The forts of folly we have in mind are those represented by supply-side economics and the unprecedented structural budget deficit that resulted from, to quote the former senator Howard H. Baker, a Republican, that "riverboat gamble" with the economy. The effects of this largest peacetime deficit in America's history are still being debated, but there is general agreement on its two main causes: Ronald Reagan's tax cuts and his defense buildup. Throughout the 1980s The Atlantic examined the evidence for and against each of these policies. In a series of articles, beginning with William Greider's 1981 "The Education of David Stockman," the magazine found that tax cuts were stimulating consumption at the expense of saving and investment, and worsening social inequality at a time when the international economy was moving in the same baneful direction. We judged the defense buildup, which doubled Pentagon spending, to be a reckless gamble to break the Soviet Union at the risk of breaking the U.S. budget. The Soviet Union was broken, though just how much the buildup contributed we leave to the historians. But, coupled with the tax cuts, the buildup did indeed break the budget.
The point of this look back at the past fifteen years? When the deficit is at last brought under control, and the budget at last balanced, as President Bill Clinton and Speaker Newt Gingrich now both pledge will happen--as this fort of folly falls, in 2002 or 2005--Americans of that more solvent future will find The Atlantic's body by the wall. On the deficit we have fought the good fight.
That gives us standing to complain about Clinton's embrace of Gingrich's drive to balance the budget. We approve the melody but not the lyrics. To repeat, the deficit had two causes: tax cuts, directed chiefly at the most affluent Americans, and the defense buildup. Yet neither tax increases nor defense cuts figure in the Clinton deficit-reduction scenario. Absent tax increases to help balance the budget, Clinton will almost certainly have to make socially irresponsible cuts in the safety net for the poor and the health-security system for the elderly. Absent the reorientation of U.S. defense strategy that was made possible by the end of the Cold War, Clinton will be unable to address the second of what in the 1992 campaign he termed "twin deficits."
This is the "investment deficit." The phrase refers to the investments in physical infrastructure and human capital that were not made in the 1980s because the tax cuts and the defense buildup did not leave sufficient resources and because Presidents Ronald Reagan and George Bush did not believe government should make them. These forgone domestic investments are to tomorrow's economy what the interstate highway system and the GI Bill were to today's--the necessary conditions of future prosperity. While America went into deficit to give tax cuts to the affluent and to win the Cold War, its trading partners were going into deficit to make these kinds of domestic investments. Yet, through NATO and through the Far Eastern forward deployment, America continues to pay for the defense of these trading partners, against a threat that, at least in Europe, is all but extinct. There has to be a new reckoning here. We wish Clinton had begun it--we wish he had shown the historical imagination to grasp the possibility of this hour.
That possibility is to begin at once a return to the template of prosperity that America abandoned in 1917 in order to save Europe from the Kaiser, humanity from Hitler, and the free world from Stalin. Until then the United States was, in Jane Jacobs's distinction, a trading nation; since then it has been a raiding nation--dispatching fleets and garrisoning soldiers around the world. Raiding has generated its own prosperity, but it is a hectic and unstable one, founded on a mutable threat. Historians may look back on the Reagan years as America's hour of triumph against that threat. Or they may look back on those years as the time when the United States became the world's leading raiding nation--ironically, just when what Paul Kennedy called (in these pages) "the metric of power" was changing in international relations, shifting from military might to economic power, from raiding nations like the United States to trading nations like Japan. As long as Americans continued to tolerate huge budget deficits, it was at least logically possible to imagine that we could combine guns and butter, NATO and domestic investment, raiding and trading. All that was needed was the right set of budgetary priorities. But a balanced budget that allows for an $80 billion annual subvention to NATO, the capacity to fight two full-scale wars simultaneously, and a strategic nuclear force freezes this country into the outmoded posture of a raiding nation as the metric of power shifts inexorably.
"To govern is to choose," President John F. Kennedy said. We wish President Clinton had made different choices. This is a rare plastic moment in history, if only this country's leaders would realize it.
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