JONATHAN CHAIT AUGUST 2, 2010
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Former GOP House staffer Scott Galupo, while crediting my skepticism of supply-side economics, thinks I give Bill Clinton too much credit for the 1990s surpluses, when the credit belongs to House Republicans:
The idea it was Clinton’s boldness alone—just a triviality that he was dealing in those days with a deficit-hawkish Republican Congress—that cleaned up a fiscal mess is equally risible. I was a (lowly) congressional staffer in those days; I remember the appropriations fights, the threats of White House vetoes, the howls of protest at cruel Republican budget slashers.
It wasn't Clinton's boldness alone that caused the budget surplus to appear. George H.W. Bush's 1990 deficit reduction deal, which was also denounced in apocalyptic terms by conservatives, did more to reduce the deficit than Clinton's 1993 budget. The 1990s economy helped as well, though both Bush and Clinton deserve credit for helping lay the groundwork for that growth by putting sensible fiscal policy into place.
Galupo makes three points in defense of his claim that Republicans deserve more credit than Clinton for the surplus:
It was Contract with America-era Republicans that established the rhetorical framework within which the aforementioned budget fights occurred.
Here’s liberal columnist E.J. Dionne assessing the Clinton presidency in an exchange with Robert Kuttner:
"[D]uring the mid-1990s, Clinton himself tacked further to the right than the situation required. He embraced a Republican view of welfare reform. He went along with a brutal immigration bill and assaults on civil liberty in the name of crime control. He accepted the idea of a balanced budget—and then when an economic boom pushed the budget into surplus, he declared that he would pay off the entire national debt."
Clinton's declaration in favor of paying off the national debt was indeed a fiscally conservative position. But it wasn't a capitulation to conservatives -- it was a direct repudiation. Republicans proposed to dissipate the surplus through tax cuts. Clinton insisted on saving the surplus, vetoing their plan, though Republicans ultimately succeeded when Clinton left office and was replaced by a Republican who shared their tax cuts uber alles ideology. Republicans deserve approximately the same share of credit for preserving the 1990s surpluses as the America First Committee does for winning World War II.
Second,
And here’s the Clinton White House’s own website, boasting of a rather important piece of legislation conveniently unmentioned in narratives of deficit reduction that stop at 1993:
"[H]e signed the Balanced Budget Act of 1997, a major bipartisan agreement to eliminate the national budget deficit, create the conditions for economic growth, and invest in the education and health of our people."
I understand why the Clinton administration likes to claim the 1997 Balanced Budget Act as an achievement. But it did nothing to reduce the deficit. By 1997, the deficit was dwindling away to nothing. The role of the "Balanced Budget Act" was to take credit for something that was about to happen anyway. The cuts same in the form of lower discretionary spending caps which were never implemented. It did reduce Medicare spending, but devoted all the savings to a children's health insurance program and a capital gains tax cut. Budget experts I've spoken with believe deficit would have been lower if the Act had never passed into law.
Third, Galupo dismisses the 1990s surpluses as mere projections:
It’s critical to remember, too, that ’90s-era surpluses were never cold cash under the federal mattress, but, rather, projections that evaporated with the NASDAQ meltdown, 9/11, and, yes, the Bush tax cuts of 2001.
That's not true at all. By the end of the Clinton administration, the federal government was paying off the national debt:
Now, it's true that the surpluses projected to continue indefinitely into the future disappeared. But the surpluses were, in fact, cold cash. They were bound to disappear even without Bush's policies. But, of course, the probability that they'd disappear was exactly why Democrats insisted that enacting permanent tax cuts was such a bad idea. Republicans scoffed at the warning that the surpluses would prove temporary. (You can find copious examples in my book.) Once again, they were wrong.
6 comments
Conservatives look back at the Clinton era and claim that they were deficit hawks. But you can't do this when you supported large tax cuts. It is as if I told my child that I would pay for him to go to college but then I blew the money on a luxury car, expensive clothes, and vacations. It has now been more than thirty years since conservatism could actually claim to be fiscally responsible. And that responsibility shows no sign of reemerging any time soon.
- liberal reformer
August 2, 2010 at 1:17pm
I have a suggestion for a name for the brand of conservatism you write about here, Jonathan: tax-cutting deficit hawks.
- liberal reformer
August 2, 2010 at 1:18pm
Well, I have a different reading of the whole thing. As I saw it, the 94 conservatives had some principle, for politicians anyway, and went into Congress thinking they would make some 'change' of their own. Change they actually believed was good for the country and a corrective to the excesses of bloated government. A big part of that change was actual spending restraint- balanced budget amendments, entitlement reform- these were the topics that filled the air back then. A funny thing happened though on the way to shutting down the government (a fight over unpopular spending cuts, btw, that if nothing else, certainly took political courage) and being given a flogging by the Clinton administration over all and sundry in the court of public opinion. They got torched in the 96 election so badly that the true believers, including their pre-makeover leader Gingrich, got pushed out. In its stead rose the hooey party of George W Bush, which is to say the hooey party that would come to be exemplified by George W Bush, replete with all the pandering to key constituencies and absurd extremes of corruption we have come to know and love. Despite the new PR wrapper, this is still the GOP we have to this day, with the same faux-spending restraint, e.g. 'deep spending cuts' that apply in their specificity to something like 4% of the budget consisting of things like token programs for the poor, but do nothing about middle class entitlements, defense, infrastructure, farm subsidies or other corporate welfare programs, (e.g. Dick Cheney brand subsidies for the oil & gas industry). The same PR-first policy-never party first to come up with an underwear gnomes approach to health reform i.e. 1. increase access to all punters, eliminate regulations- except for new one pertaining to pre-existing conditions, eschew 'rationing' of any kind, keep government hands off my medicare, etc. 2. ???, 3. cost curve bends down eliminating exploding heath care costs as problem for the country. That's my recollection of events anyway. 94 - 96 were the last years the Republican party had any sincerity when it came to legislation regarding the nation's massive problems. They deserve some credit for whatever fiscal restraint we had in the 90s, though less than the Bush I and Clinton budgets that raised taxes and cut spending. IMO.
- I Majorajam
August 2, 2010 at 2:09pm
Just reminds you of the total failure of the Clinton/Greenspan years. With hindsight: How much of that deficit reduction was actually real? Gordon Brown did the same thing with the mobile licence money. Will Hutton begged him to spend some of it on regional centres of excellence but he threw all of it at the bondholers. The difference of course is that Blair/Brown, for all their failures, actually invested in the public infrastructure, most notably the NHS, and didn't declare class war on single mothers by forcing them to forego any prospect of advancement through college and training by teaching them "the value of work" in a welfare reform 40 hour week at the McDonalds that's 20 miles away.
- IggyPop
August 2, 2010 at 4:18pm
Major, when you call for fiscal restraint out of one side of your mouth and for substantial tax cuts out of the other, you have no credibility as a deficit hawk. A balanced budget requires a mixture of tax increases and spending cuts. Sometimes (often?), peoples' principles are no good, not infrequently because they call for diametrically opposed goals.
- liberal reformer
August 2, 2010 at 4:43pm
I remember three things from the Clinton era. The Republicans took away a meeting room for the black caucus. Clinton made it clear that if taxes were not raised Republicans would be responsible for the death of social security. On the TV show crossfire, Michael Kinsley asked a Republican something to the effect, "Why don't we eliminate taxes altogether and just go with straight borrowing for everything?"
- Nusholtz
August 5, 2010 at 3:47am