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.