David Stockman Is Really Blaming Americans

David Stockman, in his best-selling memoirs about his tenure as federal budget director, would have us believe that Ronald Reagan is a god that failed.

He faults the President and his advisers for not fighting hard enough to control federal spending--and for not giving in soon enough and calling for a tax increase. He would have us believe they did not really understand the choices they were making, that the plan was “fatally flawed.” His book, “The Triumph of Politics,” is a plea for a tax increase--and an acceptance of his own disillusionment, the conclusion that the choice has been made--by the voters--between “capitalist prosperity and social security.”

In other words, his disillusionment is not really with Ronald Reagan, but with us. He sees Congress’ refusal to accept the entirety of the President’s budget proposals as the revealed preference of the electorate to keep in place the current network of subsidies, transfer payments, pork-barreling and other welfare-state spending and to find the tax revenues to fund it. He claims his experience in the Reagan Administration “proved that the American electorate wants a moderate social democracy to shield it from capitalism’s rougher edges.”

This “moderate social democracy” Stockman says we have chosen is not cheap. The tax increase he is talking about is no minor matter. Federal spending is running at 24% of the gross national product; taxes are running at 19%.

Balancing the budget with a tax increase would require additional revenues equivalent to a surcharge on all individual and corporate income tax payments of almost 40%--a lot to pay for smoothing out the rougher edges.

But the voters have not chosen this tax increase. They did not choose it when they elected Ronald Reagan, and they do not choose it in polls. They might be willing to pay a little more--but not much.

Stockman has not, then, provided any answers, but he has laid out the fundamental problem in federal budgeting: The conflict between spending for myriad programs that benefit recipients--special interests, particular regions of the country, particular industries, defense contractors, providers of health care, the poor, the aged, the retired and so on--and controlling spending to make possible the overall, primary economic objective of a strong and vital economy. Such an economy is essential to the economic growth that makes the future brighter for ourselves and our children, expanding opportunities for all; reduces unemployment; ensures rapid recovery from recessions and adjustment to change; preserves the value of savings over time, and permits tax levels that are not too burdensome--an economic future we can look forward to with confidence.

But Congress cannot vote directly for economic health and strength--for low unemployment, low inflation, more business investment, low interest rates. To vote “for” economic growth and vitality, Congress must vote against excessive spending, subsidies and protectionism.

The conflict exists not only in the mind of every one of our elected representatives but in the structure of the Congress. The problem is to find a way to put more emphasis on the overall spending and taxing totals and thereby control the spending passions of the committees and subcommittees interested in this program or that. The problem also exists within the executive branch, in conflicts between the Cabinet members who are trying to keep their constituents happy and the Office of Management and Budget, which is more concerned with the consequences of the total budget.

And the problem exists within each of us, as we support the overall objective of controlled federal spending (and the lower tax levels that go with it) while writing our representatives to make sure they preserve that special federal program that puts money in our own pockets.

This conflict between spending and restraint cannot be settled once and for all. The gap between what Congress would like to spend and what the voters are willing to pay in taxes will open and reopen. The pressures to spend are especially great in election years. The current Congress cannot even find ways to reduce the 1987 deficit from $182 billion to $144 billion, as required under the Gramm-Rudman legislation, without raising taxes. Congress is currently supporting a $13-billion tax increase for 1987 alone. It will encounter the same problem in 1988 and in every year thereafter.

I worked for Stockman for the first two years of the Reagan presidency, as one of OMB’s four associate directors in charge of the budget. He--and we--worked hard, with dedication, to find ways to reduce spending, to block bail-outs, to oppose protectionism. We had successes; the budget and the economy would be in much worse shape than today had it not been for those efforts. We lost here and there, sometimes within the Administration, more often in the Congress, but we always came back to fight with renewed energy. Our fundamental concern was the strength and vitality of the U.S. economy. In this objective, there was no fundamental difference between the President and his OMB director.

Stockman’s message is a story of profound disillusionment, not with the President or the President’s advisers or with the overall policy and objectives of the Reagan Administration, but with the American political system and the American voter. His is also a story of anger and retribution. He is saying to the American public, “You made it impossible for me to be the budget director who balanced the budget for the first time in 25 years, and now you must pay: Get out your wallets.”

Stockman knows, although he does not tell you, that a tax increase of the size he is talking about would be extremely damaging to the U.S. economy. He should have offered more.

--He might have noted that the problem with Gramm-Rudman, which automatically cuts spending (if the Congress fails to do so) to phase out the deficit in five years, is not the automatic cuts, but that the law exempts so much spending that the cuts in programs remaining on the table are excessively steep. And so he might have said: Put it all on the table, the obsolete military bases, Social Security, entitlement programs--everything.

--He might have said that we need a better way to put more emphasis on the budget totals--taxes and spending--by supporting the idea of an amendment to the Constitution to control taxing and spending, to be ratified by the states as a validation of the voters’ concern about these totals.

--He might have recommended that we address the long-term problems embedded in the budget, enacting into law gradual changes in entitlement programs like Social Security that would reduce future benefits (or their growth) but would also make possible lower payroll taxes. The second term of a popular President is an ideal time for such an undertaking.

Read Stockman, if you must, for the inside stories, but keep a saltshaker handy: He likes to play center stage. Read for unvarnished commentary on the merits of federal programs, entirely stripped of the niceties of political mythology and rhetoric. Read to observe the conflict between spending for programs and controlling spending in the interests of economic strength and vitality as this conflict plays itself out in the Congress, in the Reagan Administration and in your own mind, in the choices you would make. Read to understand the character of David Stockman and how he came to be disillusioned. If you share his disillusionment, weep not for him but for yourself.