Rampell: One more thing Bush got right: ‘Voodoo economics’

The elder Bush wisely opposed the still-vaunted GOP canard that tax cuts pay for themselves.

By Catherine Rampell

Many have mourned former president George H.W. Bush as the last of his kind. Mostly they eulogize his decency (racist Willie Horton ad notwithstanding), his physical courage, his commitment to public service.

But Bush was end-of-an-era in another crucial way. He may well be the last Republican leader to acknowledge the fundamental fraud of Republican fiscal policy: that tax cuts do not pay for themselves.

Almost 40 years ago, during the 1980 presidential primary, Bush famously characterized the agenda of then-rival Ronald Reagan as “voodoo economics.”

Bush was referring to supply-side policies that claimed tax cuts for the rich would unleash so much growth that they’d generate enough revenue to fund themselves.

Characterizing Reaganomics as “voodoo” was colorful, yes, but it wasn’t crazy. Of course it was ridiculous to claim you could increase tax revenue by cutting taxes.

Bush walked back his criticism after he became Reagan’s vice president. First he denied he’d ever called Reaganomics “voodoo.” Then, when reporters dug up the footage, he said he’d been “kidding,” and, in any case, supported Reagan’s agenda.

But even Reagan knew his fiscal promises were a scam.

Reagan began his presidency with an enormous tax cut, the Economic Recovery Tax Act of 1981. Literally weeks after he signed the bill, his administration began scheming to roll back those cuts because they were concerned about rising deficits.

Over subsequent years, Reagan endorsed and signed into law 11 different tax increases, as economist and former Reagan official Bruce Bartlett has documented.

In the end, Reagan took back about half the value of his splashy 1981 tax cut, Bartlett estimates.

How did Reagan avoid getting accused of reneging on his promise? He used euphemisms. Those necessary, deficit-plugging tax increases weren’t really tax increases! They were “revenue enhancements” or “receipts strengthening.”

Incidentally, the Reagan budget official who came up with these euphemisms, and thereby helped paper over the lies of supply-siderism, was a genial young fellow named Larry Kudlow, now President Trump’s top economic adviser.

In any case, when the 1988 election rolled around, Bush made the risky decision to publicly commit himself to a supply-side-sounding agenda. “Read my lips: No new taxes,” he pledged.

Officials who served with Bush in the Reagan administration have said they thought immediately this pledge was a mistake, and that Bush likely didn’t expect to keep the promise.

“I was really stunned when he said it,” said John “Buck” Chapoton, who served as Reagan’s assistant treasury secretary for tax policy.

Bush was a Republican in the Eisenhower mold, as tax historian Joseph Thorndike puts it, a conservative who didn’t especially like tax increases, but who prioritized broader fiscal responsibility over a narrow tax-cutting agenda. He was pragmatic, and pragmatism required dealing with rising deficits through both sides of the budget ledger.

Perhaps Bush counted on the soothing power of the right euphemism. Bush’s own Office of Management and Budget pick made that virtually impossible, though, when he testified before a Senate committee about what kinds of measures the no-new-taxes pledge would apply to. If it looks, walks and quacks like a duck, he said, “it is a duck.” Call it what you like, but a “revenue enhancement” is a tax.

Ultimately, of course, Bush agreed to do the right thing for his country, if not for his political career, by agreeing to a tax increase as part of a 1990 budget compromise. Insurgents in his own party turned against him. And when Bush ultimately lost his re-election bid, the broken pledge was blamed, perhaps unfairly, given that other factors (such as Ross Perot’s independent bid and the sluggish economy) also weighed against him.

As a result, the zombie ideas of Reaganomics only grew stronger.

Bush’s son — who inherited budget surpluses from Bill Clinton — passed massive deficit-financed tax cuts. At the time, the conservative Heritage Foundation laughably predicted the cuts would eliminate the national debt by 2010. Needless to say, that didn’t happen: They added $1.5 trillion to deficits, excluding interest and extensions.

In the years since, professional supply-side shills have continued peddling this fiscal fiction. Last year they crafted the GOP’s $1.9 trillion deficit-financed, top-heavy federal tax cut. Just a few years prior, they convinced Kansas to ax its tax rates, too, resulting in huge, end-the-school-year-early revenue shortfalls. More recently they’ve been working to persuade other states to do the same.

Somehow we keep running the same voodoo “experiment” over and over, relearning the hard way something that was obvious to Poppy nearly 40 years ago.

Catherine Rampell’s email address is crampell@washpost.com. Follow her on Twitter @crampell.

Talk to us

More in Opinion

Editorial cartoons for Saturday, June 6

A sketchy look at the news of the day.… Continue reading

Schwab: Trump won’t address racism, so that work is left to us

Unwilling and incapable to unite us, Trump uses the unrest to his benefit. What’s our response?

Commentary: Policing reforms face tough odds in Congress

Despite bipartisan support, legislation passed in the House would face unwillingness in the Senate and Oval Office.

Recall words of MLK: Riots are ‘language of the unheard’

Since the world-wide circulation of video showing the death of George Floyd… Continue reading

Gift of onions to veterans was appreciated

I wish to thank Karisa and her coworkers at New Roots Organics… Continue reading

Editorial: To restart the economy we need cash and childcare

Congress needs to extend economic stimulus support to individuals, businesses and local governments.

Editorial: Hard to see now, but we walked reform path before

In Initiative 940, we have an example of how to confront the issues that preceded ongoing unrest.

Editorial: Work ahead even if county can move to Phase 2

While easing restrictions would be welcome, there’s much to be done to get the economy going again.

Editorial cartoons for Friday, June 5

A sketchy look at the news of the day.… Continue reading

Most Read