Fiscally Conservative; Socially Moderate

Often, we hear of moderate Republicans saying they are fiscally conservative and socially moderate. A contemporary example is Tom Campbell, who is running in the California primary for Senator, to be held on June 22. In his case, being socially moderate means he favors allowing abortions.

But there is an assumption made by these moderate Republicans that I think is untrue. And that is that the Republican Party is the party of fiscal responsibility. Perhaps, once, when Eisenhower was President a case could be made, although in making it you come up against the problem that he was fiscally “responsible” when he should have been “irresponsible.” That is, during the serious recession of 1957-58, he refused to allow a tax cut to take place (in the name of fiscal responsibility) but it would have been a needed stimulus. The result was a weak recovery which soon thereafter led to another recession in 1960. (Politically, it probably led to the victory of Kennedy over Nixon in the election of that year.)

I suspect a good case can be made that in the last one hundred and ten years–yes,
110, starting in 1900–the most fiscally irresponsible President was the conservative hero, Ronald Reagan. He cut taxes while we were in the midst of double digit inflation, leading the Federal Reserve under Paul Volcker to raise interest rates astronomically–the prime rate briefly rose to 21 1/2 percent (it is now just above
3 %) and mortgage rates for financially stable borrowers were about 17-18 %. As a result of the weak economy tight money produced, which almost automatically leads to less revenue coming into the Federal government, along with the tax cut, the national debt quadrupled under Reagan during his eight years, from approximately $1 trillion to $4 trillion. This takes the cake.

But probably the second most fiscally irresponsible President was George W. Bush, who inherited from the Clinton Administration an enormous and unprecedented fiscal surplus. This led Bush to propose a huge tax cut, extremely favorable to the wealthy, that led shortly to a monumental deficit. Yes, there were other factors–namely the brief recession of 2001–but the surplus itself was considered by people like Alan Greenspan (and presumably Bush) to be bad in and of itself. (Greenspan feared, for reasons only he knows and can explain, that a continued surplus would eliminate the national debt.) Heavens to Betsy!

On the other hand, it can be argued that the most fiscally responsible President was none other than Bill Clinton, who increased tax rates (almost totally on the upper incomes) in 1993. And while other factors were involved–namely the increased taxes on capital gains during dot-com bubble–this tax increase helped generate at the end of the decade unprecedented surpluses.

What Republican politicians are really interested in is tax cuts and these inevitably create deficits, though (out of power) they may decry deficits. In justifying their votes, it would seem to me that Republican voters need another explanation for their choices than “fiscal responsibility.”