2009-03-24

Gingrich - a more important conservative than Reagan

Think back to all the presidents since Jimmy Carter. Which of these presidents is considered an icon by political conservatives? There's no doubt that Ronald Reagan would top the list. As for the president most loathed by conservatives, there's no doubt that Bill Clinton would be nominated - though Carter does come a close second.

But what do political conservatives want? If we ignore the "fluff", the basic desire of political conservatives is to reduce the size of the Federal government and to ensure that government spending is responsible.

Yet when we look at the raw statistics (Historical Tables of the FY 2009 Budget, PDF, 2.4 Mib), a rather strange thing occurs. Here is a table (based upon table 1.2 from the document) which averages out the levels of government spending and government debt over the terms of each president since Jimmy Carter:



Well whaddya know? Ronald Reagan presided over the largest Federal Government and the highest level of government debt. By contrast, Clinton presided over the smallest Federal Government (for all intents and purposes) and the smallest increase in government debt. You'd think from evidence like this that Reagan was the spendthrift while Clinton was the conservative darling - yet in the Bizarro world of conservative politics, the opposite is the case.

The problem is that conservative politics since Reagan seems to have focused solely upon taxation - and thus government revenue. Reagan did, of course, make some big tax cuts but there was no commensurate reduction in spending that accompanied such cuts. The result ended up being a Federal government that actually increased its spending as a proportion of GDP while simultaneously increasing government debt as a result. Moreover, those levels of debt were huge.

Of course we need to remember that government spending is also the responsibility of Congress. Thus if we were to criticise or praise certain presidents over their fiscal performances, we need to do the same with congresses and the party that controlled them.

During Reagan's term as president, the 97th, 98th and 99th Congresses had Republican Senates and Democrat Houses. Both houses of the 100th Congress were Democrat, and the average Federal outlay for those two years (1988-1989) was 21.45% of GDP, while debt averaged -3.15% of GDP - both lower than Reagan's 8 year average.

Of course, Democrats were hardly blameless during George HW Bush's term in office with both the 101st and 102nd Congresses being controlled by Democrats and overseeing, with Bush, no reduction in the size of government and no reduction in debt.

But if Ronald Reagan was the Republican Party's number one hero of the past 30 years, the number two would have to be Newt Gingrich and the 104th Congress. Whatever faults conservatives have today with Gingrich and the 1994 "Republican Revolution", there is much to praise them for as well.

On the surface, Gingrich's Republican Congress and the Democrat Clinton in the White House were at odds from day one. Beginning with the 1995 Federal Government shutdown and ending with the impeachment of Clinton, it is unlikely that any period during the 20th century saw such animosity and divisiveness between the executive and legislative branches of government.

Nevertheless, the stats do tell a striking story. Clinton and the Gingrich Republicans actively reduced the size of government while simultaneously cutting back on debt.

Yet this did not continue. Between 2001 and 2006, the Republicans controlled both houses of congress as well as the White House itself. While spending remained relatively tight over the course of Bush's presidency (spending which would've been smaller had not war intervened), the tax cuts he sponsored, that were approved by the Republican congress, ended up putting the government back into debt once more. By the time the Democrats retook congress in 2006, economic conditions had deteriorated and debt levels began to soar again.

Now as a political progressive who has no problems at all in increasing the size of government, I obviously do not align myself either with the Republicans of today, or those in the 1990s, or even those in the 1980s. What I do respect, though, is the ability to maintain one's political stance through practice.

The Republicans of the 1980s and 2000s are, to my mind, not really conservatives. 80s Republicans preached government restraint while overseeing a huge increase in the size of government and in government debt. 2000s Republicans oversaw a smaller sized government but didn't reduce it, while also adding to the levels of debt.

Increasingly, the 1990s will be seen as a golden period for political conservatives - despite the fact that Clinton inhabited the White House. Apart from the glory of the 1994 mid term elections, the shenanigans that followed it and the popularity of the Republican party over the next decade, there is no doubt that conservatives actually did achieve what they set out to do. The budgetary statistics prove that beyond doubt. And for that I grudgingly (and through gritted teeth) respect them.

In short, who should Republicans look back to as an icon? Not Reagan and not Bush (either of them), but to Gingrich.

10 comments:

Two Dogs said...

First, sit down.

I agree with everything that is in this post.

We also know why Reagan had such a terrible economy and had to wring inflation from it. The one glaring thing about Reagan is that he never VETOED the spending bills, they were always compromises. W. Bush have the same fault.

Let's skip my bashing of HW Bush, shall we? Let's just say that he was a turd and leave it at that.

Clinton's huge government plans gave us a Republican Congress within two years and Clinton did the same thing that Reagan did, sign the legislation.

When Newt got thrown under the bus because of marital problems, the fiscal killahs in the Congress got crushed and that started the ball rolling to what we have now.

Again, I agree with your post.

One Salient Oversight said...

Actually the irony of me posting about this is that if the Republicans and Bush from 2001-2006 had continued the work of the previous decade, we probably wouldn't be in this mess now.

I mean, if Bush wanted tax cuts then he should've been prepared to work at reducing spending as well.

Tax cuts and spending cuts at the beginning of Bush's first term would've kept inflation down and prevented Greenspan's low interest rates from creating the subprime mortgage fiasco.

The more I look at it, the more I respect the 90s Republicans. It's a pity they went loco when Bush came in.

One Salient Oversight said...

PS I would much rather a small government with a balanced budget than a big government with a big deficit.

I would also prefer big government with a balanced budget... but that's not going to happen any time soon.

The Flomblog said...

I wonder if anyone in Congress has actually read the constitution, or, perish forbid, a history book?

Tom Sawyer said...

There are some very salient points here, but I have some other things to offer which may put them in a slightly different light.

First, you cannot leave the Cold War out of the Reagan legacy. Reagan was hell-bent on spending the Soviet Union into collapse. He was willing, then, to make compromises on domestic spending in order to get the funding he wanted for defense. This, to him, probably took priority over a balanced budget. He was willing to unbalance it for a time to achieve what was, in his mind, a greater good.

Second, Reagan never had a Republican controlled House. The House is where all spending bills begin and where all budgets begin. I am told that he was promised domestic spending cuts by Tip O'Neal in exchange for a late-second-term tax increase, but never got them. No, he was not perfectly conservative all the time, but he had to work with a Democrat Congress and he had to pick and chooose his battles.

Last on Reagan, his deficits look very small compared to the Obama deficit projections I've been hearing about. Those deficits also (Reagan's), if I recall correctly, were about the biggest criticism of his administration toward the end of the 80s.

With such a rich post I just can't resist commenting further. :)

I've always said that I considered both Bill Clinton and GWB to be moderates. Bill was moderate-left and GWB was moderate-right. You are absolutely correct on your assessment of Newt Gingrich and his impact on the Clinton presidency. If you had polled me, I would have given you my opinion that Jimmy Carter was about the worst President we've ever had, with FDR and Woodrow Wilson running close behind. That's this conservative's opinion. So Clinton would not top that list for me. But I also think that Obama has done more harm to us in 8 months than Carter did in 4 years.

Well, maybe.

One Salient Oversight said...

I agree, deficits are a joint responsibility and for that reason I laud both Gingrich and Clinton for the reduction in Federal debt during the 1990s.

As for Obama, I'm quite happy saying that his money spending isn't going to help. I may not be opposed to big government but I am opposed to fiscal stupidity. Obama is merely extending the problems that were created under Reagan and Bush 2.

There is a school of thought which says that the Soviet Union was going to collapse anyway, and it's a school of thought that I give a bit of credence to, but there is also no doubt that Reagan's military buildup had an effect upon the strength of communism. My only problem with it is that he increased military spending without increasing taxes to pay for it (or cut spending in other areas).

And, as I point out in the article, the Republicans DID control the Senate during 6 of Reagan's 8 years. Blame must be apportioned and the Democrats are probably about 35-40% to blame for the 80s deficits with the rest being the Republican's fault.

Finally, as for Obama's deficit blowout - you're probably right. The Economist magazine estimates the US Government deficit to be around 13% of GDP. No one has got it that high since the Second World War, and it effectively triples anything Reagan ever did.

So am I a supporter of Obama? Not even close at the moment.

James Spurgeon said...

In response to: "My only problem with it is that he increased military spending without increasing taxes to pay for it (or cut spending in other areas)."

Are you aware that while Reagan cut tax rates he actually increased tax revenue to the federal coffers in doing so, partially by closing loopholes and mainly because of the economic boom those tax rate cuts produced? Revenue to the US treasury had nearly doubled by the end of his second term.

James Spurgeon said...

BTW - for a great history on Reagan and the Cold War you might enjoy The Crusader by Paul Kengor.

One Salient Oversight said...

Revenue to the US treasury had nearly doubled by the end of his second term.

Ah, the old conservative boilerplate in action.

Let me ask you this question. Let's say you earn $100,000 in one year year but spend $104,000 in that year, which means you need to borrow $4000. Now let's say that every year you earn more, but every year you owe more than you earn. So in the next year, you earn $120,000 but spend $150,000. In year three you earn $180,000 but spend $200,000. In the fourth year you earn $200,000 but spend $240,000. My question is - are you doing okay financially?

Obviously the answer is no. If doesn't matter how much extra money you earn, if you keep spending beyond your earnings your net worth drops.

So James. Do you believe what people tell you or are you willing to do your own research?

If you want to do your own research, read on.

First of all, download the Historical tables of the FY2009 Budget here (pdf 2.4mb). I refer to them in the original article about Gingrich and it is the basis of the data that I use to compare presidents.

Secondly, once you have downloaded it and opened it, go to table 1.1, which is on page 26 of the pdf document (which is page 22 of the original document).

Thirdly, you will notice that the table is labeled "Summary of receipts, outlays and surpluses and deficits". This is one of the two tables that gives the data.

One Salient Oversight said...

Fourthly, look at "total receipts" for the Reagan era (1981-1988 inclusive). This is the total amount of tax that the Federal government got in that period. Here we go:

1981 599,272
1982 617,766
1983 600,652
1984 666,486
1985 734,088
1986 769,215
1987 854,353
1988 909,303

Fifthly, do some basic maths.

909,300 minus 599,272 = 310,028. That is the increased revenue that the Federal Government recieved after eight years under Reagan. As a percentage of the first year figure, this is an increase of 51.73%. But, of course, for receipts to "nearly double", you would have to have a figure closer to 100%. The reality is half that.

The data thus shows that Federal Government revenue under Reagan increased by 51.73% over and 8 year period, which is a long way from "doubling".

But now let's look at an average figure - how much extra per year did the Federal Government increase its revenue by during the Reagan years. Here we go.

1981 +15.89%
1982 +3.09%
1983 -2.77%
1984 +10.96%
1985 +10.14%
1986 +4.79%
1987 +11.07%
1988 +6.43%

Average annual increase in recepits 7.45%

Sounds good. But now let's look at Carter.

1976 298,060
1977 355,559 +19.29%
1978 399,561 +12.38%
1979 463,302 +15.95%
1980 517,112 +11.61%

+73.49% increase in Federal government revenue from 1977 to 1980. Average annual increase is 14.81%.

So what we have here is the fact that Jimmy Carter increased Federal government revenue by nearly 75% - and that over a four year period!

But, of course, there is an important fact that needs to be taken into account - inflation. The Carter years were very inflationary, which means that the tax revenue figures are going to be skewed by that. So I'm definitely NOT going to say that Carter was better than Reagan at this point. Mp, what we need to do is look at a more neutral, inflation adjusted figure.

Sixthly, turn to table 1.2 in the pdf file. This looks at revenues as a percentage of GDP. Because GDP figures are adjusted for inflation, we should be able to see a more accurate version of tax revenue. Look at the column marked "Total - Receipts" Here we go:

1981 19.6%
1982 19.1%
1983 17.5%
1984 17.4%
1985 17.7%
1986 17.4%
1987 18.4%
1988 18.2%

The average over the eight years is 18.16%. What you see here is that Federal government income decreased as a percentage of GDP over Reagan's time in office. But what about spending?

1981 22.2%
1982 23.1%
1983 23.5%
1984 22.2%
1985 22.9%
1986 22.4%
1987 21.6%
1988 21.3%

The average over the eight years is 22.4%. Minus the revenue and you get a budget deficit of -4.24%.

In short, Reagan overspent. While income increased during his time in office, so did spending. By the time Reagan left office he had borrowed more money (in total and as a percentage of GDP) than any other post-war president before him. It was not until the Clinton/Gingrich era that a semblence of fiscal intelligence returned to the Federal Government