This chapter compares the fiscal policy beliefs and policies of Clinton and Blair. An intensive study of these leaders and the neoliberal ideas that guided them has led us to four important conclusions. First, highly similar fiscal strategies pursued by the Clinton and Blair administrations reflect strong continuities in their core and secondary policy beliefs. Second, the policy strategies followed by Clinton, Blair, and Thatcher were inspired (to varying degrees) by monetarism, whereas those followed by Reagan were based on Laffer's supply-side approach. Third, Clinton's and Blair's success in getting the spending cuts necessary to balance the budget in the United States and Britain stems, in large part, from the fact that they were able to build broad political support within the fiscal policy subsystem. Fourth, for Clinton and Blair, fiscal prudence represented a core aspect of their of policy beliefs as evidenced by the fact that both leaders spent tremendous amounts of political capital toward that effort. Neoliberal tax policy initiatives-a secondary aspect of their policy beliefs-pursued by Clinton and Blair would be designed in accordance with their highest economic priority: deficit reduction.
When Clinton came to power in 1993, the deficit was the most pressing item on the political agenda, and it represented a core issue for the new administration. 1 The urgency to solve the deficit problem stemmed from its recession-related surge at the end of the Bush administration. President George H. Bush's contentious decision to raise taxes on upper-income individuals in 1990 demonstrates the importance of the deficit reduction issue in the political discourse at that time. Bush's tax hike symbolized a break with Reagan's Laffer-curve supply-side approach. By the 1992 election, neoliberal claims that spending proclivity was responsible for economic decline were resonating strongly with voters. 2 It was clear that governments, regardless of their ideological persuasion, would have to commit themselves to the cause of fiscal stability above all other budgetary goals. The ballooning of the deficit to nearly $300 billion under Reagan-Bush made it clear that subsequent administrations that sought to eliminate deficit expenditure would have to
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Publication information: Book title: Fiscal Policy Convergence from Reagan to Blair:The Left Veers Right. Contributors: Ravi K. Roy - Author, Arthur T. Denzau - Author. Publisher: Routledge. Place of publication: New York. Publication year: 2003. Page number: 71.
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