Reagan Budget Director David Stockman Opposes Extending Bush Tax Cuts

by Colby Hall | 9:18 am, August 8th, 2010

» 36 comments

During his first term in office, President George W. Bush twice cut taxes as a means to spur a slowed economy. Since those cuts are set to expire (unless legislation is pass to extend them) by the end of the year, they’ve become a hot-button issue for the coming mid-term elections. During an interview broadcast on NPR’s Weekend Edition yesterday, former Budget Director David Stockman under Ronald Reagan revealed that he’s not only opposed to extending the Bush tax cuts, but he’s convinced that Reagan would never support extending them either.

Stockman, who still considers himself a staunch conservative and Republican, told host Guy Raz why he believes extending the tax cuts is akin to a bankruptcy filing by Congress and the White House. Roughly 10 days ago, Stockman contributed a column for the NY Times that outlined his position thusly:

IF there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing. The nation’s public debt — if honestly reckoned to include municipal bonds and the $7 trillion of new deficits baked into the cake through 2015 — will soon reach $18 trillion. That’s a Greece-scale 120 percent of gross domestic product, and fairly screams out for austerity and sacrifice. It is therefore unseemly for the Senate minority leader, Mitch McConnell, to insist that the nation’s wealthiest taxpayers be spared even a three-percentage-point rate increase.

More fundamentally, Mr. McConnell’s stand puts the lie to the Republican pretense that its new monetarist and supply-side doctrines are rooted in its traditional financial philosophy. Republicans used to believe that prosperity depended upon the regular balancing of accounts — in government, in international trade, on the ledgers of central banks and in the financial affairs of private households and businesses, too. But the new catechism, as practiced by Republican policymakers for decades now, has amounted to little more than money printing and deficit finance — vulgar Keynesianism robed in the ideological vestments of the prosperous classes.

During his interview on Weekend Edition, Stockman reaffirmed his frustrations with both the GOP and the White House, and was asked by Raz where he called his ‘political home’ these days. “I’m in the – unwashed middle with more and more of the American people. And one of these days, I think the public is going to speak in no uncertain terms that we’ve had enough of this crony capitalism and that we’re going to have to now clean things up.”

One can listen to the interview in it’s entirety here, but a full transcript provided by NPR is included below:

GUY RAZ, host:

This is ALL THINGS CONSIDERED from NPR News. I’m Guy Raz.

If the collapse of the financial markets in 2008 taught us anything, it’s that economics or rather economic forecasting is an art rather than a science. Some economists say the rest of this year will feel very much like a recession. And others aren’t so pessimistic. But this week’s jobless numbers and weaker than expected growth are playing into a debate here in Washington over tax cuts.

But before we get to that story, and it begins when David Stockman met President Reagan in 1981.

Mr. DAVID STOCKMAN (Economist): He was one of the, you know, greatest human beings I’ve ever met.

RAZ: In the early 1980s, Stockman became a kind of Washington wunderkind, the vanguard of a new type of economic thinking, supply side, deregulation, low taxes to stimulate growth.

As the White House budget director, Stockman was an architect of what would come to be known as Reagonomics. But a few years into the job, he became disillusioned.

Mr. STOCKMAN: The military budget got out of control and the tax cuts went to special interests as much as they did to the broad public.

RAZ: And he noticed a problem. The government wasn’t collecting enough money to cover its costs and he started telling that to Reagan.

Mr. STOCKMAN: As time passed, he was less and less enthusiastic about what I had to say.

RAZ: So, in 1985, Stockman left. Now these days, he’s still a conservative and still a Republican, but he doesn’t think his party is taking a responsible position on taxes any longer. At the end of this year, the Bush era tax cuts are set to expire. Republicans want them renewed, Democrats want to keep the tax cuts for the middle class but not for the wealthiest 2 percent of Americans.

Now, Stockman says they’re both wrong and he says extending either of those cuts is tantamount to the government declaring bankruptcy.

Mr. STOCKMAN: We’ve had a rolling referendum on what we want in government and what we don’t ever since the first Reagan spending cut program, which I was part of in 1981. And it seems pretty clear to me that by 2010, we’ve decided a lot of things that caused a lot of money, the American people won. I might not agree with that, but apparently they do.

So we’re spending $3.8 trillion in defense, non-defense, entitlements, everything else, and we’re taking in only 2.2 trillion. So we got a massive gap, you have to pay your bills. You can’t keep borrowing from the rest of the world at that magnitude year after year after year. So, in light of all of those facts, I say we can’t afford the Bush tax cuts.

RAZ: And I think many people will be surprised to hear Ronald Reagan’s former budget director make this argument. I mean, what happened to the idea you once pushed that tax cuts ultimately stimulate the economy?

Mr. STOCKMAN: I think that’s true. But we’re in a much different world today than we were in the early 1980s. We have had a spree of debt building for the last 30 years, both in the public and in the private sector. So in that environment, the highest priority is solvency now, not incentives for growth.

RAZ: You seem to suggest that many of our economic troubles are the result of Republican economic policies over the past few decades. You are a Republican. You are a conservative. Why do you think Republicans are largely to blame?

Mr. STOCKMAN: Because the Republicans abandoned their old-time fiscal religion in favor of two theories, which I think are now proving to be both wrong and highly counterproductive and damaging.

One was monetarism, which said let the dollar float on the international markets. Let 12 men and women at the Fed decide whether to raise or lower interest rates and use the Fed to try to run this massive economy. What they’ve done instead is run the printing press, they’ve flooded the world with dollars. The whole monetarist policy has been a mistake.

The second thing was the perversion of supply side. Yes, there was a good idea that in certain circumstances, lower tax rates will encourage economic activity and savings. But when you make it a religion, when you make it a catechism and you say you cut taxes no matter what the circumstance, what the season, what the condition, then I think the whole idea has been perverted.

By getting off track over the last 30 years, the Republican Party has basically given out its historic view that the key thing was financial discipline, financial responsibility and that we had to live within our means. Today, we have two free lunch parties, and as a result, we’re borrowing ourselves into grave danger with each passing month and year.

RAZ: Now, Republicans, David Stockman, in the Senate led by, obviously, the Minority Leader Mitch McConnell, they say they’re simply following, you know, the Reagan philosophy of supply-side economics, a policy that you pushed. Do you think they’re being disingenuous?

Mr. STOCKMAN: Utterly disingenuous. I find it unconscionable that the Republican leadership faced with a 1.5 trillion deficit could possibly believe that good public policy is to maintain tax cuts for the top 2 percent of the population who, after all, have benefited enormously from this phony boom we’ve had over the last 10 years as a result of the casino on Wall Street.

And I blame Paulson on it. I blame the Bush White House. They basically sold out the birthright of the Republican Party when they bailed out Wall Street unnecessarily in a state of complete panic in September 2008. That’s really, at the end of the day, one of the greatest misfortunes in fiscal governance since the Reagan revolution tried to straighten things out beginning in 1980.

RAZ: Do you hold President Obama and his economic policies responsible for some of this growing deficit?

Mr. STOCKMAN: Absolutely. The only thing worse than a Republican leadership position is that of the White House. I don’t know how they think they’re helping the economy by every month coming up with a new plan to borrow tens of billions more, drive us deeper into debt. Never in history has anyone said that for very long, you can sustain a circumstance where the debt is growing at twice the rate of the economy.

So, I think the White House with the stimulus is totally wrong. A lot of it has been wasted. Why did they put all that money in the automobile industry? There’s far too much capacity already. Why did they waste the money on the housing credit? Why are they continuing to try to pump money into state and local governments? I understand there’s a severe budget pressure there, but the federal government is in deeper debt than the state and local governments.

But in the end of the day, I would say Obama is really wrong when he says I’ll extend the Bush tax cuts except for the top, you know, 2 percent, above 250,000.

RAZ: In other words, you’re saying he has to not just end the tax cut for the top 2 percent or 1 percent of Americans, but the middle class, the so-called middle class tax cuts as well.

Mr. STOCKMAN: Absolutely. The tax – the Bush tax cuts costs $300 billion a year, 100 billion to the top 2 percent, 200 billion to the middle class. So, I ask the White House, why is $175,000-a-year family going to be given a tax break that we can’t afford, a large tax reduction, tens of thousands of dollars a year? To me, it makes no sense.

RAZ: I wonder, David Stockman, where is your political home these days? I mean, where does somebody like you go?

Mr. STOCKMAN: Well, I don’t know. I think I’m in the – unwashed middle (unintelligible) with more and more of the American people. And one of these days, I think the public is going to speak in no uncertain terms that we’ve had enough of this crony capitalism and that we’re going to have to now clean things up.

At some point, we’re going to either be forced to do it by the global bond and currency markets or the American people are going to wake up and demand it through an election that really cleans house in terms of both parties and the irresponsible behavior that each of them engages in today.

RAZ: That’s David Stockman. He was the director of the White House Budget Office under President Ronald Reagan and is widely credited as the architect of Reagonomics.

David Stockman, thank you so much.

Mr. STOCKMAN: Thank you.

Bush Tax Cuts, David Stockman, NPR, Weekend Edition

http://apostrophejones.com Apostrophe jones

I agree with every comment so far .
http://apostrophejones.com Apostrophe jones

How do Frances Perkins and Harry Hopkins see this ? Adlai Stevenson ? Estes Kefauver ?
Bootleghaircut

“Stockman, who still considers himself a staunch conservative and Republican”

Well there you go finnally a reaganite with a little intellectual honesty. Yes Mr. Stockman it would be a bad idea to renew the cuts agreed. I remember back when the GOP took more pragmatic appraoch to budgeting-like Bush Sr. who raised taxes and was then rewarded by his base by crapping out him for violating the golden rule; never ever raise taxes. Funny Bush Sr. doesn’t get much credit for anything days days because he was moderate which is now taboo in the GOP shrinking pup tent.

“Republicans used to believe that prosperity depended upon the regular balancing of accounts — in government, in international trade, on the ledgers of central banks and in the financial affairs of private households and businesses, too. But the new catechism, as practiced by Republican policymakers for decades now, has amounted to little more than money printing and deficit finance — vulgar Keynesianism robed in the ideological vestments of the prosperous classes.”

Now these people can only found in the libertarian ranks of the tea parties. The TP people want actual budget cuts and fiscal discipline while the GOP as always hides behind the skirts of their coporate interests and big money donors while pretending its for the good of all Americans.
Patrick Henry

That is a very interesting article. You know I would be willing to pay higher taxes myself for a time to reduce the deficit. If I only knew the money would be used to reduce the deficit and not wasted. With the two parties we have now I could not trust them to do that.
Bootleghaircut

“You know I would be willing to pay higher taxes myself for a time to reduce the deficit. If I only knew the money would be used to reduce the deficit and not wasted”

totally with ya on that.
Puter Boi

thus·ly
–adverb
thus.
Origin:
1860–65, Americanism ; thus + -ly
—Usage note:
“Some speakers and writers regard thusly as a pointless synonym for thus, and they avoid it or use it only for humorous effect.”

Never knowingly writing anything pointlessly…I, myself thereforely assume, that Colby was using humor….
Bootleghaircut

“Never knowingly writing anything pointlessly…I, myself thereforely assume, that Colby was using humor….”

Will you be providing your grammar services to all the bloggers or is just colby your sole target for petty nonsense?
http://www.facebook.com/people/Bill-Adkins/1585417987 Bill Adkins

I’m with you on that, too – but the main point here is the Republican philosophy/policies that brought us to this point are proven failures.
ChiliPeppersFan

i’m reminded of chris mathews asking almost all gop guests what they would cut from the budget to try and lower the debt and all but a select few not being able to answer
Patrick Henry

Chili, I could think of many things to cut, but I would be accused of being radical.
Bootleghaircut

“i’m reminded of chris mathews asking almost all gop guests what they would cut from the budget to try and lower the debt and all but a select few not being able to answer”

Well that’s because the new GOP fiscal strategy is not to have a strategy. Have noticed how they have been keeping Paul Ryan locking in a steamer trunk under capitol hill?

There’s a reason for that.
Puter Boi

Bootleghaircut said:
Will you be providing your grammar services to all the bloggers or is just colby your sole target for petty nonsense?

If other bloggers wish to pay me as much as Colby pays me…I shall gladly provide the same high quality of petty nonsense, thusly.
Bootleghaircut

“Chili, I could think of many things to cut, but I would be accused of being radical.”

Don’t leave me hanging Pat!!!!!!! What would you cut and I PROMISE not to call you radical.
Bootleghaircut

“If other bloggers wish to pay me as much as Colby pays me”

I didn’t know you were on the payroll. Well then its your fault-you should catch these errors before they hit publish. It might be time to cut your salary and save Colby a few buck.
Paula

Oh, yes….Stockboy…er, Stockman…who, in his 1980′s persona blinked when the Democrats that controlled Congress in the Reagan era simply kept spending, driving deficits through the roof. His answer to staggering deficits then (as now?) RAISE TAXES!!!

Not this time, stockboy. THIS time, when the House and Senate are taken back by the people we will impose DRACONIAN CUTS; HIRING FREEZES; AND LAYOFFS!!!

GONE will be the rich pension payouts to people in their 50′s who worked for government. GONE will be ANYTHING BUT the most strict means-tested Medicare (and the same with Social Security); GONE will be the Department of Education; the Department of Health and Human Services; GONE will be ANY federal government that is NOT STRICTLY within the purview of the FEDERAL government as set forth in the Constitution.

No tax increases! And a reduction of AT LEAST 25% of the government budget.

Failing that, OPEN REBELLION against the fake president and his gang of Socialist / Marxists in the White House and in Congress.
Patrick Henry

Boot, I would cut many of the agencies in DC. The departments of education and agriculture come to mind right away. I would make changes to SS and medicare that have to be made to keep them solvent. The reality though is that none of this would pass.
ChiliPeppersFan

pat you radical you
ChiliPeppersFan

wish obama would propose a repub idea like forming some sort of commision to reduce the natl debt…i’m sure he could get bipartisan support on that
Socrates69

You know Patrick and Boot, I’m with both of you, I do think several agencies need to be cut. Including SS, Medicare, and even the other sacred cow known as the DOD. I would like to know how much we spend on our foreign alliances and bases. It seems that since WWII, we have become the world’s peacekeepers, and with good reason of course. But when do we stand down and take a rest?
Patrick Henry

Socrates, that is another good point. We need to pull the troops out of Europe and Japan for sure.
Puter Boi

Bootleghaircut said:
It might be time to cut your salary and save Colby a few buck.

Colby can’t cut what he pays me…..he knows I have the pictures of that unfortunate bad hair day…..and I will use them!! I swear!
Petty nonsense doesn’t come cheap.
Patrick Henry

ChiliPeppersFan said:
pat you radical you

LOL, Chili, Sharon Angle in Nevada has said those things and gets labeled “extreme”.
ChiliPeppersFan

socrates..isn’t barney frank working on that with ron paul? i heard that we have the #1 air force in the world and the #2 is usnavy air force
ChiliPeppersFan

paul oniel was just on zakaria talking about getting fired over his opposition to the bush tax cuts…oh, and that pesky wmd thingy too
Bootleghaircut

“he knows I have the pictures of that unfortunate bad hair day…..and I will use them!! I swear!”

SWEET JESUS! HAIR BLACKMAIL!!!!!

THE ABSOLUTE LOWEST!!!!

And very funny. Kudos.
Bootleghaircut

Patrick-

I don’t think those ideas are very radical at all as we move forward state governments can handle education issues like McDonald is doing in VA and Chritstie in NJ and really the Department of agriculture is pretty outdated.

“We need to pull the troops out of Europe and Japan for sure.”

Agreed.

“LOL, Chili, Sharon Angle in Nevada has said those things and gets labeled “extreme”.

I think the issue is the way she chooses to communicate those points but I could be wrong.

We need to streamline the federal government so it functions as a modern bureacracy
-not like one from 1972.

Good discussion so far to bad I must leave it!

Have a good day everybody!
Azarkhan

While we’re cutting a few items to save money:

Dallas County’s public hospital is ground zero in the growing controversy over babies born to illegal immigrants.

Parkland handled 11,071 births last year to women who could not provide proof of U.S. citizenship – or 74 percent of the total 14,872 births at the hospital. Most of these women are believed to be in the country illegally.
It was the busiest hospital in the state for such births.

In 2004, women in this category accounted for 11,087 births, or 70 percent of the total deliveries.
felixw

Stockman was a failure as Budget Director. His fumbling of the budgeting process within months of Reagan’s election caused a backlash that made it impossible for Reagan to mobilize congressional support for more meaningful budget cuts. The fact that he now comes out for higher taxes is just another chapter in his failed career.
More Liberty

So? Who cares. If any of these know nothing elites really think that raising taxes si going to help the economy….well I’ve got a bridge to sell them.
felixw

For those of you who weren’t around for the David Stockman “woodshed” incident….From Wikipedia

“Stockman’s power within the Reagan Administration waned after the Atlantic Monthly magazine published the famous 18,246 word article, “The Education of David Stockman,” in its December 1981 issue, based on lengthy interviews Stockman gave to reporter William Greider. It led to Stockman being “taken to the woodshed by Reagan” as the White House’s public relations team attempted to limit the article’s damage to Reagan’s perceived fiscal-leadership skills….Mr. Stockman is quoted as saying: “None of us really understands what’s going on with all these numbers,” which was used as the subtitle of the article.”

This took place less than a year after Reagan took office. More than anything, this incident destroyed Stockman’s credibility. And he was the person who was supposed to get Congressional support for spending cuts and fiscal restraint. He failed miserably at that — just as he failed later as a CEO (driving his company into bankruptcy). In retrospect, Reagan made a mistake not firing Stockman right then and there. With a better, more intelligent person in the job, we might have been able to slow or halt the run-up in government deficits at the juncture.
jimw1016

Puter Boi says:
August 8, 2010 at 9:57 am
14 2
thus·ly
–adverb
thus.
Origin:
1860–65, Americanism ; thus + -ly
—Usage note:
“Some speakers and writers regard thusly as a pointless synonym for thus, and they avoid it or use it only for humorous effect.”

Never knowingly writing anything pointlessly…I, myself thereforely assume, that Colby was using humor….

In an extremely strange attempt to sound “almost” intelligent you have made yourself to appear as a complete fool. I suggest if you have nothing of value to add to an extremely important conversation, then play with your pee pee!
jimw1016

Paula says:
August 8, 2010 at 10:08 am (Quote)
1 3
Oh, yes….Stockboy…er, Stockman…who, in his 1980’s persona blinked when the Democrats that controlled Congress in the Reagan era simply kept spending, driving deficits through the roof. His answer to staggering deficits then (as now?) RAISE TAXES!!!

Not this time, stockboy. THIS time, when the House and Senate are taken back by the people we will impose DRACONIAN CUTS; HIRING FREEZES; AND LAYOFFS!!!

GONE will be the rich pension payouts to people in their 50’s who worked for government. GONE will be ANYTHING BUT the most strict means-tested Medicare (and the same with Social Security); GONE will be the Department of Education; the Department of Health and Human Services; GONE will be ANY federal government that is NOT STRICTLY within the purview of the FEDERAL government as set forth in the Constitution.

No tax increases! And a reduction of AT LEAST 25% of the government budget.

Failing that, OPEN REBELLION against the fake president and his gang of Socialist / Marxists in the White House and in Congress.

Total bullshit! Stop governmental waste. Demand absolute and finite fiscal accountability. POOF…no deficit or budgetary issues.
jimw1016

Socrates69 says:
August 8, 2010 at 10:27 am (Quote)
5 0
You know Patrick and Boot, I’m with both of you, I do think several agencies need to be cut. Including SS, Medicare, and even the other sacred cow known as the DOD. I would like to know how much we spend on our foreign alliances and bases. It seems that since WWII, we have become the world’s peacekeepers, and with good reason of course. But when do we stand down and take a rest?

Demand total fiscal accountability!
http://www.facebook.com/people/Bill-Adkins/1585417987 Bill Adkins

Thirty years of Trickle Down Theory and what do you get? Thirty years older and deeper in debt (Tennessee Ernis is spinning). Since 1980 $10 trillion of the current $13 trillion national debt accrued under Republican Presidents, $6.5 trillion under George W. Bush alone 2001 through FY 2009. If doing the same thing over and over again and expecting a differnt result is insanity illustrated, the Republicans are insane.
http://none pyrope

Alzheimers.
http://none pyrope

jimw1016 said:
Socrates69 says:August 8, 2010 at 10:27 am (Quote)5 0You know Patrick and Boot, I’m with both of you, I do think several agencies need to be cut. Including SS, Medicare, and even the other sacred cow known as the DOD. I would like to know how much we spend on our foreign alliances and bases. It seems that since WWII, we have become the world’s peacekeepers, and with good reason of course. But when do we stand down and take a rest? Demand total fiscal accountability!

Department of Energy–$24 billion annual budget and have never met their mission. EPA–$52 billion annual budget and the primary reason why most heavy industry has left the US. Department of Education–don’t know the budget right off but judging from the morons coming out of HS with diplomas these days, it’s obvious they have failed in their mission. National Endowment for the Arts–don’t know their budget either but when they give money to “artists” for putting crucifixes in glasses of urine and calling it “art,” it’s an insult to any rational mind. We could save a ton of money if we had a flat tax and thus eliminated the IRS–some of you whiz kids can look up their annual budget for us.

I agree that we need total fiscal responsibility, but we could also use a ban on earmarks.