History Lesson 101: The Grand Old Myth of Fiscal Conservatism

News at Home

Todd Holmes is a history PhD Candidate at Yale University. He the author of several articles on twentieth century political and economic history, including the recent award-winning article “The Economic Roots of Reaganism.”

Few myths have proven as pervasive in post-World War II politics than that of fiscal conservatism and the GOP.  As the Tea Party has heightened the myth this election cycle, pundits and proponents such as Peggy Noonan and Stanford University’s Peter Berkowitz have bestowed the falsehood with renewed credibility.  Just last week, for instance, Berkowitz argued in the Wall Street Journal that the lack of political history in U.S. universities underpinned the misrepresentation of the Tea Party, blinding educated progressives to “the spirited defense of fundamental American principles.”   Yet amid attempts to revamp the federalist past of the founding fathers, such history lessons should also include a little post-war arithmetic.  For if the lack of political history explains why liberals don’t understand the Tea Party, the absence of financial literacy within that history underscores why Tea Partiers and pundits alike seem to overlook the historical realities of fiscal conservatism and the GOP.

Contrary to the partisan rhetoric of talk radio and cable news, the highest reaches of American federal spending and deficits did not occur under the liberal hubris of Democrats, but rather under the proclaimed fiscal conservatism of Republicans.  Indeed, “runaway federal spending” and “ballooning national debt,” to use the common words of pundits, represented one of the dominant characteristics of the Reagan administration.  Within eight years, Ronald Reagan increased federal spending by over 22 percent, added almost $2 trillion dollars to the national deficit, and ultimately raised the gross federal debt by 89 percent, or with accrued interest, an astounding 189 percent.  And to be sure, Reagan’s successor George H.W. Bush only continued this trend.  Together, the twelve years of Reagan and Bush saw a quadrupling of the gross federal debt, increasing the federal debt-to-GDP ratio from 32 percent in 1981 to 66 percent by January 1993.  Thus as pundits like Sean Hanity rhetorically ask “what would Ronald Reagan do,” history tells us that in regards to federal spending and debt, it’s already being done.

Amid the now familiar political banter of small government and fiscal conservatism, Ronald Reagan pushed federal spending and debt to unprecedented levels during the post-war period—a bar only surpassed by another Republican, George W. Bush. During its two terms, the Bush administration added over $5 trillion to the national deficit, increasing the gross federal debt from $5.6 trillion in 2001 to $10.7 trillion by the end of 2008, and raising the federal debt-to-GDP ratio to over 83 percent.  In fact, if placed in comparative terms, the administration of George W. Bush accrued as much total debt as the eight years of Ronald Reagan and twelve years of Franklin D. Roosevelt combined.     

A history lesson on federal spending and debt during the last half-century has much to teach us about the vast gap between partisan ideals and political realities.  That the Tea Party and their pundits protest against a “ballooning deficit” largely created by the very political party they swear alliance to highlights both the pervasiveness of the grand old myth of fiscal conservatism, and the need of history to correct it.   As a political historian, I couldn’t agree more with Peter Berkowitz on the need of political history.  Yet, with all the problems we face today, to narrowly focus that history on the nostalgic past of the founders as he contends seems as useful as Donald Kagan’s diatribes relating ancient Greece to twenty-first century foreign policy.  The political past needs to accurately inform the political present.  The failure to do so will undoubtedly prove dire, let alone perpetuate political movements that espouse partisan ideals as mythic as the eighteenth century garb they adorn.  

comments powered by Disqus

More Comments:

Patrick Murray - 11/1/2010

Do we all remember that five former secretaries of the treasury asked Reagan to slow the federal spending on the military to six years rather than four? Reagan refused. In one term he took the US from the world's biggest creditor nation to the world's biggest debtor nation. Now we live in Wonderland with Alice where we can make words mean whatever we want.