In these dark times, a whole cavalry of fiscally conservative knights quest to slay the civil-liberty-scorching, deficit-belching dragon of Big Government and save our miserly populace from economic terror. But these gallant soldiers are all armed alike: with threats of tax cuts and illusions of grandeur. Quixotically, the fiscal conservatives will face the dragon and, like those before them, perish. Enraged, the dragon will mete out vengeance on the hapless, defenseless commoners. Or at least that’s how the tax-cut fairytale goes, argues former Reagan budget director David Stockman.
Although not a Democrat, Stockman’s views on budget-balancing and deficit reduction—as profiled by Mother Jones—are entirely out sync with the Republican Party’s. And what’s more, Stockman sees the cut-and-spend strategies of contemporary conservatives as grossly adulterated Reaganomics. Mother Jones’ David Corn summarizes Stockman’s account of authentic Reagan-era tax policy:
In the ‘80s, Reagan and his White House crew were eager to cut income taxes across the board. The aim, he asserts, was to fix the slumping economy, not to starve the beast of big government. Republican leaders on the Hill were initially skeptical—they insisted that the White House pass spending cuts before Congress tackled the tax side. “The honest-to-goodness fact,” Stockman says, “is that in February 1981, there wasn’t close to a Republican majority for tax cuts without any accompanying or coupled spending cuts. The idea of supply-side in its purest form”—that tax cuts fuel economic growth that yields increased tax revenues—“was only embraced by a handful of junior Republicans, plus Jack Kemp.”
Corn clarifies that Reagan did jointly cut taxes and spending, but the culture of tax reduction grew much faster than the culture of expenditure slimming. Reagan would go on to pass a number of tax hikes to jump-start the economy. The result, argues Corn, was ideologically consequential:
Republicans took the wrong lesson from that episode, Stockman contends: that big tax cuts are economic magic. For GOPers to argue, as they do nowadays, that only permanent tax cuts spark economic activity is “totally inconsistent with what we used to argue in the 1980s,” Stockman notes. “These were two-year tax cuts, and they’re praising them as Republican doctrine.”
Any respectable, armchair dragon-slayer should offer solutions of their own. Stockman’s suggestion to regain fiscal sanity? “First, cut military spending by $100 to $150 billion a year [. . .] His second point is classic deficit-hawkery: Apply a means test to Medicare and Social Security. His third: ‘Massively raise taxes.’”
Source: Mother Jones