Are Republicans hypocrites? Or have they just lost sight of their conservative principles? This is the question Sen. Rand Paul (R-Ky.) posed while decrying the bipartisan budget agreement that Congress passed and President Trump signed last week increasing both military and domestic spending.
Paul held up passage of the bill — forcing a brief government shutdown — because he was angry about its spending levels. In a floor speech, he declared, “I ran for office because I was very critical of [Barack] Obama’s trillion-dollar deficits. Now we have Republicans hand-in-hand with Democrats offering us trillion-dollar deficits. … I can’t in all good honesty, in all good faith, just look the other way because my party is now complicit in the deficits.”
Katie Packer Beeson, a former aide to President George W. Bush who also worked for Mitt Romney’s 2012 presidential campaign, agreed, tweeting: “Interesting thread: we are no longer the party of Ronald Reagan, or Jack Kemp, or any other GOP leader who stood for things. If you’re a Republican, ask yourself ‘what defines the GOP?’ The honest answer won’t make you proud.”
But the contradictions between fiscally conservative principles and increased spending have actually been at the heart of the GOP’s agenda for more than 40 years. It was conservative icons like Reagan and the quarterback-turned-congressman Kemp who led the charge to trade balanced budgets for tax cuts, reducing fiscal discipline to a rhetorical weapon rather than a governing principle.
The 1970s witnessed the emergence of a new strain of Republican economic orthodoxy. Economist Arthur Laffer famously sketched a curve on a cocktail napkin to demonstrate how cutting taxes might actually raise government revenue — a win-win that would prevent any need for tough choices. Journalist Jude Wanniski helped popularize this new theory — supply-side economics — arguing that Republicans needed to become the “Santa Claus” of tax cuts (in contrast to the Democrats’ Santa Claus of government spending), abandoning the idea of fiscal discipline and the practice of balanced budgets that Republicans like President Dwight D. Eisenhower had been promoting for decades.
Politicians like Kemp adopted this prescription, wanting their party to shed its “‘root-canal view’ of economics”’ in favor of an optimistic vision that promised a tide that could lift all boats. Kemp joined with Sen. William Roth (R-Del.) to offer a bill that promised to “lower marginal tax rates by 10 percent a year over three years.” These Republicans understood that tax cuts allowed them to offer Americans something politically attractive — more money in their pockets — instead of playing fiscal scolds and demanding unpopular programmatic cuts to balance the budget.
The beauty of supply-side economics was the notion that the cuts would spur economic growth, leading to overflowing government coffers, which abrogated the need to slash spending.
Ronald Reagan integrated this idea into his 1980 presidential campaign. As president, he signed it into law with the 1981 Economic Recovery Tax Act, which pushed through a 25 percent reduction in the marginal tax rate for individuals over three years. At the same time, Reagan spearheaded a massive military buildup that skyrocketed defense spending.
These two actions, however, undermined a third campaign promise: balancing the budget. Unwilling to raise taxes to cover new military spending, Reagan exploded the deficit, adding $1.86 trillion to the debt, with interest payments rising from $69 billion in 1981 to $169 billion in 1988.
The conflict between the economic priorities of the Republican Party — tax cuts or balancing budgets — came to a head under Reagan’s successor. President George H.W. Bush paid lip service to this new Republican orthodoxy, understanding that it was necessary to capture the support of the party’s ascendant conservative faction. At the 1988 Republican Convention, he infamously pledged, “Read my lips, no new taxes.”
Bush, however, subscribed more to the old school of Republican economics (during the 1980 Republican presidential primaries, he had derided Reagan’s supply-side plan as voodoo economics). As such, in 1990, in response to worse than expected deficits, he broke his no-new-taxes pledge and worked with congressional Democrats to bring back fiscal discipline. Conservative Republicans, however, made clear they had no interest in Bush’s fiscal discipline: House Minority Whip Newt Gingrich led the majority of House Republicans in opposing the final bill.
Of course, congressional Republicans were more than happy to be budget hawks when a Democrat was in office. After several years of fiscal battles over spending and taxes, including multiple government shutdowns, President Bill Clinton reached a historic balanced budget agreement with a Republican Congress in 1997. But a growing economy and previous austerity measures (including the 1990 deal and Clinton’s tax-raising 1993 budget — which received zero Republican support) allowed that pact to include tax cuts, the real Republican prize, along with new spending on education and a new health care program for impoverished children, the victories for Clinton.
Upon his election in 2000, President George W. Bush showed that his father’s breed of Republicanism was out: Aided by a Republican Congress, he undid this balanced budget, passing two huge tax cuts despite starting two expensive wars. On top of it all, he also added a costly new prescription drug benefit to Medicare. He did so with fairly little conservative opposition: With a Republican back in the White House, deficits took a back seat to tax cutting and defense spending.
Bush’s party only returned to the full-throated rhetorical denunciations of deficits and runaway spending after Obama entered office. Yet Republicans could never agree to a grand bargain with Obama that would have paired the spending cuts they desired with significant tax increases — an actual recipe for trimming the deficit. Tax cuts remained a priority over balanced budgets.
Paul is right that Republicans have behaved hypocritically on fiscal matters, decrying spending and deficits only when Democrats control government. They have refused to make the sort of draconian spending cuts necessary to balance the budget while also adhering to their new orthodoxy of cutting taxes. But even Paul himself is guilty of this. For all of his rhetoric, he nevertheless voted for Republicans’ $1.5 trillion tax cut in December.
But this is not a betrayal of Republican principles, at least not the principles that have driven Republicans over the last four decades. The battle for the fiscal soul of the Republican Party was waged in the 1970s and 1980s. When most Republicans abandoned George H.W. Bush in 1990, it was clear that Republicans cared primarily about cutting taxes, not deficits.
Modern conservatism is built around the promise of supply-side economics — an economic philosophy that claimed to allow Republicans to cut taxes, maintain popular social programs, robustly fund defense and balance the budget. The problem: Supply-side economics hasn’t actually worked as promised, but the GOP refuses to abandon it.
And that, more than hypocrisy, is the real problem facing Republicans — they have principles; those principles just don’t work.