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.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).
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.
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.