What a difference a day makes, especially if it's Election Day! Before Nov. 6, according to the president and his team, the budget deficit wasn't much of a concern: The economy was booming, and continued growth could gradually eradicate the red ink without a tax increase or other dramatic changes.
Oh, sure, there might be tax "simplification" to make it easier for the taxpayer. But this would be "revenue-neutral," meaning that no one's taxes would be boosted: It was Walter Mondale who would raise taxes, the president and his TV commercials said night after night. And that message paid off for Reagan on Election Day.
Meanwhile, did you hear anything about the Catholic Church's worries about Reaganomics or the condition of the poor in this country? No -- its intervention in the political arena was limited to a vigorous campaign against legal abortion.
The church so harassed Geraldine Ferraro on the abortion issue that she forgot John F. Kennedy's guiding principles in her debate with George Bush, and stunned some of her backers by saying if there were ever a conflict between the duties of elective office and her Catholicism, she'd resign.
But now, all the hokum, deception, and double-speak of a presidential campaign is behind us, and some remarkable changes are taking place:
*The Reagan administration is "discovering" that the federal budget deficit is much bigger than it had led us all to believe. A David Stockman "re-estimate" now puts the federal budget deficit for fiscal 1985, the year that began Oct. 1, at a minimum of $205 billion, a $15 billion jump from Stockman's estimate of $190 billion the week before, and a whopping $33 billion jump over the campaign-generated figure of $172 billion. The latter number was widely circulated as evidence that the deficit had edged down from higher deficits in 1984 and 1983.
*Reagan's campaign assertions that a "simplification" of the tax laws would raise no one's income taxes were blandly dismissed, once the votes were counted. "The president misspoke," said a candid Sen. Richard Lugar, who hopes to become Senate majority leader. "He just simply did not think through all the implications." And with the calm of a burglar, Treasury officials for the first time started to talk of reducing some of the cushy business depreciation allowances that have filled corporate treasuries for the past three years.
*Having deliberately held it back until the election was over, the National Conference of Catholic Bishops' Pastoral Letter on Catholic Social Teaching and the U.S. Economy turned out to be a blistering attack on the administration's economic policy. In particular, the letter challenged Reagan's campaign assertion that poverty in America is on the decline. The letter said 35 million Americans were poor at the end of 1983 by the government's own definition, and that this number understated the real picture by another 20 to 30 million persons.
The pastoral letter, fast becoming a controversial document, nonetheless will stir a useful debate over the mal-distribution of income in the richest nation in the world. But the bishops must have been more worried about abortion than poverty to have deprived the voters of their conclusions during the presidential campaign.
As for the Reagan administration, the evidence accumulates that it deliberately misled the public on the deficit and taxes: It's clear that the basic situation in the nation can't have changed so dramatically so quickly. The rosy economic scenario painted by Reagan and his lieutenants wasn't really so rosy after about midyear.
When the president says, as he did at a Cabinet meeting Tuesday, that he was "taken aback" by the new and distressing deficit estimates by Stockman, does that mean that Stockman withheld the bad news earlier or didn't know the truth himself? Unreconstructed supply-siders, to be sure, argue that Stockman exaggerates the deficit so as to push Reagan into a tax increase.
The truth is that the budget deficit was always bigger than the White House would publicly admit. Reagan, during the first debate with Mondale, brusquely dismissed the highly regarded Congressional Budget Office estimates of the running deficits -- far higher than his own -- as "wrong."
Evidence suggests that the administration knew all along that the CBO estimates were pretty darn good, and that dramatic action -- including a tax increase -- would be needed to deal with the deficit. But the White House had made a political and cynical decision to stonewall the issue so long as the economy appeared to be strong. Newsweek's special post-election issue, citing White House aide Richard Darman as its source, offers convincing evidence of that.
This reporter learned independently, and wrote essentially the same thing in three different columns prior to the election, based on a confidential interview with a highly placed source on July 18. The thrust of that interview was that the president throughout the campaign would deny any plan to raise taxes, sticking to the "party line" that the way to cut deficits is to cut spending. Coincidentally, this conversation took place in Washington the day before Mondale accepted the Democratic presidential nomination with a pledge to raise taxes, and a claim that Reagan had a "secret plan" to raise taxes. "Mr. Reagan will raise taxes, and so will I. He won't tell you. I just did," Mondale said.
My source unhesitatingly acknowledged that the deficit problem could not be solved without a tax increase, but that the president could "get away" with a denial of the need for boosted revenue because the economy appeared to be doing so well. During the campaign, White House and Treasury officials insisted that strong economic growth, by itself, would reverse the buildup of the deficits. And so long as the weekly and monthly economic numbers looked good, this supply-side argument would be credible.
My source outlined a plan to move right after the election (in a bipartisan way, if possible) to get a deficit reduction package, including a big tax increase disguised as tax simplification, totaling $150 billion by 1988 or 1989, of which $50 billion would come "up front" in fiscal 1986. A value-added tax was another possibility. The goal would be to cut the deficit from the current 4.0 to 4.5 percent of gross national product to no more than 1 percent of GNP in 1988 or 1989.
Thus, the administration as far back as mid-summer was planning on -- but denying any thought of -- a post-election tax increase. There was a candid admission that, except for cutting waste out of Pentagon spending, other significant budget reductions would be hard to achieve. That left the burden of the deficit reduction on higher taxes.
To sum it up, a slick and cynical White House team pulled off one of the biggest public relations scams in history, and the voting public fell for it. The question now is whether the Democrats, after having been assailed all through the campaign as the party of higher taxes, will play ball with the White House.
If they do, they will have to make sure that a revised tax structure doesn't skew income distribution further, thereby worsening the gap between the rich and the poor that the Catholic bishops belatedly pinpointed and denounced.