Eighteen
The Deficit in Public and Elite Opinion

In the 1984 presidential election, Democratic nominee Walter Mondale made the deficit his major charge against the incumbent. Not only did Reagan win in a landslide, but also voters who cared most about the deficit split their votes nearly evenly between the candidates. Voters with strong feelings about solutions to the deficit favored Reagan; they tended to oppose either taxes or spending. Why, one might ask, did Mondale focus on such a loser of an issue?

Democrats and the Deficit

The short answer is that Mondale focused on the deficit because it not only formed one of Reagan's few glaring weaknesses but also obstructed traditional Democratic proposals to use government to address society's ills. Mondale's campaign thus became part of the larger process by which the Democratic party moved from the Keynesian position that had served the party so well during most of the postwar era to the me-too-ism in which the Democrats would support Gramm-Rudman-Hollings. The Democrats' journey may have been unwilling; it surely abounded in political calculation. Whatever their sincerity, however, Democrats changed their positions, and that is a major part of the story of how the deficit recast American politics.

We have seen that stagflation caused a crisis of confidence in which many Democrats, including President Carter, seized the banner of deficit reduction, in spite of its danger for their constituencies (see Chapters 2 and 3). We have seen that Ronald Reagan's deficits, combined with tight money, could be argued to favor creditors, mainly Republican, over debtors, mainly Democrats (Chapter 15). By 1984 a plausible constituency-based argument supported Democratic concern about deficits. The

end of inflation, however, should have eliminated the Democrats' first objection to deficits. The redistributive concern, as we will see, was emphasized by only one faction of the party. Given the pressure that the deficit exerted against good things Democrats wanted to do, including good things for the worst off, Democrats had plenty of reason to down-play the deficit; instead they emphasized it.

No doubt Democrats calculated that if they ignored the deficit and proposed new social-spending programs, they would be pilloried by the media and the public, be defeated in their efforts anyway, and possibly split their party. Any politician who read Times or Newsweek, or who remembered 1980, knew that Democrats who acted as if they approved of the deficit would suffer withering abuse. By 1984 the mood was such that Richard P. Conlon, executive director of the liberal House Democratic Study Group (DSG), declared that "there's no way you can talk about liberal social programs—there's no way you can talk about anything—until you talk about deficits." DSG Chairman Matthew McHugh hastened to distance the group from "the old spend-spend-spend liberalism."^[1]

Although the public liked programs, it condemned deficits in principle. A large faction of Democratic politicians would also object to any effort to show that deficits were a "good thing." These included not only the boll weevils but also more mainstream figures such as Lawton Chiles, James Jones, and Leon Panetta.

If the Democrats could have found a way not to join in the antideficit clamor, to make clear to all concerned the reasons why they disliked Reagan's deficits but not all deficits, subsequent history might have been different. The panic about deficits might have been moderated by discussion of their nature and effects. That certainly would have been in the interest of the Democratic party, if not the nation. Instead, the party actually intensified the antideficit din. Part of that was practical politics: the Mondale campaign seized one of the only weapons available with which to attack Ronald Reagan. Part was visceral reaction against Ronald Reagan; impaling him on his own antideficit rhetoric gave Democrats immediate satisfaction.

Democrats condemned the deficit, but what could they do about it? Reagan could condemn the deficit, say it was caused by domestic spending, and propose slashing programs. Although he could not rally a majority for that position, at least it was consistent and won support from a substantial minority of the public. Democrats blasted the deficit, but most of what they wanted to do cost money. They were reduced to being mealy-mouthed or campaigning for higher taxes.

Both in the House and during the presidential campaign, a group of black Democrats and their left-liberal allies managed to merge deficit

reduction with their social agenda. The Black Caucus budget plans (when offered) and Jesse Jackson's campaign combined liberal priorities with an attempt at serious deficit reduction. It was easy: clobber the military and raise taxes. Many black and left-liberal activists thought that America's mission to protect the "free world" from communism too often turned into the domination of "people of color." Why should they worry about protecting the national community from evil outsiders when blacks had been exploited for four hundred years by evil insiders? In their view, America's military might could be seen as extending the police forces of Selma or Los Angeles to El Salvador, or Chile, or Angola. Yes, the Soviets did threaten Europe, but the liberals would add that if Europeans spent more on their own defense we could spend less. When Berkeley's black congressman, Ron Dellums, proposed large defense cuts, he did not have to worry that it would compromise America's world role; Dellums opposed that role anyway.

Black Caucus members and Jesse Jackson and other diehard liberals had less difficulty than most members in proposing tax increases on the upper brackets. Too few of their constituents were in upper-income groups to be worth worrying about. A large proportion were precisely the people, those with incomes under $10,000, who most depended on the federal spending that was threatened by the deficit. Furthermore, many Black Caucus and other urban liberals who most strongly supported large tax hikes had very safe districts. Their political circumstances were reinforced by their policy preferences: to redistribute income from richer to poorer groups. This hard core of diehard liberals, therefore, saw neither defense cuts nor upper-bracket income tax increases as painful costs of deficit reduction.

In his 1984 presidential campaign, Jesse Jackson proposed large, immediate reductions in the deficit and large increases in social spending. He would have cut $80 billion (roughly a third) out of the military budget, added $50 billion in taxes, and then increased domestic spending by $60 billion. The resulting $70 billion immediate deficit reduction, combined with much smaller interest payments and defense growth in later years, would have made a big dent in the out-year deficits. The package reflected Jackson's basically redistributive intent; economic arguments about growth of the whole were less important.^[2] Timothy Clark of the National Journal summarized both Jackson's policy and its possible appeal:

Jackson's deficit-reduction program rested on reasoning likely to appeal to his rainbow coalition and perhaps to the majority of Americans. The federal debt, he [Jackson] said, constitutes "a near-permanent engine for the redistribution of income from the general public to lenders. The

chronic and expanding budget deficits, combined with bloated interest rates, are speeding this revenue transference along at a dizzying pace, saddling future generations of Americans with an issue containing highly explosive conflict potential."^[3]

Jesse Jackson, opponent of deficits, tight money, and high interest rates, meet Andrew Jackson, early opponent of same: 1980s Democrats had good reason to return to the antideficit position of 1830s Democrats. Yet doing something about it was a much different proposition than it had been 150 years before.

In Andrew Jackson's day, egalitarians criticized government spending as providing special privileges to a favored few. Even massive internal improvements that benefited millions were financed by a transfer from a great mass of taxpayers (tariff payers) to smaller groups of beneficiaries. Andrew Jackson's Democrats saw the market as a force for, and government as a foe of, equality; obviously Democrats of the 1980s could not follow Andrew Jackson's lead. Moreover General Jackson was an assertive nationalist and military man; the hero of New Orleans and the Indian Wars was able to join intense aggressive nationalism with "small government" because the nation's enemies were extremely weak. Modern Democrats either had to play down their nationalistic assertiveness—hardly a popular course—or pay up for a military comparable to the Soviets'. When Andrew Jackson rallied debtors against creditors, he could appeal to a series of ideologically helpful, reinforcing cleavages, such as farmers against the city and non-Yankees against New England's self-righteous puritans. When liberal Democrats in the early 1980s wanted to symbolize their group of the exploited, they talked about "minorities" or "a rainbow," but many Americans saw only blacks. Blacks in 1980 were far fewer and less popular than were agrarians in 1830, and the symbolic politics of redistribution was less promising.

In Search of a Program

Democrats who were not left-liberals, or those with less safe constituencies, could not or did not want to propose huge defense cuts and big tax increases. What, then, could they do about the deficit, other than become Republicans? Democrats understood that the deficit prevented new programs. They understood that their party's basic political principle was government activism. They believed the public was skeptical of spending; they objected to Reagan's market ideology not as fundamentally false, as would a Marxist or old-line labor leader, but as extreme. Needing not only to assert a role for government but also to make a viable budget, mainstream Democrats became defensive.

The difficulties for most Democrats and their responses are evident in two papers prepared by the House Democratic Caucus. The first, "Rebuilding the Road to Opportunity," was produced by a Special Task Force on Long-Term Economic Policy and published in September 1982. Task Force Chairman Timothy E. Wirth (D-Colo.) and member and Caucus Chairman Gillis W. Long (D-La.) described the responses to their widespread process of consultation in a cover letter to the Speaker as "indicating a shared concern to answer the question we are so often asked: What do the Democrats propose?"^[4]

After producing this "Yellow Book," the House Democratic Caucus joined with the Democratic National Committee (DNC) to create the National-House Democratic Caucus. The new organization, cochaired by Gillis Long and former DNC chairman Robert Strauss, included House and DNC leaders and a roster of private members that spanned the breadth of the party, from old hands like Clark Clifford to academics like Lester Thurow. In Gillis Long's words, the new organization's blue-covered statement in 1984, the "Blue Book," meant to provide "a public philosophy and an action program on which most Democratic candidates can agree—although they need not embrace every detail—and can be proud to run." These documents of the party center, however, served best to document the party's difficulties.

When the Democrats condemned Reagan's recession in 1982, they declared:

Once more they [the Republicans] have chosen to pursue the discredited policies of "trickledown" economics. So it is up to our party to rekindle the entrepreneurial spirit in America, to encourage the investment and the risk taking—in private industry and in the public sector—that is essential if we are to maintain leadership in the world economy.^[5]

Objection to trickledown was standard, but the key terms—entrepreneurship, risk taking, economic leadership—sounded Republican.

The Democrats' goals, they declared, were growth and fairness. Their distinctive means to these ends included cooperation (among business, labor, government, academics, and other sectors of society; or among nations) and a positive role for government, both of which stood in contrast to the Republican model of growth from competition in the private sector. Reagan blamed government, but Democrats did not blame the market. They declared that "free-market capitalism is the basis of our economy and remains the first and best hope for long-term growth and jobs. But just as it has done through our history … government must be a vital partner."^[6] This formulation was just one in a series of "yes, buts."

Our Democratic author could only shake his head in sadness as he read the following passage:

Achieving a balanced budget is very important to our economic future. We do not believe that the federal government should continue to spend an ever-increasing percentage of the nation's wealth. We need to limit spending and to set tax rates in order to generate a balanced budget during periods of sustained economic growth. To achieve the goal of a balanced budget, while limiting taxes, we must strengthen our congressional budget process, and we must constantly review existing government spending and tax programs.^[7]

In the middle of this passage we see the Keynesian logic: a balanced budget during sustained growth means full employment. But that is the subordinate assertion; primary is "the importance of a balanced budget to our economic future." Next is a criticism of "ever-increasing" spending—a bow to opponents of "big government." The need to raise taxes is also subordinated with an emphasis on "limiting" them. The hairy hand was the hand of Democrats, but the voice was the voice of Reagan. If Democrats wanted spending and balance, they had to justify higher taxes.

Sensitive to the charge that Democrats were merely redistributive, failing to help create wealth in their urge to do good with other peoples' money, the Blue Book declared that "this volume helps Democrats to re-establish our identity as the party of growth, for growth is the prerequisite of opportunity." The blueprint for the future in Renewing America's Promise consisted of eight pillars.

The first was "a concerted, multi-year effort to eliminate the structural imbalance between the government's spending obligations and its revenues"—politicalese for "reduce the deficit." At the end of 1983, this was the primary policy goal of the New Force within the Democratic party. "Before we can target our efforts on growth," the Blue Book declares, "we must target the chief obstacle to it: the Reagan deficits. We must begin a program of economic expansion with a campaign of deficit reduction."^[8] Again, Keynesian caveats were subordinated in the texts.^[9]

What was needed, the Blue Book argued, was "a new understanding between Americans and their government, insuring that the people know and accept the burden they must share, defining for them the common good their sacrifices will advance."^[10] They did little, however, to create that understanding. Tax reform, for instance, would have to be "the cornerstone of new revenue measures" because otherwise the average taxpayer wouldn't accept a tax hike. Talk about tax reform, however, was cheap; everybody does it. Action is much more difficult because it attacks a host of interests whose immediate stakes far outweigh the average

citizen's. The Democrats could have made tax reform a dramatic issue, distinguishing themselves from the Republicans by pushing the existing Bradley-Gephardt bill through the House in 1984. But because that would have led to protests by those who had to pay more at the height of the campaign, the Democrats hesitated; in the end, they allowed the president to steal the issue. That is material for another chapter.

Reagan's belief that the deficit could be reduced while taxes were unchanged and defense increased was not credible. The Democrats' promise to reduce deficits by negotiation was no more so. Yet incredible promises to reduce the deficit still committed them to the task, even as they did not win over those voters who cared most about deficits. Democrats, once again, were placing themselves in the worst of both worlds.

The Blue Book especially provided the beginnings of a new rhetoric to build a sense of community that might later encourage the individual sacrifices necessary for deficit reduction. This notion of community was expressed in imagery of the family. Thus, Reagan's spending cuts masked "an assault on poor families with pious rhetoric about 'cutting waste in government.'"^[11]

By family, Democrats meant those people who have to take you in—the primary community in which differences of age or health or gender serve as reasons for some members to help others. For many, however, the family is the school of conformity and right conduct, the model hierarchy with distinctions of gender and age that order all relations. In the family people learn values and behavior. The Democrats' version of family, a subtheme in the Blue Book, would reach its greatest visibility in New York Governor Mario Cuomo's keynote address to the 1984 Democratic Convention. Whether the compassionate family was a more powerful symbol than the moral family supported by the striving individual remained to be seen.

All Democratic presidential candidates in 1984 campaigned on the themes of deficit reduction, government activism, and cooperation. The three who reached the convention were all liberals; neither Senator Gary Hart nor Reverend Jesse Jackson had substantive reasons to refuse supporting former Vice President Mondale against Reagan.

Because Walter Mondale won, his positions are of greatest interest. Mondale looked at Reagan's Republicans and saw a group of people who exalted the pursuit of wealth. Mondale—who was doing quite well, of course, as a lawyer after leaving the White House—included himself when, on September 15, 1983, he told his business advisory council that he would favor raising taxes on business and the well-to-do because "most of us in this room received more tax cuts than we needed" from President Reagan. Though met by tepid applause, Mondale continued that "I just happen to believe it. I think most wealthy Americans are a little embarrassed

by the amount of tax cuts they have received."^[12] Mondale looked at unions and saw not an interest group but working men and women.^[13] "Since when is it a special interest to be for organized labor? I'm for organized labor. We have to stand up and make our case unashamedly." If Mondale were less redistributive than Jesse Jackson, he nonetheless defined his party's mission in terms of underdogs against topdogs.

If there is such a thing as a liberal establishment, Mondale was a perfect member. He considered himself an insider, emphasized his experience in government, and defined the president's task in terms of knowledge and management—insider considerations. "I've been there," he would declare. "I know where the buttons are." He could not shed his membership in the liberal establishment because he was of them and they were of him. In particular, he was the candidate of labor, the first candidate for the presidential nomination of his party endorsed by the AFL-CIO. The unions, with wages being slashed as companies demanded "givebacks," strikes failing left and right, and their membership declining, needed a president who would make reviving their movement a top priority.^[14]

At the beginning of the presidential primary season, Mondale, with his labor base, was the front-runner. Therefore, he took the fewest risks on the deficit, proposing, for example, smaller tax hikes than did his major rivals.^[15] He became the prime target in a game of "bash the candidate for not saying how he'll solve the deficit." When the eight Democratic candidates shared a stage in Hanover, New Hampshire, on January 15, Mondale and Senator John Glenn (D-Ohio), then front-runners, generated headlines with a heated exchange. Glenn called Mondale's position "vague gobbledygook," and Mondale denounced Glenn's "baloney figures."^[16] In response to attacks, all the candidates had to become more specific about their budget policies.

Many campaign professionals, such as pollsters Peter Hart and Patrick Caddell, believed their party could make the deficit an issue. A few Democrats dissented. Economist Lester Thurow argued that the deficit was too big and taxes too unpopular. Victor Fingerhut, a Democrat consultant with strong union ties, scoffed that "if you walked into a bar and told three guys the Democrats had a super plan to balance the budget, what kind of response do you think you would have? … the American people will sit back and roar with laughter."^[17] These skeptics may have been right; yet, as the campaign season wore on, the Democratic party became more and more committed to using the deficit as its major economic issue against the president. The deficit helped candidates combine worries about the future, the family, and the caliber of Reagan's management into one symbolic appeal. The trouble was that any Democrat who seriously campaigned against the deficit would have

to run a campaign whose most visible policy proposal was a tax hike. Yet Mondale the candidate, as a decided underdog, had to take risks. He also had to respond to charges that he was a candidate of the special interests and a bit of a wimp, a designation meaning soft and fumbly, not a leader. So it happened that on July 19, 1984, a triumphant Walter Mondale stood on the podium at the Democratic National Convention in San Francisco to accept his party's nomination for president, declaring his courage by calling for higher taxes.

Mondale proclaimed a "new realism" based on listening to the message of the 1980 election for a strong defense and faith in the private economy, but he declared that the voters had not chosen to "savage social security and medicare," "poison the environment," create $200 billion deficits, or to create a "government of the rich, by the rich, and for the rich." He emphasized his own decency, small town roots, and sense of fairness, and then he tried to make honesty about the deficit a test of leadership, the issue on which he would show that he was more forthright and upright than the president:

Here is the truth about the future: We are living on borrowed money and borrowed time. These deficits hike interest rates, clobber exports, stunt investment, kill jobs, undermine growth, cheat our kids, and shrink our future.

Whoever is inaugurated in January, the American people will have to pay Mr. Reagan's bills. The budget will be squeezed. Taxes will go up. And anyone who says they won't is not telling the truth.

I mean business. By the end of my first term, I will cut the deficit by two-thirds.

Let's tell the truth. Mr. Reagan will raise taxes, and so will I. He won't tell you. I just did.

There's another difference. When he raises taxes, it won't be done fairly. He will sock it to average-income families again, and leave his rich friends alone. I won't.

To the corporations and freeloaders who play the loopholes or pay no taxes, my message is: your free ride is over.

To the Congress, my message is: We must cut spending and pay as we go. If you don't hold the line, I will: that's what the veto is for.

Now that's my plan to cut the deficit. Mr. Reagan is keeping his secret until after the election. That's not leadership; that's salesmanship.

I challenge Mr. Reagan to put his plan on the table next to mine—and debate it with me on national television. Americans want the truth about the future—not after the election, but now.^[18]

There was some posturing here—whom was Mondale kidding about the veto and domestic spending?—but the main thrust is pretty clear: I am going to raise your taxes. The political calculation was partly that

some voters would care more about the deficit than taxes, partly that aggressive pursuit of the issue would put the president on the spot. Perhaps Mondale's challenge would make Reagan waffle, change the terms of political debate, and alter the public's perception of the two candidates as leaders.

Over a century ago, Walter Bagehot commented sagely on how a politician should approach the public:

Much argument is not required to guide the public, still less a formal exposition of that argument. What is mostly needed is the manly utterance of clear conclusions; if a statesman gives these in a felicitous way (and if with a few light and humorous illustrations, so much the better), he has done his part…. A statesman ought to show his own nature, and talk in a palpable way what is to him important truth. And so he will both guide and benefit the nation.^[19]

Could anyone better state Ronald Reagan's own practice? It helps a lot, however, if the "clear conclusions" have popular appeal. Engaging Reagan on Bagehot's terms, Mondale also had only four months to display his "true nature," while Reagan had had four years. Mondale's hopes required that the president "blow it." In their first debate, the president almost did; he seemed aged and confused. Suddenly suspense infused the campaign. But the suspense ended with the second debate, when Reagan again was the Reagan voters thought they knew.

William Schneider of the National Journal explained that Mondale's "calculated risk" was aimed at seizing control of the political agenda. If Mondale could force the president to talk about specific policies, then "the campaign [would] move in the direction of the Democrats best issue—fairness."^[20] Mondale's strategy temporarily put the president on the defensive. It exacerbated the internal Republican split over taxes in which Jack Kemp and Bob Dole led the rival factions. Critics in the media joined in urging "economic realism" (that is, a tax increase) on the president. Administration representatives hedged.^[21] Conservative columnist George Will remarked on the disarray and the threat to Reagan: "The tax issue bothers Reagan because it threatens to blur the sharp outline of his political profile. It has been well said that the way to get across an idea is to wrap it up in a person. Reagan became a political force by embodying clear elemental ideas."^[22] Will obviously had read Bagehot.

The Democrats' tactic failed because Reagan righted his ship and took a strong antitax course, which hardly meant that voters believed there would be no tax hike. It meant instead that most voters recognized the truth of Senator Dole's explanation of the difference between the two parties: "With candidate Mondale, a tax increase is a top priority; with President Reagan it is truly a last resort."^[23]

The Deficit and the Election

When Mondale lost, carrying only the District of Columbia and his home state of Minnesota, many aspects of Reagan's victory, especially his large margin among eighteen- to twenty-four-year-old voters, suggested that the long-awaited partisan realignment might follow.^[24] Except for blacks and Jews (and maybe Norwegians), no group from 1980 swung toward the Democratic column. The Democrats' advantage in party identification narrowed dramatically, as Republicans seized back the advantage (won in 1981, lost in 1982) as the party of prosperity.^[25] The themes of 1980's recriminations and of the Yellow and the Blue books—that the party had to embrace new ideas, avoid being tagged as spenders, and emphasize prosperity instead of redistribution—once more echoed across the pages of the nation's press.

The threatened realignment made Democrats so nervous they took the tax hike almost entirely off their public agenda. "If he wants taxes," Tony Coelho summed up their sentiment, "Mr. Reagan will have to plead with the American people for higher taxes." An ironic consequence of the election, therefore, was that the Senate GOP was left more isolated than before; instead of hoping to get the House to join with them against the president, in 1985 they first would have to win over their president, lacking a credible threat to proceed without him. A weak position.

Although most politicians took the election as a mandate against something—tax hikes—they did not believe that Reagan had a mandate for anything in particular. Polling data analyzed by Warren Miller and Merrill Shanks suggests that the electorate felt Reagan had been too conservative (in giving too little to welfare and too much to defense) but, because times were better, they reelected him anyway.^[26] The president's reelection campaign had done nothing to convince politicians that voters who chose Reagan were voting to cut domestic programs. Chief of Staff James Baker declared that "it was a victory for [Reagan's] philosophy and a victory for him personally, but I'm not sitting here claiming it's a big mandate."^[27]

Reagan himself did not believe that policy success in a second term required explicitly endorsing those policies. Thus, at the beginning of 1984 he had this exchange with a Newsweek interviewer:

Q : What's different about a second term?

A : In the first term [in California] we laid the groundwork for the great comprehensive welfare reforms that were unlike anything that had been done any place in this country before. I never mentioned them in the campaign for reelection. Never made them an issue, never held them up as something to look forward to. I didn't want to politicize it. And

immediately after the election, we went to work on them, and we achieved them.

Q : Is there a parallel here? Do you feel that in a second term you will be able to do something about the runaway cost of entitlements?

A : I believe there have to be some structural changes in our government…. And this is part of the getting at the deficit problem over the long haul that I look forward to doing.^[28]

Reagan certainly did not campaign on the issue of controlling entitlements. The presidential election sent no message about dealing with the deficit, save that a tax hike would be politically unwise.

If the congressional election sent any message, it was an endorsement of the status quo. To regain control of the House, the GOP needed to regain almost all the twenty-six seats lost in 1982. Instead they won only fifteen, and their ideological gain was more like ten seats. Democrats, moreover, gained two seats in the Senate. Since the development of a stable two-party system, no president had emerged from his election with a smaller portion of partisans among the representatives.^[29]

The voters loved Reagan but gave him a Congress that had little desire to endorse his policies. The most probable explanations for this election result include the many advantages of incumbency, good times that eliminate the impulse to "throw the bums out,"^[30] and the undoubted advantage that control of state legislatures, especially in California, gave Democrats in creative redistricting. There was also some evidence to back up John Ferejohn and Morris Fiorina's suggestion that "a large majority feels hesitant to trust either party with full control over the government."^[31] That is, maybe the public wanted budget and overall political stalemate or at least preferred it to any alternatives.

The public's choice of officeholders maintained the stalemate. Opinion data in 1984 told two other stories: first, the structure of opinion that constrained policy changes remained; second, the deficit, though a concern, did not dominate public opinion the way it dominated policy debate in Washington.

We already know that the public saw budget deficits as very bad, so much so that people overwhelmingly supported the balanced-budget amendment. The political question is the salience of a particular problem—how many people care how deeply about it. One index is Gallup's recurrent polling of what people consider the "most important problem" facing the country. On that subject, the deficit (or excessive spending) figured as a pretty minor item in the polls, never above 5 percent until 1984. For much of this period Reagan's budget cuts were cited by about the same percentage. In February 1984, however, the deficit jumped up to "most important problem" designation for 12 percent of respondents.

Gallup's time series on this question shows that throughout this period

citizens' economic problems were far more important than the deficit. As inflation declined and unemployment increased, concern shifted to the latter. As unemployment then began to decline, foreign policy (perhaps spurred by events in Lebanon and elsewhere) sparked concern. The 1984 rise in worry (to still unimpressive levels) about the deficit, therefore, suggests not alarm so much as that slightly more than a tenth of the public felt happy enough with trends on more important issues to see the deficit as the most important problem.

This analysis of the deficit issue's marginality is supported by other data from Gallup's February 1984 poll. When asked if they approved the president's handling of his job, the public did so by a 55 percent to 36 percent margin. Reagan's worst rating—even worse than on Lebanon—was on the deficit. In an April 1984 poll, voters were asked, "Regardless of your own political views, what would you give as the best reason for voting against President Reagan?" The deficits ranked ninth, at 4 percent, far behind foreign policy (21 percent) and fairness (18 percent), less even than his age (8 percent) and distributional concerns about cuts in social programs (5 percent) or excess defense spending (5 percent). In other words, he had botched the deficit, but it did not matter too much.

The next question is, what was the public willing to do about those deficits? Throughout our history we have shown that public opinion expressed skepticism of tax cuts if it meant increasing the deficit. Even in 1983, at the height of a recession, during which people could easily claim they needed help, "narrow majorities," as William Schneider summarizes the data, were "willing to postpone or even cancel the third year of Reagan's income tax cut." But these very same people were unwilling to pay more than they already were. An early 1983 Roper poll had shown, for instance, that five respondents would rather live with the deficit for every three who would pay higher taxes to bring it down.^[32] If offered other options, people overwhelmingly chose to avoid tax increases. Indeed, once they received the final installment of the tax cut, few would willingly give it back . Just as it is harder to cut benefits than to prevent their improvement, convincing people to forego a tax cut is much easier than persuading them to pay more. The politics of taxes and the deficit therefore passed a crucial threshold on July 1, 1983. Once people had the money, concern about the deficit, absent bad economic conditions tied to the deficit, would not convince them to give it back.

So far public opinion was all good news for Reagan; now comes the bad part. Like Congress, the public was more interested in cutting defense, though not drastically, than in reducing social spending. The public's opinion of domestic spending depended on its description. Support for "maintaining cost-of-living increases in social security benefits" and

opposition to cuts in entitlement programs remained overwhelming—around eight to one—throughout this period.^[33] At the end of the campaign increased spending for social programs was favored by a three to one margin.^[34] Twice as many election-day respondents favored more rather than less spending on the poor (no one asked how much they were personally willing to pay). Yet voters also worried more that some people who did not deserve welfare might get it than that some who deserved it might do without.^[35]

Each major political faction, therefore, was out of step with the public in some major way. The public rejected Reagan's desire to reallocate money from social to defense spending, House Democrats' desire to raise taxes, and Senate Republicans' desire to do lots of unpleasant and unpopular things to repair a deficit about which they cared far more than did most people. Yet the overall policy—worry about, but don't take much action on, the deficit—was pretty close to public preference.

Both Reagan's month-to-month job approval rating and his final margin in the election were strongly related to economic conditions. "In short," says Scott Keeter, "Reagan succeeded in accomplishing what most government heads try to do, and that is to have the cyclical upswing of the economy coincide with the latter part of an election year."^[36] Election day polls showed that approval of the economy's performance was easily the largest element of Reagan's support. Both improved personal finances and hope for the economy as a whole contributed to Reagan's landslide.^[37]

The deficit issue helped Mondale very little. In the end, exit polls showed that between 14 and 25 percent of voters were influenced by the deficit, and that they split fairly evenly between Mondale and Reagan. Thus, the issue helped Mondale but nowhere near enough to justify his effort.^[38] In fact, if we combine deficit reduction with the tax issue, Mondale's stance was clearly unpopular. The Los Angeles Times poll reported that the 17 percent of voters who named taxes an important issue voted for Reagan by 80 to 20 percent. Although not all people who opposed a tax increase would have voted for Mondale in any case, the tax proposal only hurt his chances at election.

The Democrats were left committed to a position on a fundamentally Republican issue. Both ABC and Los Angeles Times polls showed that people who worried about the deficit marginally favored Mondale. But the larger number, who emphasized either taxes or government spending, favored Reagan by more than four to one. Many Democrats, especially politicians, now had reasons to dislike deficits. But the real, visceral deficit haters are in that large group who object to government spending and who share Reagan's belief that deficits mean excessive spending.

"I keep pointing out that that's the problem," said Maine Democratic Senator George J. Mitchell. "There's no pressure on Reagan to do anything [about deficits] because most people who are concerned are Republicans who are going to vote for him anyway."^[39]

Mondale tried to make the deficit an argument for unease about the economy. It didn't work because it's hard to convince people to pay something now (e.g., taxes) for an uncertain future reward. The epitaph for the Democrats' use of the deficit in the 1984 presidential campaign was pronounced by a student in Youngstown, Ohio: "I have a personal debt, and I can't afford taxes being raised," he explained. "The national debt might hit me later in life but I've got to put bread on the table right now."^[40]

The Deficit and Elite Opinion

The election, at a minimum, suggested that the deficit was not such a great electoral issue. The economics of the deficit were at best obscure. Why, then, one might ask, did the election not cause the issue to begin to fade away? If the public was basically satisfied, and experience suggested it gave no partisan advantage, then why didn't the politicians find something else to worry about?

Error and inertia and the short-run attractiveness of banging on the other side explain some persistence of the deficit issue. We would emphasize another factor as well. Unlike Time 's student in Youngstown, the politicians could not so easily separate the nation's debt from their self-esteem. The deficit was their responsibility as the nation's governors and thus a measure of their own worth. True, the public kept returning incumbents to office, seemingly indicating satisfactory performance. Yet within their own group, as well as the realm of opinion formation and debate to which they paid most attention, the deficit became a sign of their own ineptitude.

This intermediate realm of "informed," "elite," or "responsible" opinion is what V. O. Key called the "political stratum." Throughout the budgetary struggles we have seen politicians verbally mortifying themselves over their deficit sin, lamenting their own lack of courage, and prophesying the visitation of the sins of the fathers upon the children and grandchildren unto endless generations. You would think they were discussing the sacking of the Temple of Solomon. We have seen commentators galore, the mass media and academics, holding politicians accountable; the newsweeklies running cover articles on the deficit monster searching for ill effects and, as they stubbornly refused to appear, stubbornly concluding that retribution was inevitable. The deficit battle has been, in large measure, a panic of responsibility, a panic among the responsible .

There is a quality of group-think to our story that might best be left to the social psychologists. Politicians are a group, talking to each other, reinforcing their own opinions. And they pay close attention to their, peer groups of Washington influentials, the media and policy experts.^[41] Yet the tendency to all say the same thing resulted also from some ways politicians relate to the public.

American politicians are entrepreneurs in a market for representation. They are continually insecure, fearful that their market will be raided by a competitor. Worse yet, their customers' preferences are fickle, influenced by other noncompetitive but also uncontrollable actors (the media, academics, etc.) who are not competitors but also cannot be controlled. Politicians can never be sure what the public wants. All of us come to understand other people by associating them with ourselves; politicians similarly expect the public to share their personal fears and values even while suspecting that the public may be different. Fear of both opponents using the deficit and other influencers increasing the marketability of antideficit appeals, encouraged politicians to believe that the public would punish deficit makers. This belief, of course, was fed by many pieces of evidence ranging from poll data to personal contacts. But it was wrong.

Democracy, a wise man (we think Adlai Stevenson) once said, is a political system in which the people get the kind of government they deserve. In a fair world, politicians could tell the public that it should resolve the contradictions within itself. What did it want compared to what it was prepared to pay for? In the real world, politicians could not blame the voters. That is not only a bad way to get reelected (compare Jimmy Carter and his "malaise" to his buttering up the public in 1976), but it also admits politicians' impotence, a denial of responsibility for governing the nation. Politicians of all stripes would take the moral objections to deficits more seriously because, if the deficit signified bad management, they were the bad managers.

When the press blasted politicians, it quoted politicians to do so. Dan Rostenkowski declared that "word of our impotence will precede us"; Warren Rudman described himself and his colleagues as "a bunch of turkeys." The whole complex of moral notions surrounding the deficit—household management, trusteeship, care for future generations, good government—spoke to the self-worth of the nation's governors more than to that of the public. The politics of responsibility was self-imposed by many of our leaders upon their visions of themselves.

In 1980 and 1981, the deficit ostensibly had been so important because it had something to do with the economy. By 1983 and 1984, deficits were much worse, and the economy was somewhat better. If the real concern were the economy, worry about deficits should have diminished.

On balance, worry about the deficit did diminish among the public, but agony over it among politicians increased. The issue remained, but its meaning changed.

The deficit became a symbol of order and legitimacy within the political household. Both its persistence and level of budgetary strife convinced politicians they were failing to govern the nation. Thus, the failure to solve the problem became the problem: the deficit mattered because it proved the politicians were too inept to handle it. Desperate to show they could act, Congress and the president adopted two radical proposals: tax reform and Gramm-Rudman-Hollings.

There are many differences and similarities between the politics of 1985–1986, when GRH and tax reform were adopted, and the politics of 1981, the year of the Omnibus Budget Reconciliation Act and Economic Recovery Tax Act. The most important difference is in the stakes. In 1981 the question was whether the government could command the economy. In 1985–1986 the question was whether the government could control itself.