Column: Learning Nothing from the Reagan Deficits
11It had to be the most awesome, lollapalooza understatement of the year. In a June 30th headline, the New York Times – which neurotics in the know regard as a capitalist rag of unsubdued socialism -- reported without a hint of sarcasm or bias that the “Budget Surplus Could Dwindle, Bush Aide Says.” Surely this admitted reversal of fortune came as “news” only to children under the age of nine who aren’t quite right, and perhaps George W. himself.
11The aide selected to deliver the un-news was Lawrence Lindsey, Bush’s Economic Council director. The euphemistic “dwindle” in revenues could amount to a trifling $56 billion, said Lindsey dismissively. The day selected for announcement was a Friday, chosen to hold broadcast-news accounts to a minimum for a couple days.
But the White House need not have worried about extensive reportage. The announcement was merely one more confirmation of a now-familiar executive tactic: plunge a shiv into good sense, then treat the wound with a linguistic Flintstone Band-Aid. No news there.
11 Interestingly enough, Lindsey’s statement came just one day after his economic paisano, Mitchell Daniels -- director of yet another administration office of merry fiscal hijinks -- guessed that the shortfall might run in the neighborhood of … oh … say … $20-$30 billion. So within just 24 hours that expert estimate jumped by … oh … say … $36 billion or so. Thereabouts. Something like that. Maybe.
At that rate, by Bastille Day we’d be in trouble, by Simon Bolivar’s birthday (July 24) we’d be in real trouble, and by Pakistan’s Independence Day (August 14) we’d up to our keesters in revenue-“dwindling.“
But not to worry, said Lindsey. The coming tax cut – that is, the further slashing of government revenue – will boost federal fortunes and re-guarantee a surplus. Work with me here. Take strong drink and think like an economist.
Sadly, this administration is showing a lack of vision by resorting to economic formulas to revive wistful spirits. The actual and best remedy for another round of bulging deficits, we can all agree, is simply for the White House to blindly hope for the best, quit releasing annoying figures, and for the press to keep things to itself. That’s the way we did things during the Reagan administration, and as you know, everything worked out fine.
Precisely one score ago, In The Beginning, a similarly slowing economy existed and there reigned in the White House a cherished belief in ignoring the obvious. Reagan’s first director of the Office of Management and Budget, David Stockman, revealed the appalling depth of this ignorance less in the published version of his book, The Triumph of Politics, than in the book’s draft, obtained and reported by the Washington Post in 1986.
In his original, much harsher and little-known assessment, Stockman charged that an influential assortment of economic crackpots – among others Treasury Secretary Donald Regan and independent “snake-oil” salesman (Stockman’s term) Arthur Laffer – “thoroughly misled the President” with incoherent fiscal advice that not only was “a non sequitur” but “willfully ignorant twaddle.” Reagan & Co., wrote Stockman, embraced an economic policy assembled in “scramble and haste,” which then “painted [them] into a corner.” As published, “confused” replaced “misled,” and intense modifiers such as “willfully” were absent.
If one excludes from budget estimates the official embezzling of Social Security and Medicare revenues, a deficit has been foreseeable since the economy started its slide several months ago. Sluggish growth, combined with a goofy $41-billion tax rebate designed to stimulate a mammoth $10 trillion economy, are prodding this year’s deficit from prediction to reality. And W.’s $1.35 trillion tax cut makes future deficits as predictable as Sonny Gravano lapsing into unpure thoughts.
11Serious scholars of things economic have doubted the dreams of secure surpluses especially since the presidential campaign, when George W. casually defended his then-proposed tax cut as “responsible and easily affordable in light of federal surplus projections” [23 August, 2000, NY Times]. I once thought that few believed George then, even those who went on to vote for him. I more recently thought that no one could possibly believe him now. Until, that is, I read evidence of a sizable group in the United States that, without doubt, is well on the road to institutionalization at the nearest state-run, white-coated, net-snatching facility.
To wit, an opinion poll released June 29 by the nonpartisan Publicampaign.org showed that 20 percent of the voting population is not -- I say not -- convinced that “politicians often do favors for people and groups who give them campaign contributions.” A throng that unconnected with reality is as likely to believe W. on fiscal matters as it is unlikely capable of dressing itself, self-spooning a serving of Fruit Loops, or wiping its own prodigious drool. 5 will get you 10 that nearly all of this dubious crowd voted for George, and still believe him when he says his policies are “responsible.” Where in God’s name were these people years ago, when in flight from the capricious angel of financial doom, I sunk so criminally low as to sell “legitimate” timeshares. I was never indicted, I swear, yet any hope of canonization is, I’m afraid, shot to hell.
And so again is the country’s economic health for years to come.
For the nostalgic there is no need to search out Reagan’s lovable antics on the classic film channel. His best performances are being reenacted on the evening news, which is to say, no news at all. It’s only history, squeamishly remembered.
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Scott Harwood - 7/11/2001
I voted for Clinton, I never voted for Reagan or either Bush. As such, this reply is in the interest of historical accuracy rather than partisan demagoguery.
Regarding Reagan’s deficits, Reagan’s tax cuts, like Kennedy’s in 1961, actually increased the government’s income through the economic growth that resulted. The Democrat-controlled Congress then increased spending to levels that far exceeded the increased income. They added more spending to every single budget Reagan submitted except one. Reagan is not entirely blameless, however. He refused to back down on the astronomical defense budget. As a result, the Soviets were not able to keep up with our spending and they collapsed into an economic oblivion. So, yes, we did incur debt due to his defense spending proposals, but this has proven to be a bargain in the long run because we no longer have an arms race.
In the end, under Reagan’s watch, our national debt increased by $1.7 trillion. In all fairness, it should be noted that our debt also increased by $1.5 trillion under Clinton’s watch, and that was without an arms race.