While Republicans oppose the Democratic plan, few can credibly do so by invoking the danger of large budget deficits after the Trump years — when the deficit grew despite a strong economy with nary a word from most of the congressional GOP.
This is the culmination of a major shift over the past three decades. In the 1990s, balancing the budget was a priority for both parties. But this was a moment of consensus that has faded. As the Republican Party has shifted to the right since the Reagan era, it has become far more consumed with cutting taxes than balancing the budget. And as the left wing of the Democratic Party has gained momentum over the past decade, it has become more concerned about achieving its goals through social spending, believing that the risks of budget deficits aren’t as great as once thought.
By the late 1960s, Republicans had long been known as the party of fiscal rectitude, as moderate conservatives like Dwight D. Eisenhower made a balanced budget their top economic priority. As White backlash smoldered over Lyndon Johnson’s Great Society, this reputation provided a political club to attack social welfare programs (and attract new voters) under the mantle of combating what Republicans deemed Democrats’ fiscal recklessness.
A new generation of Democrats scrambled to show they could be responsible financial stewards, lest they be tarred as “tax-and-spend liberals.” In 1976, Jimmy Carter ran against the federal bureaucracy and then took on liberals in his own party when he took office. He recalled “stricken” expressions on the faces of Democratic leaders when he discussed balancing the budget during meetings. Even Carter’s vice president, the more traditional liberal Walter Mondale, proposed raising taxes to close the deficit when he ran for president in 1984; in 1988, Michael Dukakis repeatedly invoked the multiple budgets he balanced while governor of Massachusetts during his presidential campaign.
These Democrats leaned in to fiscal conservatism even as Republicans began to embrace tax cuts over balanced budgets as their top economic priority. Republicans had tired of the reputation that they were Scrooge-like, and figures like Rep. Jack Kemp (R-N.Y.) and Ronald Reagan promoted the new supply-side theory that promised that tax cuts would pay for themselves. This theory allowed Republicans to sell themselves as fiscally responsible, even while offering voters a new benefit — lower taxes. Yet that premise flopped when deficits soared after Reagan’s 1981 tax cuts.
Crucially, however, many traditional fiscal hawks like Sen. Bob Dole (Kan.) remained in positions of power in the Republican Party and joined with Democrats to push for tax increases to close the budget hole.
Before becoming vice president, George H.W. Bush had been one of those fiscal hawks — labeling Reagan’s economic program “voodoo economics” during the 1980 Republican primary. This background stirred suspicion on the right about Bush’s fealty to tax cuts. Trying to put it to rest, he famously and unambiguously declared, “Read my lips: no new taxes,” at the 1988 Republican Convention.
Yet the suspicions proved justified as, once in office, Bush broke his pledge and negotiated a deficit reduction package with congressional Democrats that included tax increases. In response, House Minority Whip Newt Gingrich (R-Ga.), a leader of the new generation of tax-cutting Republicans emerging from the Sun Belt, led a revolt, forcing Bush to agree to a new package that could garner more Democratic support.
Even so, Bush’s 1992 opponent, Arkansas Gov. Bill Clinton, campaigned on cutting the deficit. After Clinton won, it became clear that the deficit was going to be higher than anticipated. Many of his moderate economic advisers urged a laserlike focus on balancing the budget to build confidence and lower interest rates. Indeed, they argued that his reelection depended on it, much to the frustration of Clinton and his campaign team.
And so, Clinton jettisoned a middle-class tax cut and some of the investments in education and training he had also campaigned on, pushed through higher taxes on the wealthy, raised the gas tax and implemented spending reductions. Some Democrats wanted even more steps taken to restrain entitlement spending. “Where are all the Democrats?” bemoaned Clinton, “We’re Eisenhower Republicans here, and we are fighting the Reagan Republicans. We stand for lower deficits and free trade and the bond market. Isn’t that great?”
After Republicans captured control of Congress in 1994, now-Speaker of the House Gingrich tried to implement tax cuts and a balanced budget, through steep spending cuts. Though many of his advisers solely wanted to attack the Republican plan, Clinton nonetheless proposed his own path to a balanced budget. The ensuing budget standoff shuttered the government, hurt Republicans politically and helped propel Clinton to reelection. Gingrich and his disciples looked callous for advocating deep cuts to popular social programs, while Clinton appeared to be a responsible fiscal steward.
Finally, in 1997, Clinton and congressional Republicans agreed to a balanced budget deal. By 1998, the combination of the various deficit reduction efforts and strong economic growth produced a surplus for the first time since 1969.
It proved short-lived. After witnessing the conservative anger toward his father’s tax hike, George W. Bush cut taxes twice, even while increasing federal education spending and adding a prescription drug benefit to Medicare (some conservatives objected to the new spending, while cheering the tax cuts). Combined with a recession early in his term and spending on the post-9/11 wars, these policies produced new budget deficits. But when challenged about the growing red ink by Treasury Secretary Paul O’Neill, Vice President Richard B. Cheney spelled out the new Republican orthodoxy, instructing him that “Reagan proved deficits don’t matter.”
Democrats, including Barack Obama, remained attuned to the deficit, even as it spiked thanks to the Great Recession. Yet Obama’s rhetorical fealty to the need for fiscal discipline was not sufficient for the new tea party movement, which helped Republicans capture the House in 2010 with attacks on the deficit. And yet, when Obama tried to negotiate a grand bargain with House Speaker John A. Boehner to balance the budget with revenue increases and cuts in Medicare — pain for both parties — the deal fell apart.
The final blow to deficit orthodoxy came during the Trump years. The working-class voters Donald Trump brought into the GOP often rely on government programs — especially Medicare and Social Security — and have little interest in spending cuts. Trump himself had no fixed ideological commitments, and tea party conservatives like Ohio Rep. Jim Jordan and North Carolina Rep. (and then Trump chief of staff) Mark Meadows, who had fumed about fiscal responsibility during the Obama years, made peace with large tax cuts and higher deficits.
At the same time, the left wing of the Democratic Party grew in strength, and many liberals came to believe that deficits were not as problematic as previously believed, with some economists hypothesizing that government could run up higher debts without harming the economy. No longer would these concerns constrain Democratic ambitions as they had under Carter, Clinton and Obama.
The shift in Republican orthodoxy dating to the late 1970s, combined with this new balance of power in the Democratic Party, has paved the way for what may be the most liberal Democratic administration since Johnson’s. No wave of opposition has appeared on the right with the intensity of the tea party of 2009-2010, and while moderate Democrats like Sen. Joe Manchin III (W.Va.) and Sen. Kyrsten Sinema (Ariz.) appear uncomfortable with the current legislation, it remains to be seen what impact they will have on the final bill.
Today few on either side argue that the deficit should be a top priority. Republicans have decided that their voters are far more concerned about tax cuts and cultural issues than the old fiscal conservatism. And Democrats now believe they won’t pay an economic or political price for deficit spending to achieve more important policy goals.
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Perspective | Over three decades, both parties stopped caring about the deficit - The Washington Post
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