You ever notice that none of the presidential candidates—of either party—are campaigning on a platform of deficit reduction?
Don’t you think that’s weird?
I remember when deficit reduction was a big priority. Back in 1991. Everyone freaked out over Reagan’s deficit spending, building up defense, but deficit-to-GDP only got up to about 6%. I remember my teachers showing us these current events slideshows in 4th grade. The deficit, at the time, was about $150 billion.
$150 billion sounds like a huge number when you are a kid. But it was only about 6% of GDP, which is above-trend but still manageable.
George Bush Sr. famously broke his pledge not to raise taxes (under the auspices of deficit reduction). He took the top rate from 28% to 31%.
But 1991 was the crucial year. Bill Clinton tapped into voter anger on debt and deficits and won the election handily, and then took the top rate from 31% to 39.6%. Everyone was pretty much cool with it. It was going toward deficit reduction.
He also froze discretionary spending. I worked in the Clinton government. You had to save your paper clips. The constant mantra coming out of the White House was “do more with less.” Career government employees were pissed. No more boondoggles and expensive toys.
You know what happened: Not only did we balance the budget, we ended up with a surplus, that we all fought about—and squandered.
It has been all downhill ever since.
Downhill