On MSNBC's "Morning Joe" this morning, several guests discussed the lack of serious debate on the terrible national debt crisis. One of them was Dave Walker, of the allegedly non-partisan ComebackAmericaInitiative, which sounds pretty much like Pete Peterson's outfit redivivus. This could be because he was the former President and CEO of Pete Peterson's foundation. You know the rap--we have to have a serious discussion of cutting entitlements to balance the budget and reduce the deficit. One minor point wasn't discussed, however, and that is the fact that the reason a lot of serious (as well as not so serious) people are having this conversation is the result of a 30 year program by conservatives to destroy every program which assists poor and middle class Americans.
In 1981, Ronald Reagan began to implement an agenda which, he assured us, would restore fiscal sanity to the US. It involved massive tax cuts, deregulation, and huge increases in defense spending. It wasn't clear to many of us how he could spend more on defense (a LOT more), cut taxes, and balance the budget. Hell, it wasn't even clear to his primary opponent, George H.W. Bush, who famously called it "voodoo economics." (George didn't call it that after he became Reagan's VP). Part of the voodoo was the Laffer Curve, which said that lowering taxes would generate more revenue because it would sprinkle magic dust on the economy and the resulting expansion would pour huge tax revenues into the Treasury.
Well, economists may differ on the effect the cuts had on revenue--some conservatives maintain they did generate more, while liberals say no--but the overall fiscal impact of Reagan's economics was inescapable. When Reagan took office, the US debt from Washington to Carter was just under $1 trillion. When he left, it was $2.8 trillion. Eight years of trickle down, Laffer Curve, voodoo economics had tripled the debt it took the previous 39 presidents 200 years to accumulate. (Note: the figures are available on the BLS website. Because presidents assume office on January 20 but live under their predecessor's budget until 9/30, the end of the government's fiscal year, I used the latter date to measure debt. So the debt as of 9/30/81 was attributed to Carter, although Reagan took office on 1/20/81, and the debt as of 9/30/89 was attributed to Reagan, although Bush took office on 1/20/89, and so on).
And, of course, Bush pere largely continued Reagan's policies, in spite of a small tax hike which conservatives devoutly believe cost him the election (remember "read my lips, no new taxes?"), and after only 4 more years of the conservative economic agenda the debt was $4.4 trillion.
An economic catastrophe, right? Twelve years of Reaganomics more than quadrupled the national debt (but conservatives were still able to run against "tax and spend" liberals--to paraphrase Mencken, no one ever went broke betting on the stupidity of the
American electorate). NO--far from seeing it as a catastrophe, conservatives were elated, because the debt laid the groundwork for conservatism's most basic long term goal--the destruction of the New Deal. Conservatives could now say that, in light of the debt, we must cut back on Social Security, Medicare, food stamps, etc. We just can't afford them.
This is no paranoid liberal fantasy. Reagan's own budget director, David Stockman, famously spilled the beans in an article by William Greider published in the December, 1981 issue of The Atlantic Magazine:
"But, second, Stockman used the appalling deficit projections as a valuable talking point in the policy discussions that were under way with the President and his principal advisers. Nobody in that group was the least bit hesitant about cutting federal programs, but Reagan had campaigned on the vague and painless theme that eliminating 'waste, fraud, and mismanagement' would be sufficient to balance the accounts. Now, as Stockman put it, 'the idea is to try to get beyond the waste, fraud, and mismanagement modality and begin to confront the real dimensions of budget reduction.' On the first Wednesday in January, Stockman had two hours on the President-elect's schedule to describe the 'dire shape' of the federal budget; for starters, the new administration would have to go for a budget reduction in the neighborhood of $40 billion. 'Do you have any idea what $40 billion means?' he said. 'It means I've got to cut the highway program. It means I've got to cut milk-price supports. And Social Security student benefits. And education and student loans. And manpower training and housing. It means I've got to shut down the synfuels program and a lot of other programs. The idea is to show the magnitude of the budget deficit and some suggestion of the political problems'."
Reagan himself said it: "John Anderson tells us that first we've got to reduce spending before we can reduce taxes. Well, if you've got a kid that's extravagant, you can lecture him all you want to about his extravagance. Or you can cut his allowance and achieve the same end much quicker." So did Alan Greenspan in 1978: "Let us remember that the basic purpose of any tax cut program in today's environment is to reduce the momentum of expenditure growth by restraining the amount of revenue available and trust that there is a political limit to deficit spending."
As he so often does, Paul Krugman gave the best summary in February, 2010:
"Rather than proposing unpopular spending cuts, Republicans would push through popular tax cuts, with the deliberate intention of worsening the government’s fiscal position. Spending cuts could then be sold as a necessity rather than a choice, the only way to eliminate an unsustainable budget deficit." He wrote that the "...beast is starving, as planned..." and that "Republicans insist that the deficit must be eliminated, but they’re not willing either to raise taxes or to support cuts in any major government programs. And they’re not willing to participate in serious bipartisan discussions, either, because that might force them to explain their plan—and there isn’t any plan, except to regain power." (Reagan, Greenspan, and Krugman quotes from a Wikipedia article).
I realize the deficit is a long term problem which must be addressed, and I realize that knowing how we got here doesn't reduce the deficit. But knowing how we got here is vital to designing the solutions. If we understand that this is not just the accretion of short-term, ad hoc decisions, but rather the consequences of a deliberate program, we can determine that we will not let it succeed. Make some minor adjustments in entitlements, sure--how about removing the cap on the SS tax--but don't let the supply siders win. We have a giganic bloated defense budget and historically low tax rates. Let's start there.