Anyone witless enough to fall for Bob Dole's $548-billion election year promise of a tax cut, including a 50% reduction in the capital gains tax primarily benefiting the super rich, ought to be forced to read Richard Darman's new book, "Who's In Control." Or they could have it read to them as an exercise in lip reading.
Former top Reagan advisor Darman was there in the 1980s, deep inside economic policy-making during the decade of greed, when Republican tax cuts and a wildly escalating defense budget all but drowned the nation in a sea of red ink. It is infuriating that this devastating memoir arrives now, when vital social programs have been destroyed to pay for the fiscal madness it lays bare.
In the most damning indictment yet by a top Reagan insider, Darman gives the lie to the argument that the massive U.S. debt can be attributed in any significant way to the cost of Great Society social programs for the poor. Darman, who served for seven years as assistant to the president and deputy secretary of the Treasury, writes that prior to the start of the Reagan administration, "the American government had managed to keep its debt within reasonable bounds . .J.J. After 200 years, the national balance sheet had been left in pretty good shape."
Flash forward eight years: "In the Reagan years, more federal debt was added than in the entire history of the United States. Interest costs alone rose to hundreds of billions of dollars a year." This betrayal of the public trust occurred because the Reagan administration never made good on its boast to cut government spending along with taxes but rather escalated expenditures, most dramatically in military spending.
The free-spending orgy began when Reagan in his first year in office signed tax-cutting legislation that he pushed through Congress without its even being "read in detail by the senior White House staff or the president," Darman writes. The legislation was so poorly thought out and hurried through that "many were embarrassed when it emerged that the actual bills were so crudely slapped together they included cut-and-pasted pieces of Xerox paper taped to the conventional parchment."
At the time, Reagan was clearly informed of the enormous debt that would result, but such concerns were overwhelmed by "voodoo politics." Darman, who would head the Office of Management and Budget under George Bush, reports that in the unreality of the Reagan years, "we were all in a kind of cowboy heaven."
The Krazy Glue that held it all together was the cockeyed concept of supply-side economics, which, to his credit, was resisted by then-Sen. Bob Dole and just as fervently supported by then-Rep. Jack Kemp. Dole held his ground as a deficit hawk right up through the latest Republican primary battle, only to abandon it when he slipped so badly in the polls.
Now Dole has called for ending the IRS "as we know it." I am not inclined to rise in defense of the revenooers, but, seriously, how can Dole claim he will raise money by closing tax loopholes and at the same time call for destroying the very agency charged with enforcing the tax laws?
The answer is that he is not serious and can be counted on to raise, not lower, taxes if elected. Even Reagan attempted to compensate for the disastrous tax cut of his first year in office with five subsequent major tax increases. As Darman points out, Reagan, as early as his second year in office, was forced to sign "the largest tax increase in the history of the country." But it came too late to undo the damage of that first massive tax cut.
Dole's tax cut proposal is similar mischievous nonsense. Now that welfare has been gutted and turned over to the states, it will no longer be possible to indulge the canard that the poor are responsible for the federal debt. Like Reagan, Dole proposes a substantial run-up in Pentagon spending, including an absurd fixation on "Star Wars" missile defense, even though there is not a sophisticated military enemy in sight.
Without going after the defense budget and major middle-class perks like home mortgage deductions, it is impossible to cut both taxes and the national debt. That is the political reality, and Clinton has proved far more skillful than Reagan or Bush in cutting the deficit without endangering the more affluent or the Pentagon.
Dole knows all this. He has long held nothing but contempt for the tax-cutting supply-siders, and it is absurd that he now is saddled with the economic voodoo that he has long deplored. Poor Dole must now wince every time Kemp rambles on about the wonders of supply-side economics and wonder if he is not having a horrible case of deja vu.