David Stockman’s prophecy of fiscal doom

'80s flashback: Ronald Reagan's budget director lashes out at both parties. Some things never change

Topics: U.S. Economy, How the World Works, Federal Deficit, Budget Showdown,

David Stockman's prophecy of fiscal doomDavid Stockman

Age has not mellowed David Stockman, Ronald Reagan’s first budget director. In an interview published at the Fiscal Times, Stockman rampages against both Republicans and Democrats, and while his language can get a bit over the top, his analysis is hard to dispute.

On the Bush tax cuts:

The two parties are in a race to the fiscal bottom to see which one can bury our children and grandchildren deeper in debt. The Republicans were utterly untruthful when they recently pledged no tax increases for anyone, anytime, ever. The Democrats are just as bad — running their usual campaign of political terror on Social Security and other entitlements while loudly exempting all except the top 2 percent of taxpayers from paying more for the massively underfunded government they insist we need.

The fact is, the Bush tax cuts were unaffordable when enacted a decade ago. Now, two unfinanced wars later, and after a massive Wall Street bailout and trillion-dollar stimulus spending spree, it is nothing less than a fiscal travesty to continue adding $300 billion per year to the national debt. This is especially true since these tax cuts go to the top 50 percent of households, which can get by, if need be, with the surfeit of consumption goods they accumulated during the bubble years. So Congress should allow the Bush tax cuts to expire for everyone. By doing nothing, the government would be committing its first act of fiscal truth-telling in decades.

And there’s more where that came from.

David Stockman’s fame, of course, derives from his unmatched ability to say what he really thinks, even when talking to a reporter while serving as a government official. William Grieder’s blockbuster 1981 Atlantic magazine profile, “The Education of David Stockman,” endures today as one of the most penetrating illuminations of how government really works — or doesn’t. For anyone reeling from too much exposure to the dysfunctionalities laid bare by the last two years of political wrangling, it’s kind of refreshing to go back and reread the doomed tale of Stockman’s efforts to balance the budget in the age of Reaganomics. Not much has changed, although the numbers involved have gotten much, much bigger.



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Here’s a passage that especially resonates. Stockman is bemoaning the compromises that had to be made to accomplish any kind of agenda

“I now understand,” he said, “that you probably can’t put together a majority coalition unless you are willing to deal with those marginal interests that will give you the votes needed to win. That’s where it is fought — on the margins — and unless you deal with those marginal votes you can’t win.”

In order to enact Reagan’s version of tax reduction, “certain wages” had to be paid, and, as Stockman reasoned, the process of brokering was utterly free of principle or policy objectives. The power flowed to the handful of representatives who could reverse the majority regardless of the interests they represented. Once the Reagan tacticians began making concessions beyond their “policy-based” agenda, it developed that their trades and compromises and giveaways were utterly indistinguishable from the decades of interest-group accommodations that preceded them, which they so righteously denounced. What was new about the Reagan revolution, in which oil-royalty owners win and welfare mothers lose? Was the new philosophy so different from old Republicanism when the federal subsidies for Boeing and Westinghouse and General Electric were protected, while federal subsidies for unemployed black teenagers were “zeroed out”?

The parallels with the travails of the Obama tacticians are beyond obvious. The main difference between then and now? Democrats crossed party lines in droves to support the Reagan Revolution. Republicans, aside from two or three Senate moderates, rejected every part of the Obama agenda.

As a side note, I have to say I was both amused and perturbed to see that the first section of Grieder’s masterful article is subtitled “How the World Works.”

How The World Works. It was a favorite phrase of Stockman’s, frequently invoked in conversation to indicate a coherent view of things, an ideology that was whole and consistent. Stockman took ideology seriously, and this distinguished him from other bright, ambitious politicians who were content to deal with public questions one at a time, without imposing a consistent philosophical framework upon them.

But the education of David Stockman is all about his emerging realization that the world does not work, a tragic, extended epiphany that is also hard to deny.

The world was less manageable than he had imagined; this machine had too many crazy moving parts to incorporate in a single lucid theory. The “random elements” of history — politics, the economy, the anarchical budget numbers — were out of control.

Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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