produced a $115 billion deficit in seven years according to CBO numbers, even as the OMB estimated that it would balance the budget by then. The dispute was not resolved before the continuing resolution agreed to a month earlier…expired.
If that all sounds technical and a stupid reason to ruin the holiday seasons for millions, that’s how most Americans also saw it at the time. As the
summed it up,
What resolved it? Republicans caved, basically, and passed legislation to keep the government open. Clinton, in turn, submitted a budget plan that the CBO said balanced the budget within seven years.
The political consequences of all this Gingrich-induced Wagnerian drama were that the ads we made attacking Bill Clinton for raising taxes were like trying to accuse someone of a mild traffic violation when your own client was up for war crimes in The Hague. Four years later, as part of the team assembled for Governor George W. Bush’s presidential campaign, I helped make ads for him on taxes. One of our first was called “Priorities”:
BUSH: I believe that government should do a few things and do them well. My top priorities will be to preserve Social Security and Medicare and to strengthen education and our military.
I believe that once priorities have been funded we should pass money back to the taxpayers. That’s what I’ve done in Texas. I signed the two largest tax cuts in our state’s history. And we still have no personal income tax. I believe we ought to cut tax rates to continue economic growth and to broaden prosperity.
In the first debate, Gore opened with a call for a middle-class tax cut and, in terms almost unimaginable now, talked about not squandering the budget surplus. “And I will cut taxes for middle-class families. I believe it’s important to resist the temptation to squander our surplus.”
Nineteen years later with a national debt pushing $23 trillion and climbing hourly, the mere mention of “surplus” in a presidential debate is like reading H. G. Wells describe World War I as the “the war that will end war.” It seems…quaint and bathed in the glow of lost innocence. Gore went on to attack Bush on taxes:
The priorities are just very different. For every new dollar that I propose for spending on health care, Governor Bush spends $3 for a tax cut for the wealthiest 1 percent. Now, for every dollar that I propose to spend on education, he spends $5 on a tax cut for the wealthiest 1 percent. Those are very clear differences.
Bush defended his plan for an across-the-board tax cut:
The federal government should take no more than a third of anybody’s check. But I also dropped the bottom rate from 15 percent to 10 percent. Because by far the vast majority of the help goes to people at the bottom end of the economic ladder. If you’re a family of four in Massachusetts, making $50,000, you get a 50% cut in the federal income taxes you pay.
This went on back and forth through the rest of the debate and the rest of the campaign. We made more ads on taxes. We loved them. But they never really moved numbers. The year 2000 was the sort of environment in which an incumbent vice president should have won easily: peace and prosperity, a budget surplus, consumer confidence at record highs on Election Day. But the one message that did work was the theme of “restoring honor and dignity to the White House.”
Just as the 1992 race became about change, the one race President Bush—former VP, former head of CIA, former RNC chairman, former congressman—couldn’t win against a young governor from Arkansas who had never served in Washington, the 2000 race became about character. And that was the one race Bill Clinton’s VP couldn’t easily win.
In his nomination acceptance speech at the 2000 Republican Convention, a beautiful piece of writing by Michael Gerson, Bush spoke to the issue that resonated most with voters:
So when I put my hand on the Bible, I will swear to not only uphold the laws of our land, I will swear to uphold the honor and dignity of the office to which I have been elected, so help me God….My fellow citizens, we can begin again….After all of the shouting and all of the scandal, after all the bitterness and broken faith, we can begin again.