The intense debate over raising the debt ceiling now appears to have reached a solution. However, the successful negotiation of cuts, the source of so much discord, hinges on a new committee made up of an equal number of Senators and Congressmen from both parties. Whether this committee will ultimately lead us to a balanced budget or merely deteriorate into further partisan politics is yet unclear. The intense focus on efforts to curve federal spending has made me think back on a now largely forgotten budget battle, and contemplate what politicians and ordinary people can learn from it.
In his book What It Takes, author Richard Ben Cramer profiled the lives of George Bush Sr., Bob Dole, Dick Gephardt, Michael Dukakis, Joe Biden, and Garry Hart, discussing how each had risen to become presidential contenders in the 1988 election.
Slaying the Deficit Vampire
In 1985, Bob Dole, who had overcome a devastating wound from World War II to successfully climb the political ladder, had reached the lofty position of Majority Leader in the Senate. That year, President Ronald Reagan, who had run for reelection on the promise of severe cuts to Federal spending, had sent his budget plan to the Senate. According to Cramer, the budget “would have pumped red ink up over the window sills.” Dole began campaigning for deeper cuts, ultimately creating a $56 billion plan: “…and it was not just the easy stuff. It proposed to freeze the defense budget, to freeze the cost of living hikes for all federal pensions-even Social Security,” Cramer wrote. Altogether, every federal program would take a hit. As Cramer explained, “It meant $300 billion in savings over the next three years.” That would considerably slow the growth of the $1.7 trillion deficit.
To opponents of the plan, Dole argued the party needed to do something dramatic or they would lose badly in the ‘86 elections. For the next few days he worked tirelessly on the deal, often meeting with several people from both parties at once. Finally, Dole wrapped up the last major sources of resistance by assuring small businesses and farmers that they would be taken care of through other bills.
He then took several compromise proposals and put them all into the single bill. In a fight that lasted all night, Dole systematically dragged factions of both parties kicking and screaming to the final vote. Finding that he needed two more votes, Dole told John East and Pete Wilson to come to the floor. Both men had been extremely sick, and were still in the hospital. East’s wife claimed he was in no condition to even make the trip. Wilson, too, was still weak, having just received an emergency appendectomy. But in a dramatic scene similar to the recent eleventh-hour appearance by recovering Congresswoman Gabby Giffords ,“Pete Wilson rolled up to the Capitol in an ambulance and medics wheeled him in, wearing his brown bathrobe, with an IV tube still in his arm,” Cramer wrote. Wilson announced his vote in favor to thundering applause. Vice President George Bush had the plane on which he was traveling turned around in mid-flight to reach Washington in time and cast the tie breaking vote as President of the Senate just after three in the morning. As Cramer wrote, “Dole had slain the deficit vampire.”
At least he thought he had. But, like the final scene in horror film, the vampire rose back up in the form of Republican Congressman Jack Kemp and one of Reagan’s top advisors, Don Regan, who both argued that the economy would continue to grow even with a deficit. The pair had gone to Reagan, who then declared there was no need to freeze federal pensions, a major component of the bill, which all but made the whole original proposal, and all of Dole’s meticulous work, meaningless. Cramer wrote, “In the end, the deficit kept growing; they just swept it under the rug.”
Lessons Learned
As this story shows, even when a party attempts to cut the budget and has a popular president, it still cannot get things done. Today, deep cuts are still needed across all federal programs, and we can neither fix the problem by simply lowering taxes or by turning our anger on the top wage earners. Both Republicans and Democrats need to remember that there is a split Congress right now, much as there was in 1985, and the idea that either side can make sweeping changes is a fallacy. If Republicans truly want to stop the economy from circling the drain, they need to push for genuine cuts from currently running programs rather than artificial cuts from unspent balances. Democrats and the Tea Party supporters also need to be more open to compromise and can no longer expect to get by on party rhetoric alone. But the most important lesson everyone can learn is from the 1985 budget crisis is that problems don’t go away with last minute compromises and quick fixes. The current deficit is over $14.5 trillion; our government is spending at a rate far more than we could ever pay back in our lifetimes and our debt is now growing faster than our total Gross Domestic Product. Currently the debt is 97.2% of our GDP and will go over 100% in a few short years if the current rates continue. Yet, there’s still a sense of procrastination that permeates the actions of our leaders; rather than make the vital cuts needed to curb the spending, they simply layer more and more Band-Aids on critically ill money-management practices. Our country has hit a point where the deficit can longer be swept under the rug.
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