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Previously in Politics & Prose:

The New New South (September 13, 2000)
In recent decades the South has been a Republican stronghold. Times are changing, Christopher Caldwell writes.

The Tyranny of Belief (September 13, 2000)
Some politicians, including Joe Lieberman, would blur the line between religion and politics. They're gravely misguided, Jack Beatty argues.

Leftward Bound (August 23, 2000)
Can you teach a New Democrat old tricks? Christopher Caldwell on Gore's gamble with Lieberman.

The Legacy Haunting Gore (August 9, 2000)
Trade, not scandal, Jack Beatty argues, is the legacy of the Clinton years that could cost Gore the election.

The Issues That Aren't (July 26, 2000)
Where does George W. Bush stand on Microsoft? Where does Al Gore stand on Kosovo? On Big Tobacco? You don't know? You're not alone, writes Christopher Caldwell.

The Democratic Difference (July 13, 2000)
Ralph Nader says the Republican and Democratic parties are indistinguishable. Jack Beatty looks at the record on labor, "the issue our era will be measured by," and sees quite another reality.

Your Morality, My Values (June 28, 2000)
Values and morality may sound like the same thing, Christopher Caldwell writes, but Democrats have been able to capitalize on one, while Republicans remain stuck on the other.

More Politics & Prose in Atlantic Unbound.


Discuss this article in the Politics & Society conference of Post & Riposte.



Fuzzy Economics

George W. Bush is right -- the era of big government being over is over. Even if he's the one elected

by Christopher Caldwell


October 12, 2000

At a box factory in Green Bay, Wisconsin, days before the first presidential debate, George W. Bush warned assembled workers that Al Gore was an "old Democrat." Once in power, Gore would return the country to what, pre-Clinton, was the model for Democratic presidencies: tax-and-spend liberalism. "If Gore gets elected," said Bush, "the era of big government being over ... is over." Bush is making a mistake in trying to revive a Reaganite attack on the size of government and its (implied) effect on the economy: After two decades in the wilderness, Democrats have regained a firm advantage on bread-and-butter issues. It's not just that Democrats, with the help of that godsend Newt Gingrich, won the battles over whether to cut or maintain such programs as Social Security, Medicare, and Medicaid. It's also that they've convinced the public of the need for new entitlements -- like prescription-drug benefits, which almost all Republicans in national races are promising. That's something no one would have envisioned in the Reagan era.

To a certain extent Bush is correct about his opponent. Gore is to the left of Clinton on a number of spending issues. On a bus trip to Cincinnati a month ago, for instance, Gore told reporters he would seek $170 billion in funding for a one-shot federal educational infusion that he hoped would revolutionize schooling nationwide. This is no high-spirited sally but a real policy proposal; Senator Joseph Lieberman harped on it in the vice-presidential debate. And even though both Gore and Lieberman come out of the "New Democrat" Democratic Leadership Council, there's nothing New Democrat about their economics. Contrast them with President Clinton, who attempted Keynesian economic prime-pumping only gingerly -- promoting a $16 billion "stimulus package" for a broad range of infrastructural, educational, and job-training measures that was filibustered to death in a Democratic Senate, on the grounds that it would "wreck the economy."

That package was not the hallmark of a radical leftist, and Clinton was to migrate even further right. It was he who decided in the first year of his first term to heed the advice of Robert Rubin, then the chairman of the National Economic Council, and Treasury Secretary Lloyd Bentsen that, in an age of global capital flows, responsible (read: anti-deficit) fiscal policies could provide more stimulus than any stimulus package could, because they attracted investment. The result was an economic policy extraordinarily pro-business even by Republican standards. That's not Gore's style at all. If Gore followed Clinton's lead in 1993, it was more out of loyalty than out of conviction. On the campaign trail, Gore has sounded like a profligate.

But that still doesn't mean Bush can run a Reagan-style campaign, tarring his opponent as liberal enough to wreck the economy. Because even if Gore doesn't get elected, the era of big government being over is over. It's over because Bush has as good as declared it over. In debates and on the stump, he matches or raises every spending proposal Gore makes. Two billion for West Virginia mining research, five billion for protecting national parks ... and there's not a single program Bush has recommended cutting.

To figure out just where Bush fits in among Republican economic thinkers, it's necessary to look at the three stages of Republican economic policy since Democratic Presidents gained what looked like a permanent economic advantage in the wake of the New Deal.

First was the "me too, but less" approach Republicans took on in the shadow of FDR. This involved embracing a green-eyeshade role in every expansion of the welfare state. In a political climate where voters insisted on electing Democrats as CEOs, Republicans carved out a role as CFOs: the arbiters of "what we can afford." The exponents of this view were the liberal Republicans of the Ripon Society in the 1960s and 1970s, people like Mayor John Lindsay of New York (until he, tellingly, became a Democrat), and Bob Michel, the Illinois congressman who was House minority leader until the Gingrich insurrection of 1994.

Second, and most successfully, came Reagan. Republicans in the twentieth century always stood for smaller government and lower taxes. But what's most important to remember about the Reagan revolution is that it came about on pragmatic terms. In 1980, Democrats made the same claims against Reagan's proposed tax cuts that Al Gore made about George W. Bush's last week: they would dramatically increase the deficit, and all the benefits would go to the richest sliver of taxpayers. But such claims didn't work, because Reagan had on his side a number of pragmatic concerns: (1) The rich were paying too much in taxes. At 70 percent, the top tax bracket was retarding investment and thus increasing unemployment. (2) "Bracket creep" -- the insidious means by which the federal government claimed its left (spending) hand didn't know what its right (taxing) hand was doing. During the seventies, inflation was running at 12-15 percent per year, so people who were making the same real income (with cost-of-living adjustments) kept moving into higher and higher tax brackets. The Nixon, Ford, and Carter Administrations -- all of them devoted to big government and thus ravenous for tax revenues -- pretended they didn't see this happening. The combination of inflation and a graduated tax unindexed to inflation gave everyone in the middle class a legitimate reason to feel they were being shafted (and lied to) by tax-and-spend liberals. (3) The outright failure of government. At a time when murder rates were reaching their zenith, Americans felt like welfare payments were pretty much subsidizing crime. In sum, average voters had legitimate reasons, when confronted with arguments about how tax cuts only benefited the rich, to cry: "Baloney."

The Gingrich revolution, the third post-New Deal wave of Republican economic thinking, took these Reaganite arguments and turned them into an ideological crusade for small government against big. With a President more focused on gays in the military and national health care, the GOP felt it could win a case for a low-tax, low-spending state. This is not something that Americans (outside of Mississippi) have wanted for at least sixty-five years. When President Clinton recovered his footing -- and muted his positions -- on economic issues, he found it easy to slap Gingrich down. The government shutdowns of 1995 and 1996 provided him with a perfect opportunity to do so.

And scared Republicans witless. Their problem, however, is that they never climbed out of the Gingrich mindset. George W. Bush is simply discarding the unpopular side of the 1994 Republican revolution (cuts in popular entitlements) while retaining the popular side (devolution and local control). Americans are bound to like both, but as an economic narrative it is incoherent.
Even with the economy zinging along, the economics argument is not one that Bush necessarily should lose. In the debates Bush embarrassed himself with his mantra that Gore was using "Washington fuzzy math." But Gore's math is fuzzy. His two most striking statistics -- that Bush would spend more on tax cuts for the top one percent of earners than he would provide in new spending for Social Security, the environment, prescription drugs, and defense, and that 30 percent of Bush's tax-cut beneficiaries earn more than $1 million a year -- were somewhat bogus. These figures include those who got their "million" through inheritance or through selling an asset (like a house) on which they had to pay capital gains. They're not people "earning" a million dollars a year.

But until Bush can come up with a cogent and honest economic narrative of his own, he will not win, nor will he deserve to. His greatest incoherence and dishonesty is on the matter of the budget surplus. There is a bipartisan conspiracy to defraud the American people on this score. There is no budget surplus, if Social Security is to be funded at present levels and under present rules.

All the dough presently washing through the federal treasury comes from the fact that the largest generation in American history, the Baby Boomers, who constitute 38 percent of the voting public, are now in their prime earning years (aged 36-55). Once they're retired and earning nothing at all, and there are only two workers per every retiree (as opposed to the current ratio of 3.4 to one) to support the Boomers in the style to which they've become accustomed, we're going to be looking at a very different picture. Al Gore is dishonest in his projections that economic growth and the $1.3 trillion surplus will take care of this problem, making cuts in benefits or increases in the retirement age unnecessary. Stabilizing Social Security might cost something more on the lines of $5 trillion. And Bush, in his assertion that one can keep the Social Security benefit structure and offer tax cuts at the same time, is disingenous. Either that, or he's winning centrist voters by making a promise he's bound to break. That's a big mistake, if the chastening by centrist voters of a left-wing Bill Clinton in 1994 is any example.

Lucky us. Voters going to the polls on November 7 will be choosing between a candidate who will destroy the Clinton economy out of hubris and a candidate who will destroy it out of wishful thinking.


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More on politics and society in Atlantic Unbound and The Atlantic Monthly.

Christopher Caldwell is a senior writer at The Weekly Standard. He writes a weekly Washington column for New York Press and is a regular contributor to Atlantic Unbound.

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