Principle over Politics? The Domestic Policy of the George H. W. Bush Presidency

By Richard Himelfarb; Rosanna Perotti | Go to book overview

Discussant: Michael J. Boskin

The best time economically to take serious action against large, persistent structural budget deficits is when the economy is strong—for example, the late 1980s or currently. The cyclical deficit rises as tax revenues decline and social spending increases as unemployment rises. The public, political, and media discussion focuses on the actual deficit, whereas economists tend to focus on cyclically adjusted budget deficits, sometimes called structural deficits.

Despite the conventional wisdom, taxes as a share of the gross domestic product were not cut during the Reagan administration; they stabilized around 19 percent of GDP. The deficits were a result of spending rising relative to GDP. Thus, President Bush strongly committed in the 1988 campaign to do something serious about the budget deficit by controlling spending—that is, imposing a real spending flexible freeze. He was quite aware that this would require a serious whack at defense and entitlements, especially the latter, relative to projected baseline budget growth.

Unfortunately, it was decided for political reasons not to press for these budget priorities in the first year of the Bush administration. This was a major mistake, because the economy was sure to soften over the coming year—the Fed had raised interest rates 300 basis points in the ten months prior to his inauguration—and because the president received over 400 electoral votes running on this fiscal program. It made lots of sense economically as well as politically. But the feedback was that under no circumstances would the Democrats agree to any serious control over spending unless the president would go along with a major tax increase, and the president and most of his advisors—including myself—were strongly opposed to considering such an outcome for both economic and political reasons.

Meanwhile, the second round of disinflation ensued, the economy slowed, and budget projections were way off for technical reasons, such as the enormous growth of Medicare and Medicaid expenditures above previous trends. The cost of the savings-and-loan resolution, including temporary working capital and a variety of regulatory problems, were worsening the credit crunch in financial institutions. The president wound up in serious budget negotiations the following year in a much weaker economy. Contrary to popular belief and numerous press statements, the president was quite aware of what was going on in the economy. This was no secret. The economy performed very closely to the administration’s officially published economic forecasts.

I had always taken President Bush’s “no new tax” pledge seriously. I also believed that it would be difficult to get the Democrats in the Congress to go along, and that the president would have to either get a close-enough approximation, having prepared the public for what was finally negotiated, or blame the Democrats for failure to reach a budget agreement and run against them in the midterm election.

-64-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this book

This book has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this book

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited page

Bookmark this page
Principle over Politics? The Domestic Policy of the George H. W. Bush Presidency
Table of contents

Table of contents

Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen
/ 452

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.