I am going to reproduce below an article I first wrote in 2011, titled “The Return of Voodoo Economics.” To set the stage, this was just after the Republicans had delivered the Democrats a “shellacking” in the 2010 midterm elections, picking up an astonishing 63 seats. That rout brought to power a Tea Party-fueled GOP majority that vowed to administer the harsh medicine America’s sick polity needed, by pushing deep cuts to government spending. This was necessary to put America’s fiscal house in order, which itself was both an economic imperative and a moral one. America, so this narrative went, had for too long been on a drunken spending bender, the result of which was looming economic disaster. We were spending beyond our means and, in the process, sending the wrong moral signals to ordinary Americans, protecting them from the discipline that free markets impose and that, in our once glorious past, made America’s economy so dynamic, innovative and prosperous. Indulgent liberalism had replaced what made America great - the freedoms necessary to unleash its natural talents and the work ethic that ensured people got what they deserved - with a runaway welfare state that coddled people, perverted incentives and led to social breakdown.
I’m sharing the 2011 piece here because, with a different cast of characters, it provides what remains important historical context for understanding the arguments that the GOP’s so-called budget hawks have long proffered and that you’ll be hearing repeatedly over the next two years. Bear in mind that many of the new so-called fiscal warriors, many of whom are allied with the Freedom Caucus and were at the heart of the mini-rebellion against Kevin McCarthy last week, supported the Trump tax cuts in 2017, including Andy Biggs, Matt Gaetz and Paul Gosar. Those tax cuts, to continue a longstanding GOP tradition, overwhelmingly benefitted the already well-to-do. At the same time, they increased the budgetary deficit which1, now that a Democrat is in the White House - in another longstanding tradition - makes deficits an unconscionable stain on our nation’s soul.
OK, without further ado:
With Congressional Republicans insisting that we have to attack the sickness of spending that, in Speaker John Boehner's words, is afflicting Washington, it's worth recalling some recent history.
In 1981, Ronald Reagan's budget director David Stockman admitted to Sen. Daniel Patrick Moynihan, a Democrat from New York, that running up "strategic deficits" was a useful political tool because it "gives you an argument for cutting back programs that really weren't desired and giving you an argument against establishing new programs you don't really want." Stockman noted further that strategic deficits can enable opponents of public investments to sound compassionate, providing them with opportunities to use phrases like "We can't steal from our children to pay for our short-term desires" to oppose government spending.
Reagan had run on a platform of reining in government spending and waste and on promises to put our house in fiscal order. Reagan insisted that deep cuts in personal income and capital gains taxes would result in increased tax revenue for the government because of the wealth-generating benefits of the cuts - so-called supply-side economics. During the 1980 campaign, his future vice president, George H. W. Bush, mocked supply-side theory as "voodoo economics." Of course, during his eight years in office, Reagan presided over an explosion in government deficits and a more than doubling of the national debt. But he also achieved two goals critical to modern conservatives: He dramatically shifted wealth from ordinary Americans to the very wealthy, and he made "deficit reduction" a useful code for hamstringing government efforts to help the less well-off.
When George W. Bush became president in 2001, he inherited large projected surpluses. Bush set about attacking those surpluses, passing large tax cuts in 2001 and 2003 that overwhelmingly benefited the wealthy and combined with the Bush wars and Medicare drug prescription plan were largely responsible for wiping out those projected surpluses and replacing them with large projected deficits." Like Reagan, Bush accomplished two cherished goals in the process further transferring wealth to the wealthiest Americans while putting Congress in a "straitjacket" with respect to critical investments in the nation's infrastructure and social programs. As conservative columnist and Bush cheerleader Fred Barnes put it at the time, "The most important fan of strategic deficits in Bushland: Bush." Like Reagan, Bush certainly succeeded, if success is defined as running up large deficits that constrain future efforts to address adequately the nation's pressing social and infrastructural needs.
At the start of 2011, the GOP remains deeply dishonest about its motives for screaming about red ink. Every action they have taken makes clear that their goal isn't deficit reduction or fiscal responsibility. Rather, their intention, largely unchanged for 30 years, is - broadly speaking - to shill for the wealthiest Americans while insisting that everyone else keep a stiff upper lip.
Consider the budget "road map" offered last year by Wisconsin Republican Paul Ryan. Ryan has emerged as the leading congressional spokesman in his party on fiscal issues. And his "road map" did offer by far the most detailed and widely discussed GOP blueprint plan for deficit reduction. That plan offered, in the words of one commentator, a "breathtaking vision of how the government would operate in the 21st century if conservatives had their way," including increases in taxes for everyone except the rich, largely replacing Medicare with a voucher system and deep cuts to Social Security. And at the end of the day, the Ryan plan would ...wait for it ... not reduce the nation's deficits.
Ryan says otherwise, of course. But in a brazen act of deception that has become entirely typical of today's GOP, Ryan insisted that the Congressional Budget Office supported his contention that the road map cuts deficits, when the CBO said no such thing. In fact, Ryan only asked the CBO to "score" his spending cuts while leaving out the deficit-increasing effects of his tax cuts. Having asked the CBO to score, in effect, a fake proposal with fake parameters, he declared "mission accomplished." Nice work if you can get it.
Ryan refuses to consider that tax cuts would undermine his plan to cut the deficit - par for the course for the Republican Party, circa 2011. This is the party, after all, whose leaders now commonly assert that tax cuts don't actually cost anything and which has adopted new spending rules in the House that reflect that claim. If it sounds like voodoo economics, it is, but with a vengeance. Top marginal tax rates are already half of what they were 30 years ago. Income inequality is at levels not seen since the 1920s. And the top 1 percent of earners captured half of all economic growth in the United States between 1993 and 2007. Given these facts, it's even more brazen and dishonest now than it was 30 years ago to insist that the cure for what ails America is to reduce taxes on the rich while telling everyone else to wait for the goodies to "trickle down."2
Ryan, unsurprisingly, voted for those Bush tax cuts, the ones that contributed decisively to converting those large projected surpluses into deficits, the deficits he now claims to be on a crusade to eliminate. …
There is a serious debate to be had in this country about pressing challenges: mushrooming health care costs, the enormous expense of maintaining Pentagon expenditures and balancing the needs of struggling Americans against legitimate long-term concerns about our fiscal health. But the Republican Party today, as an institution, is simply not a serious or credible participant in that debate. Their leaders have engaged in serial dishonesty about what ails America and what can be done to put the country on a more sound and just economic course, shilling for the wealthy interests they faithfully represent while claiming to be concerned that deficits are the moral equivalent of stealing from our grandchildren.
Thirty years ago, Stockman told an interviewer that the theory behind supply-side economics was suspect at best, but that it was a "trojan horse," the only way to get through Congress the tax cuts on the top earners that, Stockman confided, was the real goal of Reagan's supply-side mantra. Today's GOP leaders routinely cite Ronald Reagan as their hero. And one has to be impressed by how well they've learned from the master of modern political deception to misrepresent so fully what they really stand for.
As I said, we’re going to be hearing these kinds of arguments repeatedly over the next two years. And the stakes are perhaps higher than ever. There is a real possibility that the new House majority will try to force a government shutdown default and, even more consequentially, a default on United States debt payments. To justify such destructive behavior, evangelizing deficit warriors will reiterate the same dishonest arguments we’ve been hearing for forty years. It will be critical for political media reporting on this to remind readers of the context in which these arguments are being made. From my platform, for whatever its worth, I’ll try to do my part.
It has been consistently true since 1981 that deficits have increased under Republican presidents and declined under Democratic ones. As Stephen Colbert once said, reality has a well-known liberal bias.
The deficit-increasing Trump tax cuts are set to expire in 2025. Key members of the Freedom Caucus, surprise, surprise, wants to make them permanent.
One of the sad ironies of this whole scam is that the business world the GOP represents recognizes you need to accrue debt through investment in order to reap future projects. It took Tesla 18 years to have its first profitable year, yet Wall Street cheered it on for well over a decade. Trump in 2020 reportedly had $1b in debts, yet his supporters would write off those debts as "wise" investments. I wonder how Americans would react if the Democrats would say, "Okay, we agree that debts are bad, so we are going to balance the budget and pass the law that all Americans must also balance their budgets - no more stealing from your childrenby accruing credit card debt!"
Exactly right, Steve. To add to your list - taking out a mortgage to buy a house, or using a small business loan to start a business, or borrowing money to pay for college. We don't want people to be saddled with debts they can't pay. But no economy can function without borrowing.