Nullary Sources

The LIEbrul socialismsphere has been getting a lot of play lately of remarks Ronald Reagan made in the 1980s about the debt ceiling. In a letter he sent to members of Congress in 1983 and a radio address he made in 1987, he pushed the necessity of raising the debt ceiling to avoid catastrophe. From the letter:

The full consequences of a default or even the serious prospect of default by the United States are impossible to predict and awesome to contemplate. Denigration of the full faith and credit of the United States would have substantial effects on the domestic financial markets and on the value of the dollar in exchange markets.

So some folks have been pretty giddy about the re-emergence of this stuff: EVEN RONALD REAGAN UNDERSTOOD and all that. I admit that I laughed when I heard it. It’s a nice, self-contained zinger, something which the Democrats haven’t been terribly successful at putting together in our attentionless world.

Of course, since we live in the real world and not the univariate model the politics machine reduces us to, the actual budgeting situation of the 1980s was quite a bit more complex than that. Steve Kornacki of Salon wrote an excellent piece for their War Room blog which goes through the causes of the 1987 budget crisis, the political maneuvering, and how things eventually played out:

On Reagan’s watch, deficits had exploded, thanks mainly to his 1981 tax cuts (which slashed the top marginal rate for 70 to 28 percent) and to a massive increase increase in defense spending. From George Washington through Jimmy Carter, the country’s debt had never grown past $1 trillion, but in just Reagan’s first six years in office, it soared past $2 trillion, with no slowdown in sight. The deficit for fiscal year 1986 reached $220 billion.

It was against this backdrop that Congress decided to confront Reagan in 1987. The Supreme Court had just struck down a key enforcement provision of the 1985 Gramm-Rudman deficit reduction law (which mandated annual cuts), so Congress came up with a new plan: They’d attach a provision to the next debt ceiling increase requiring that the deficit be reduced by a fixed amount over the next five years until it was zeroed out. First up would be a $23 billion cut from the deficit, to go into effect with the fiscal year that would start that fall. Under Congress’ plan, automatic budget cuts would be immediately triggered (half of them defense-related) if Reagan and Congress couldn’t agree on a plan of their own by November 20.

The important thing to remember here is that neither congressional party was nearly as ideologically cohesive in 1987 as it is today. The Democratic ranks were still littered with conservatives from the South and moderate (and even liberal) Republicans were not uncommon. The GOP’s Capitol Hill leaders — Bob Michel in the House and Bob Dole in the Senate — were both pragmatic, deficit-wary conservatives. That is, they were as alarmed by Reagan’s deficits as many Democrats were, and they weren’t averse to cutting a deal to address them, even if it meant raising taxes.

Because of the ideologically blurry lines between the parties, Congress’ vote on the debt ceiling plan truly was a bipartisan affair. In the House, Democrats supported it by a 125-111 margin, while Republicans supported it by a 105-65 spread. In the Senate, 31 Democrats voted yes, and so did 33 Republicans.

The Reagan White House reacted angrily, convinced that Congress was using the dual threat of a debt default (if Reagan vetoed the plan) and deep defense cuts (if Reagan signed the plan but then failed to reach an agreement with Congress on how to cut $23 billion from the deficit) to force the president into a tax hike — something he opposed with the adamance of today’s Republicans. Several of his aides urged him to veto it, and for several days he considered doing just that, until he finally relented and signed it. That is the backdrop for the video Democrats are now circulating.