Neither Reagan nor Clinton believed in austerity
By Ezra Klein,
Economist Robert Barro thinks real recovery will only come from austerity. And not this weak sauce, supercommittee-and-discretionary-spending-cuts austerity. Real austerity. A consumption tax and an end to the mortgage-interest deduction and a rise in the retirement age and massive spending cuts. I don’t agree, but to each their own, obviously. The part of the op-ed that really confuses, though, is the grand finale: “This dream could become reality if our leader were Ronald Reagan or Bill Clinton — the two presidential heroes of the American economy since World War II — but Mr. Obama is another story.”
In 1980, the year before Reagan entered office, the budget deficit was 2.1 percent of GDP. In 1982, the year after he entered office, it was four percent of GDP. In 1983, it was six percent. Some of that was due to a serious recession, but much of it was due to Reagan’s tax cuts. You can see Reagan’s structural deficits by looking past the recession to the end of his presidency: In 1988, the year Reagan left office, the deficit was 3.1 percent of GDP, larger than it was when he entered, and larger than in any year of the Carter presidency. Reagan’s record is tax cuts, not austerity.
As for Clinton, he balanced the budget during a period of roaring economic growth. And the economists and policy analysts who helped him do so — folks like Gene Sperling, Jack Lew, Bruce Reed, Larry Summers, Peter Orszag, and Alan Blinder — are the very same economists and policy analysts who have been advising Obama.
In a very real sense, the Obama administration is as close to the Clinton administration as you can get without violating the 22nd Amendment. And those economists and policy analysts do want to reduce the deficit, and so too does their boss. That’s why they included hundreds of billions in Medicare cuts and new taxes and other cost controls in the health-care law and why they have been looking for a grand bargain with the Republicans. But they don’t think austerity this year or next year is a good idea, and if Clinton was in office, they would be telling him the same thing.