Ronald Reagan's aides talked about "starving the beast." They said it meant "big government," but they had no intention of starving the war machine or the mechanism that dols out corporate welfare. The plan was to let the deficits and national debt get so large that there would be no choice but to slash Social Security and entitlements. He borrowed vast amounts to cover two tax cuts for the rich in 1981 ansd 1986.
Now voters are rightly concerned about the deficit and national debt and are help bent on giving the GOP the power to slash Social Security and entitlements. There are a lot of emotional red flags in this election to distort and confuse, but there is enough data out there to conclude that the GOP will not cut the deficit by hurting the war machine or cutting the George W. Bush 2001 and 2003 tax cuts for the wealthy.
When Reagan gave the rich two big tax cuts, he cited Arthur Laffer to the effect that the cuts would produce much more revenue. Few believed that for more than a few years. Some Republicans said this was the idea of Frederick von Hayek, but the Austrian economist never said this; and he mocked Reagan's excessive borrowing.
David Stockman let the cat out of the bag when he admitted that the cuts reduced revenue and that the game was to hike the deficit as a way of attacking social spending. For telling the truth, the president took him to the woodshed.
Later, Republicans seem to have given up any pretext of slashing the debt. Richard Cheney said deficits did not matter, but he may just have meant that the public only blames Democrats for debt, so well have they been educated about tax and spend Democrats.
Bill Clinton cut the debt and left a surplus in the neighborhood of $230
billion. The Democrats also had a pay as you go polioy that only excluded war and emergencies. They got little credit, and the conventional wisdom that they were the4 tax and spend party continued.
George W. Bush spent the Clinton surplus and ran up a huge deficit with two tax cuts for the rich and two pointless wars. At the end he borrowed another $700 billion to bail out the banks, but his successor , Barack Obama is now taking most of the blame for TARP.
Barack Obama restored Paygo and added seven years to the viability of Medicaid, but got no credit for it.
The Obama administration is now being punished for the TARP borrowing and the fact that the stimulus program, incurring more debt, only headed off a deep depression. It only created 3,300,000 jobs. It did not restore employment because the Bush Great Recession was so great.
Democrats seem reluctant to honestly discuss the stimulus, because they do not want to remind people that they had to borrow and increase the debt. They seem to think, perhaps rightly, that the citizenry cannot understand two-step economic arguments. Others, trapped by beltway thinking, want to borrow for another stimulus.
More borrowing cannot be undertaken because Republicans squandered out ability to borrow. Democrats should try to educate voters and explain some rough realities. Borrowing did prevent a depression and it created jobs. The problem is that there has been so much structural damage done to the economy that more jobs will not come back soon.
Were the national debt lower, we might risk more borrowing. The problem is that years of tax cuts and wars have sharply reduced revenue. Our revenue to GDP ratio is now a bit below 15%, the lowest since the 1940s. In addition to the debt that we can see, there is about $7 billion in municipal defaults that will be part of the national debt by 1215. In addition there are the Treasury and Fed guarantees of bad bank debt that could turn bad. David Stockman put that at $23 billion.
People need to see the situation as it is. Most of the debt came not as a result of Democratic "tax and spend" policies. They are a result of Republican wars, taax cuts for the rich, and bail-outs for banks going back to the 1980s.
The Democrats have been dealt an impossible hand. Still, they should be addressing debt reduction, but that would force them to admit more stimulus cannot be undertaken now. Moreover, a good plan would involve more than cutting the Bush gifts to the rich. No party can safely discuss trimming the war machine. Our conventional wisdom has it that we need to police the world and impose our form of democracy whereever possible.
Democrats cannot even agree on cutting the Bush gifts to the wealthy. Some, like Kent Corad, Evan Bayh, and Ben Nelson buy the conventional wisdom that the tax cuts generate great economic activity.
The Republicans seem assure of a big November victory and ther ability to finally implement the Gipper's plan. They will extend the Bush tax cuts, thus increasing the deficit by more than $2.3 trillion, feed the war machine, impose no cuts on pharmaceuticals on medical insurance, and
bring some savings by gradually privatizing Social Security and trimming other entitlements.
The attack on Social Security and Medicid cannot be frontal; that would cost votes. But Republicans know they must begin substantial cuts in those areas to retain benefits for the wealthy and to feed the military.
Perhaps at some level, many voters think this is the only approach to debt that will work. At any rate, they will have voted for it.