Public Policy Web

Reagan, Bush, and Clinton

The presidency of Ronald Reagan oversaw a massive overhaul in public policy and budgetary affairs. Taxation, fiscal policy, governmental regulation, social welfare policy, national defense, international trade all were turned around in an uncommonly consistent overall policy thrust. Accompanying this was a sharp rise in the federal deficit, the national debt, and the number of families living in poverty.

The big-ticket tax cut and increase in the payroll tax to fund social security (which then went into general revenues) shifted the tax burden from the very rich and toward the lower and, especially tellingly, the middle classes. Even the conservative stalwart Kevin Phillips made this argument in his best selling book, The Politics of Rich and Poor. Cutting programs for the poor indicates that the underclass has ceased to be the political issue it was in the sixties and that it poses little threat to the status quo, justifying less social welfare relief. Environmental regulations and prudent management of public lands and natural resources only increase the cost of doing business. This lowers profit, so such regulation and environmental expenses must be cut back. The support of corrupt elites in Latin America, the trading of arms for hostages, and the containment of revolution ate also seen as consistent with the class-based fiscal policy argument.

Behind all this was a clever fiscal strategy: By cutting taxes and raising defense spending, domestic spending was inevitably squeezed. Under these conditions, either social welfare would be cut or the deficit would rise. In the longer term, the persistent federal deficits would preclude reinstallation of social welfare policies and spending.

It worked, but brought with it such impacts as huge budget deficits, relaxation of environmental regulations, cheaper raw material prices, erosion of the social "safety net," shifts of fiscal burdens to states and municipalities, increases in social security withholding tax for the middle class, and massive redistribution of income toward the rich, especially those whose income derived from property. Not all these effects were met with widespread popular support.

The subsequent political effect was constant pressure for Congressional restraint and the dampening of the prospects of new federal and state programs. Such austerity culminated in the shredding of social programs, a sharp increase in the incidence of poverty, widespread homelessness, and the lack of commensurate response to an epidemic of AIDS. The strategy deftly accomplished its mission. As a case of strategic policy analysis, the Reagan Revolution was brilliantly conceived and masterfully executed. Of course, critics fret about the side-effects in terms of social and environmental costs, shifts to the next generation of massive increases in national debt, and the transformation of America from a creditor to a debtor nation. The rapid and sustained economic growth satisfies many, especially the rich and the upper-middle class. The powerful supporters of this policy thrust continue to back it while the critics and the victims*can muster little effective opposition beyond occasional legislative reversal of the president's initiatives. Sitting tight favors the victors in what O'Connor would deem a manifestation of class war manifested in the realm of public policy.

The election of Vice-President George Bush in 1988 as successor to Reagan continued the triumph of the Reagan Revolution. However, Bush's initial success on the world stage has not quelled the cry of "America first" and protectionism. The domestic public policy agenda remained sparse while needs grew.

The national electoral strategy which underlies the GOP grip on the presidency, articulated in the mid-sixties by Kevin Phillips in his prescient book The Emerging Republic Majority, had shattered the electoral basis for a potent Democratic response during the 1980s. Writing nearly a quarter of a century later, Phillips foresaw another turn of the historical wheel (1990), predicting that those who did not benefit would eventually create an electoral majority and give way to a more populist regime. He appears to be right, again.

The election of a moderate Democrat, Bill Clinton, might auger a shift in policy and budgetary priorities. Certainly, the tax windfall enjoyed by the affluent, mostly Republican voters, is likely to be modified, at least a bit. The hungry Democratic party constituencies, including most governors, county executives, and mayors, will demand more from federal government. The Public, disappointed, frustrated, and fearful of a health system which costs too much, delivers too little, and leaves too many out, demands a better way, and this will not be easy. Hundred of interests groups who could not penetrate the Republican administrations now have access to the president and will make a myriad of demands. And there are many generous contributors to the Clinton campaign to keep happy. An upturn in the national economy will help, but the constraints and difficulties remain intractable.

Public policy remains shackled by the fiscal crisis: Policies are precluded by budgets. An argument can be made that any enhancement in the level of confidence in public policy felt by the public at large rests with the realization that public policy meets their needs. This implies smarter public policy, providing more results for the dollars spent. This means that government should be able to demonstrate that what it does really works. One way to do that is to evaluate public policies and programs. It is to this topic that we now turn to close the loop of the public policy cycle.

Budgets By Presidents

Reagan, Bush, and Clinton