Monday, August 2, 2010

Voodoo

The New York Times thought this was, er, fit to print:
In 1981, traditional Republicans supported tax cuts, matched by spending cuts, to offset the way inflation was pushing many taxpayers into higher brackets and to spur investment. The Reagan administration’s hastily prepared fiscal blueprint, however, was no match for the primordial forces — the welfare state and the warfare state — that drive the federal spending machine.
Soon, the neocons were pushing the military budget skyward. And the Republicans on Capitol Hill who were supposed to cut spending exempted from the knife most of the domestic budget — entitlements, farm subsidies, education, water projects. But in the end it was a new cadre of ideological tax-cutters who killed the Republicans’ fiscal religion. 
That's David Stockman.   Let's see...first, who was in charge of preparing that "hastily prepared blueprint"?  Hey, I know that one -- it's David Stockman (Reagan's OMB director). 

And those nefarious enemies of Reagan's budget?  "The welfare state and the warfare state"?  Well, actually, the real enemy of Reagan's budget was a little thing called arithmetic: the numbers didn't add up.  Which is what, actually, Stockman confessed, long ago.  Here's a taste:
Stockman thought he had taken care of embarrassing questions about future deficits with a device he referred to as the "magic asterisk." (Senator Howard Baker had dubbed it that in strategy sessions, Stockman said.) The "magic asterisk" would blithely denote all of the future deficit problems that were to be taken care of with additional budget reductions, to be announced by the President at a later date. Thus, everyone could finesse the hard questions, for now.
The bottom line in 1981 was that, in budget terms, the Reagan administration got exactly what it wanted from Congress, and whatever private doubts Stockman may have had, he was responsible for submitting budget estimates that were, largely, phony.  It's disingenuous, too, for Stockman to complain that "soon, the neocons were pushing the military budget skyward."  That implies that Pentagon increases came after (and therefore undermined) previous "responsible" budget choices.  In fact, Ronald Reagan had of course run on a major increase in military spending; the commitment to a large military basically preceded the commitment to tax cuts, and at any rate both were long in place by the time Stockman arrived at OMB. 

Indeed, the main criticism of Reagan and Stockman in 1979-1981 was precisely that they were promising the impossible: one could not actually cut taxes, increase military spending, and balance the budget.  The implicit claim that it Stockman (and Reagan?) was on the right course before others jumped in is voodoo history, to go with the voodoo economics.  For better or worse, the turn of the conservative movement from faith in balanced budgets to faith in tax cuts was cemented in the first Reagan budget, and that was David Stockman's budget.

6 comments:

  1. Thank you for taking this apart. I've seen a few liberal blogs trumpeting this column, presumably because it - ostensibly - criticises the current conservative orthodoxy - despite the fact that it's predicated on some assumptions that are, you know, anathema to liberals. Some people are looking too hard for Obama Republicans. Even Frum is a freaking hero.

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  2. Not looking for Obama Republicans. Looking for *sane* Republicans. For our *father's" Republicans. For Republicans who reside in the fact-based universe. Particularly in leadership positions. They don't have to like or support Obama. That's not even the point.

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  3. In the current environment of Republicans insisting that tax cuts and laying off of businesses if you want more jobs and a better economy and an end to this recession, I feel that this piece was striking in its courage. So many people believe this view the Republicans have seemed to have embedded in the perspective of so many Americans. Until we grapple with this perspective, liberals are going to be on the defensive for a very long time. This piece challenges that orthodoxy rather well in my view.

    Its partially true what you say in terms of the early Reagan years (and the supply-siders first found their home in making policy in that administration). However, didn't Reagan raise taxes not long after he lowered them? Is it conceivable that a Republican candidate nowadays would even dream of raising taxes?

    Furthermore, even if the seeds were planted at that time, the piece was still quite counter to all the nonsense of the evils of taxation. And until liberals are willing to focus on the need for more funds instead of why person x did something or person y didn't take enough responsibility, things are going to get worse. I was quite surprised by this piece and to me the measure of its importance was in how the circle Stockman is likely to surround himself or having worked with might take it (as a betrayal I wouldn't be surprised to surmise).

    If you can point me to many others closely connected to the Republican world -- whether from the Reagan Administration or later on -- who have gone this far (Bruce Bartlett perhaps, though he was not nearly as prominent as Stockman) then I would find your point more compelling. Otherwise I'm disappointed that you're not cheering more for this piece as I think its important and one of the very few pieces of evidence that there are prominent folks closely tied to the Republican party who are willing to speak up and admit that the emperor has no clothes.

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  4. DavidT,

    The difference is that Bartlett is honest, and Stockman isn't.

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  5. Bartlett may be honest, but he isn't always exactly clear-thinking:

    "Today, hardly any economist believes what the Keynesians believed in the 1970s and most accept the basic ideas of supply-side economics — that incentives matter, that high tax rates are bad for growth, and that inflation is fundamentally a monetary phenomenon. Consequently, there is no longer any meaningful difference between supply-side economics and mainstream economics."

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  6. Jonathan,

    I got your point re: honesty and Stockman. BTW, thanks for the kind reply. Yet I didn't get a response (or more importantly to me, an acceptance in some fashion that highlights the courage of Stockman's move). There's lots to criticize w/Stockman and one of his failings, at least when he was in the eye of the nation, was his candor as reflected by the famous Greider Atlantic piece (a copy of which I lent a friend and never saw again :). However even if he himself is entirely to blame for inflicting the supply-side nostrum into the Reagan Administration and the succeeding generation of politicians, his piece in the New York Times was still striking in its courage. Don't you think? Or, again, can you cite many other examples of Republicans of that era or after (where is Bob Dole, Howard Baker, Ken Duberstein, Jim Baker and are they so much more virtuous because they didn't write a piece on this subject for the New York Times without admitting whatever contribution they made to the current Republican nostrums?).

    Appreciative of your response but hoping for your greater appreciation of one of the few people to step forward and say what he did (even if he didn't admit greater culpability).

    Respectfully,
    David T

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