What’s the largest political issue looming over the next few years (decades?) in the United States? It’s almost certainly the federal government’s fiscal health.
So, right now, I’m remembering Ronald Reagan, the man who inaugurated “The Reagan Era” in American politics (hip name, no?). This was/is the era dominated by the “cut taxes while raising spending” strategy that Republican Presidents have followed ever since.
This is a man who somehow increased the national debt nearly 21% as a percentage of GDP, but somehow snuck out of public life with a reputation for fiscal conservatism. This is a man who said that the national debt had gotten out of control under Jimmy Carter (who left office with the debt around 1.8 trillion in current dollars), and quickly got to work at ballooning our national debt. Carter left office with the debt around 1.8 trillion in current dollars (near its lowest point in 50 years). It had been dropping. When Reagan left eight years later, it stood at 3.8 trillion (also in current dollars). Current dollars=these figures are adjusted for inflation.
So look, Tea Party and Co.—you want someone to blame for setting us out on this path? Ronald Reagan’s your guy. You can also toss some blame to Presidents Bush and Bush, if you’d like.
Quick—to the facts! The only refuge for sensible politics!
Here’s a good chart for starters. Notice how level things are for most of the chart. We win WWII, we build the interstate highways, etc, etc, and the federal debt doesn’t really increase much. Notice how things tick up a little there in the 1970s? Notice how the debt starts skyrocketing under Reagan (and continues under Bush)? Notice how Clinton starts to slow things down?
Here’s another chart (condensed timescale), which includes the debt as a % of GDP. See how Reagan more or less invents the modern spending pattern? See how fiscally responsible Clinton was?
So, I’m sorry, Gipper, but you you’ve given us a lot of dollars to repay and a lot of bad habits to unlearn. You should’ve stuck to acting. Thanks for nothing.
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**Hey Reaganites…don’t want to take my word for it? Ask Reagan OMB director Dave Stockman:
In 1970 [the national debt] was just 40 percent of gross domestic product, or about $425 billion. When it reaches $18 trillion, it will be 40 times greater than in 1970. This debt explosion has resulted not from big spending by the Democrats, but instead the Republican Party’s embrace, about three decades ago, of the insidious doctrine that deficits don’t matter if they result from tax cuts.
At this point, our language just breaks down, Conor. I don’t think it makes sense to attribute sole agency to one man, the president. Talking this way only contributes to the pernicious view of presidential omnipotence we already hold. I’m not going to defend Reagan entirely, but at no point during his presidency did the Republicans have control of both the House and Senate. Anything that got done had Tip O’Neill’s fingerprints on it as well.
Here’s the thing. Reagan should have worked harder to control spending. He failed on that front. But the reason he cut taxes first was because, when he took office, they were too damn high. They really were. He inherited a terrible economy and thought that lowering taxes was necessary. That was his priority. He took what he could get when he could get it, and hoped that as he moved through his presidency the rest could be achieved. But its not like he entered office hoping to cut taxes and raise spending, and thereby increase the debt. As with almost all modern presidents, his agenda was adopted piecemeal, and in modified form.
He also spent a great deal on defense. How precisely that correlates to the end of the Cold War is arguable, though I think it was a major factor. I’m not making the strongest statement I could about this — just saying that it mattered. Of course this defense spending contributed to the deficit as well.
So if we say that Reagan came in with three major items on his agenda: rejuvenate the economy, precipitate the end of the Cold War, and reduce the deficit, well, 2 out of 3 isn’t bad. The increase in the deficit did not happen in a vacuum.
And look, I actually think the Clinton example is instructive. He essentially was operating within a Reaganite structure. The highest tax rates under Clinton were far closer to where Reagan brought them than to what they were under, say, Jimmy Carter. He had a lot more freedom of action because the Soviet Union no longer existed — remember all that talk of a peace dividend? He reformed welfare. He was a Democrat who had absorbed a lot of conservative critiques of Great Society liberalism.
Here’s my point: within 10 years of Reagan leaving office, the deficit was under control AND taxes were right around where Reagan wanted them. The fact that, during his eight years as president, he couldn’t do everything he set out to do is not the real story here. Reagan’s doctrine was not, contra Stockman, that “deficits don’t matter” (the line is Cheney’s, actually, I think), it was that deficits, in this particular situation, can be reluctantly accepted in the pursuit of other goals. As a supporter of the bailouts, you should recognize this logic. And this setting of priorities mainly was because Tip O’Neill ran the House. I’m not sure, if Reagan were dictator, we would have had deficits.
I won’t defend all other Republicans. Especially during the last decade, the Republican party has been terrible on this — they don’t seem to think deficits matters, at least not when forced to choose between deficits and tax cuts. But that doesn’t mean Reagan is to blame. As a pragmatist, you should understand the important of historical contingency and context when reasoning about politics.
Posted by Matt S. | February 7, 2011, 4:51 pmSome fair points here: Tip O’Neill is not without blame. Reagan might not have acted on a blueprint plan, but piecemeal. The Cold War matters, and certainly might explain some of the spending. I think we’d differ over how much can be explained away with that last excuse—but it would mostly be conjecture v. conjecture. I’ll spare us both.
Where I’d quibble:
• “within 10 years of Reagan leaving office, the deficit was under control.” Clinton had slowed down its growth, but the debt from Reagan/Bush was still there, and was trillions of dollars more than it had been during the first 80 years of the century. Slowing the growth of the newly-outrageous debt is not the same as having it under control. Which brings me to another point…
• Clinton adopting “conservative critiques of Great Society liberalism.” It’s telling that Great Society liberalism did almost nothing to raise the debt, even while the nation was still paying off WWII. Which brings me to the point of my post…
• It’s instructive that Bush I and Bush II both picked up exactly how Reagan left off. My argument is that Reagan set the tone (part of why conservatives still claim that we’re in “the Reagan era) for the Republican Party in the decades since. I’m not arguing that Reagan had some well-developed, nefarious plan to sink the government. I’m arguing that at throughout his presidency, he acted in such a way that it set this tone of politics. He raised taxes eleven times during his presidency, but kept spending well above the revenue they generated. As you write at the end of your comment, “the Republican party has been terrible on this.” I’m arguing that it’s because their ideological hero set them this model. It is telling how similar the taxing/spending records of both Bush presidencies were (even with changes in the control of both houses of Congress).
Posted by CPW | February 7, 2011, 5:17 pm