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Eighteen The Deficit in Public and Elite Opinion
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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.


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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."


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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


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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


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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


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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


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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]


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Eighteen The Deficit in Public and Elite Opinion
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