How David Stockman Became Democrats' Favorite Reaganite

The former OMB chief's attacks on Paul Ryan have endeared him to liberals, but they really ought to read the fine print.

Former Reagan budget chief David Stockman in Manhattan in 2007 (Reuters)

Don't look now, but the man who ran Ronald Reagan's budgets throughout his first term is becoming a minor hero on the left. To see why, you don't need to look further than the headline of his New York Times op-ed today: "Paul Ryan's Fairy-Tale Budget Plan." But hey, let's look further anyway:

PAUL D. RYAN is the most articulate and intellectually imposing Republican of the moment, but that doesn't alter the fact that this earnest congressman from Wisconsin is preaching the same empty conservative sermon ....

Mr. Ryan showed his conservative mettle in 2008 when he folded like a lawn chair on the auto bailout and the Wall Street bailout. But the greater hypocrisy is his phony "plan" to solve the entitlements mess by deferring changes to social insurance by at least a decade ....

The Ryan Plan boils down to a fetish for cutting the top marginal income-tax rate for "job creators" -- i.e. the superwealthy -- to 25 percent and paying for it with an as-yet-undisclosed plan to broaden the tax base.

It's a harsh take on the chief Republican budget guru from Stockman -- who was himself once a young, Midwestern GOP budget whiz himself, and might present a cautionary tale for Paul Ryan. After serving two terms in Congress representing Michigan, Stockman took a job as director of the Office of Management and Budget in the Reagan Administration. A true believer in supply-side economics, Stockman was charged with figuring out how to cut the federal budget and taxes without slashing entitlements or defense.

Stockman's disillusionment didn't take long. While his compatriots were eager to cut taxes, he found that they were unwilling to shrink the government, that special interests were able to beat back any cuts he proposed, and that supply-side economics wasn't as effective as he'd hoped. These concerns spilled out in a lengthy December 1981 Atlantic cover story, written by William Greider, in which Stockman provided a tick-tock of his efforts since taking office, which ended with exploding deficits and an economy veering toward recession.

Autumn was cruel to David Stockman's idea of how the world should work. The summer, when furious legislative trading was under way, had tattered his moral vision of government. Politics, in the dirty sense, had prevailed. Now he was confronted with more serious possibilities--the failure of the economic strategy and the political unraveling that he had feared from the beginning. On Capitol Hill, where Stockman was admired and envied for his nimble mind, where even critics conceded that his presence in the Cabinet was essential to Ronald Reagan's opening victories, politicians of both parties were beginning to reach a different conclusion about him. Despite the wizardry, Stockman did not have all the answers, after all. The wizard was prepared to agree ....

Stockman's prospects for balancing the budget were getting worse, not better. The optimistic economic forecast made in January to improve his original budget projections came back to haunt him in September. The inflation rate was down considerably (a prediction fortuitously correct because of oil and grain prices) but interest rates were not: the cost of federal borrowing and debt payments went still higher.

Where did things go wrong? Stockman kept asking and answering the right questions. The more he considered it, the more he moved away from the radical vision of reformer, away from the wishful thinking of supply-side economics, and toward the "old-time religion" of conservative economic thinking.

The article spelled the beginning of the end for Stockman's influence. He was, he said, "taken to the woodshed" by President Reagan, and though he stayed at OMB through Reagan's reelection, he never recovered his stature. He's spent the ensuing years working in finance (where he was indicted but never prosecuted for fraud in 2007) and acting as a political gadfly on fiscal issues.

Even if his supply-side apostasy is all but forgotten in most contemporary debates, he's won the affection of Democrats for his willingness to turn his guns on the GOP. In May, he agreed with the Obama campaign in saying that Mitt Romney's time in private-equity didn't really teach the Republican hopeful anything about how to create jobs. He has previously blasted Ryan's plan for not going far enough. And he criticized Republicans for dragging their feet on raising the debt ceiling.

Still, liberals might want to be wary of embracing Stockman too fully, even if he does advocate raising taxes, cutting defense spending, and attacking the Ryan plan. He also advocates jacking up interest rates and ending quantitative easing (i.e., the only form of stimulus available to the government as long as Congress is deadlocked). He has said, "I invest in anything that [Federal Reserve Chair Ben] Bernanke can't destroy, including gold, canned beans, bottled water and flashlight batteries."

As economist Justin Wolfers tweeted Tuesday morning, "I don't get liberals getting excited about David Stockman's anti-Ryan tirade in the NYT. His complaint is that Ryan isn't right wing enough." For Democrats, the enemy of their enemy is just that -- he's still not their friend.