To David Stockman, `Reagan revolution' never had a chance. Former budget aide describes `impressionist' economic policy
As Americans rush to file their tax returns, Congress continues to debate whether the current tax load is high enough, given the amount of spending voters want. David A. Stockman, President Reagan's first budget director, offers his answer in a kiss-and-tell memoir excerpted in the current issue of Newsweek magazine.
His advice: ``Trim a little more spending where the democratic consensus will permit it, and raise a lot of new taxes to pay for the government the nation has decided it wants.''
With its dire warnings about the consequences of current fiscal policy, Mr. Stockman's book, ``Triumph of Politics: Why the Reagan Revolution Failed,'' may intensify the already brewing budget battle between Congress and the White House.
The latest skirmish came when the Republican-controlled Senate Budget Committee recently passed a proposed fiscal 1987 budget containing sharply more in new tax revenues than President Reagan's budget had called for. The dispute is a key reason Congress will miss its April 15 deadline for preparing a first draft of its 1987 budget.
But the impact of Stockman's memoir -- with its tales of doctored economic forecasts and internal administration intrigue -- likely will be partly offset by current economic conditions.
Recent cuts in congressional defense spending plans, coupled with falling interest rates, oil prices, and inflation, have put the deficit on a downward path that makes Stockman's most extreme warnings sound a bit shrill. His dire warning: ``If we stay on the course we are now on . . . the decade will end with a worse hyperinflation than the one with which it began.''
The President Reagan who emerges in the pages of Stockman's book is a warm-hearted individual, an ``incorrigible optimist,'' but someone with at best only a surface understanding of key economic issues. Stockman writes, ``Reagan's body of knowledge is primarily impressionistic: He registers anecdotes rather than concepts.''
``The complexities, the intricacies, and mysteries involved in the tax breaks that Congress wanted were simply beyond him. In essence, he didn't understand the line between the federal tax structure and the budget,'' Stockman asserts.
When Stockman tried to convince the President of the need for a contingency tax in the 1985 budget, Reagan delivered a lecture Stockman considered irrelevant. ``What do you do when your President ignores all the palpable relevant facts and wanders in circles. I could not bear to watch this good and decent man go on in this embarrassing way,'' Stockman writes.
White House spokesman Larry Speakes said he would have ``no comment on the excerpts from Stockman's book. When asked if the President had read the book, Speakes responded,``No! Goodness, why would he read it?''
Stockman, a key economic player in the first Reagan term, asserts ``The true Reagan revolution never had a chance.'' The revolution's goal, as Stockman defines it, was to produce a ``minimalist government -- a spare and stingy creature which offered even-handed public justice, but no more.''
Stockman asserts that the revolution failed because Reagan's advisers, who were ``economic and fiscal illiterates,'' and the Presidsent adopted a flawed economic plan.
The plan cut revenue twice. First, there was the 30 percent cut in personal tax rates that Reagan pushed after first taking office. Federal revenue was also reduced as a result of Reagan's support for efforts by the Federal Reserve Board to reduce inflation. Lower inflation erased the added revenues the government got when inflation was pushing workers into higher tax brackets.
At the same time revenues were dropping, Reagan lacked the backbone to cut government to a size that could live on reduced revenues, Stockman writes. ``Ronald Reagan proved to be too kind, gentle, and sentimental for that. He always went for hard-luck stories. He sees the plight of real people before anything else.''
The result of slashing tax revenues and trying to offset the loss with relatively small budget cuts produced huge deficits. Reagan was left in the position of promising ``to alter the laws of arithmetic,'' Stockman argues.