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July 25, 2014

GOP Must Transform From Scrooge to Santa (Part I)

Bush032513 445x295 GOP Must Transform From Scrooge to Santa (Part I)

George W. Bush played Santa on two fronts, cutting taxes and increasing spending. (Tom Williams/CQ Roll Call File Photo)

Among the Republican Party’s many problems, perhaps the biggest is: what should it be for? Former Florida Gov. Jeb Bush correctly pegged the issue in his Conservative Political Action Conference speech — “stop being the anti-everything party” — but didn’t have much to offer as an alternative.

The party has confronted this problem before and met it. It was encapsulated in 1976 by the brilliant, erratic journalist-activist Jude Wanniski in an essay, “Taxes and a Two-Santa Theory,” published in the long-defunct Dow Jones newspaper, National Observer, but available here thanks to historian-economist Bruce Bartlett.

Wanniski argued that Republicans had embraced the role of Scrooge while Democrats had the pleasure (and political benefit) of playing Santa Claus, using government to dispense goodies and redistribute income. Republicans, fixated on balanced budgets, either constantly just said “no” or, in those days, insisted on raising taxes to pay for the Democrats’ spending. In a battle between Santa Claus and Scrooge, Santa wins, he wrote.

Wanniski, the chief popularizer of supply-side economics, advised that the GOP become the “Santa of tax-rate reduction” and economic growth. He served as guru to then-Rep. Jack F. Kemp, R-N.Y., who fought courageously with conventional “root canal” Republicans and finally triumphed when President Ronald Reagan adopted and then passed Kemp’s proposal to bring the top individual tax rate down from (can you believe it?) 70 percent to 50 and then (in the Tax Reform Act of 1986) 28 percent.

What ensued was a burst of prosperity that lasted from 1983 to 1992, got Reagan re-elected and President George Bush elected and, arguably, benefited even President Bill Clinton, who raised the top rate to 39.6 percent but did not challenge other aspects of supply side economics, notably a reduced tax rate for capital gains to inspire investment.

Then George W. Bush played both Santas at once, cutting tax rates twice, waging two unpaid-for wars, expanding Medicare and vetoing not a single appropriations bill for six years. He, too, got re-elected, but he doubled the national debt.

Republicans in Congress went along with the game — until, of course, President Barack Obama got elected and out-Santa-ed Bush on the spending side, redoubling the debt. The GOP rediscovered fiscal responsibility in a big way, but the party is sounding like Scrooge again, forever saying “no” or “cut.” (And, on social issues, Republicans often sound like the grand inquisitor.)

Check back Tuesday for part II of this post: Can the GOP find a way to play Santa again?

  • danno415

    The prosperity from 80-83 that got Reagan (and Bush I) reelected was based on a lot of deficit spending, especially on the military side. To claim it was the results of tax cuts is and ignore the effects of deficit spending stimulus is intellectually dishonest, and a lie by omission.

  • Beeker

    What ensued was a burst of prosperity that lasted from 1983 to 1992, got Reagan re-elected and President George Bush elected and, arguably, benefited even President Bill Clinton, who raised the top rate to 39.6 percent but did not challenge other aspects of supply side economics,
    The prosperity is based on deficit spending where Reagan increased the deficit which forced the US to obtain foreign money to cover the difference that the domestic could not provide. Even Laffner admitted that his theory is based on the fact if the tax rate goes below the equilibrium, a deficit will result. Many ignored it, including Laffner who admitted that Clinton era surplus was a gift to Bush II to cut taxes to stimulate the economy. By then the economy is diametrically different from the Reagan era.
    Obama had many of the spending put in place by Bush II and it was response to the financial crisis perpetrated by Wall Street banks and the too-big-to-fail banks. The only reason the Republicans played the role of fiscal responsibility after the mess they created with Bush’s 2001 & 2003 tax cuts and the raft of spending is merely tactical so they can blame the guy for it and squeeze the middle class so they can pip.
    In summary, your statement is intellectually dishonest by omitting the deficit and a lie.

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