The Last Showdown Over Deficits: 1990 and George H. W. Bush

We have no idea what the details are in this so-called deal.  They’ve talked about a compromise deal that would produce $3trn in savings from spending cuts and just hazy promises of new revenue in the future.  Let’s tell the truth, the Republicans want no new revenue coming in at all.  That is their mission.

But if President Obama goes after something like this, he will need Republican votes to get it.  That reminds me of the last great showdown over deficits:  the 1990 budget deal, his “No new taxes!!” pledge and cut a sweeping deficit reduction deal with congressional Democrats.  That tormented Bush in different ways for the rest of his time in office.

That ’90 agreement was the products of six month of negotioations between Bush and a bipartisan group of congressional leaders.  Deficits were soaring and Democrats, who at that time controlled both houses of Congress, demanded that any plan include a significant revenue part.  Does that sound familiar?   Regardless of his campaign promise of no new taxes, Bush was more practical and willing to go along.  So were Bob Dole and Bob Michel, the practical conservatives who led the GOP in the House and Senate.

The spectacle came in two parts.  First, the plan was drawn up that relied on fees, excise taxes, cuts in social welfare programs, and new restrictions on tax deductions.  The plan was to cut the deficit by $500 billion over five years, with the idea that Bush would be able to say that he hadn’t raised income tax rates on anyone.  Also, to keep conservative Republicans in the House in line.  But, the Democrats got mad, they believed that this deal put too much on the middle-class and the poor. Then there was the shooting star, Hooting Newt who urged the conservatives on.  In October ’90 the deal when down in flames.

Then came the government shutdown.  Bush’s approval ratings dived.  Then he agreed to a plan that moved more the burden to the wealthy by raising the top marginal income tax rate from 28 to 31 percent.

The war was on.  Republicans marked Bush a sellout.  The bill passed and Bush signed it.

Bush had become a supply side theory believer, despite calling Ronald Reagan’s theory “voodoo economics.”  But Bush, with this ’90 budget proved that he was a pretender.  The first Gulf War made him a hero again.  Then the economy tanked.

“Read our lips!” was the cry.  He made a terrible mistake making the “Read my lips” promise.

Can Obama , if he goes after a deal that alienates his own party, will he face similar repercussions.  Namely, be a one-term president?

A lesson from Bush is that a president can get away with alienating his base if he is still popular.  If Obama take a hit with his base in the next few weeks, there won’t be much long-term damage if the economy returns to life.  This has been true for just about every challenge he has faced during his presidency.

Now, we are doing it all over again in many ways.  We had Hootin’ Newt and now he is gone.  What can the future hold Cryin’ Boehner?

This is Boehner’s test as to what Speaker of the House he would be.  He has been lacking and gutless.  He can cry, but he as yet does not know how to speak.

 

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