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April 2006 -- Bruce Bartlett, Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy (New York: Doubleday, 2006), 310 pages, $26.00.
Supporters of limited government used to take some comfort from liberal complaints about George W. Bush. Back in 2000 when Bush was running for president, liberal critics frequently observed that the state of Texas provided far fewer entitlement benefits than other states and that the office of governor had sharply limited powers. Bush’s experience as a governor led them to conclude that he was a fiscal conservative unlikely to support any expansion of federal government programs.
How wrong they were. Over the past five years the Bush Administration has increased government spending by 45percent. Non-defense discretionary spending grew by eight percent annually, compared to four percent under Bill Clinton. The Bush Administration has added a drug benefit entitlement that the Congressional Budget Office projects will cost $1.009 trillion through 2016 (the “9” is in the billion column). Pork-barrel spending “earmarks” have increased from 958 in 1996 to 13,999 in 2005.
And George W. Bush has yet to veto a single bill passed by Congress.
That distresses Bruce Bartlett, who has written an angry book deeply critical of the tax and spending policies of the Bush Administration. Bartlett was executive director of the Joint Economic Committee of Congress in the 1980s, where he helped promote “supply-side” economics, the theory that a reduction in marginal tax rates spurs economic growth. As a White House policy adviser in the Reagan administration, he helped carry out Reaganomics, the title of his 1981 book.
Bartlett is a Republican and a fiscal conservative. He believes Bush’s tax and spending are unprincipled and that the Bush Administration is squandering Ronald Reagan’s legacy, leaving the nation vulnerable to economic calamity and future tax increases. Bush fiscal policies, Bartlett concludes, are the product of faulty political calculations that haven’t won popular support. But they may destroy any chance free market advocates have to build a credible political argument for low taxes and limited government.
Bartlett believes Bush’s tax and spending policies are unprincipled and leave the nation vulnerable to economic calamity.Take that trillion-dollar Medicare drug benefit. Bartlett quotes Heritage Foundation health policy expert Robert Moffit: “There’s no excuse for what the administration did. The people who were hurt the most were congressional Republicans who put their faith in estimates that turned out to be wrong.” The Administration twisted arms to pass a bill it knew was unaffordable. Indeed, the Health & Human Services inspector general found that the official in charge of Medicare deliberately withheld information requested by members of Congress. It would have shown the program’s announced $394 billion cost for the period 2004-2013 was a gross underestimate based on deceptive calculations. (The Administration counted the cumulative ten-year cost beginning in 2004 instead of in 2006, the point at which the program actually starts.) Republicans in Congress who voted for the measure destroyed their reputations as fiscal hawks. They are winning no credit from seniors, many of whom are confused by the program or expect it will pay all their pharmacy bills. And in time AARP can be expected to attack the program it once endorsed, arguing that it “doesn’t do enough.”
Bartlett scoffs at Bush’s claim to be a fiscal reformer. Having imposed a massive unfunded liability on the nation in election year 2004, the President spent 2005 touting Social Security reform to save the next generation from ruin. But, says Bartlett, “Social Security’s unfunded liability is 60 percent less than just that of the drug program and only 16 percent that of the Medicare program as a whole.”
Bush talks like a believer in free trade. But he imposed a 30 percent tariff on steel imports (lifted in 2003 after the World Trade Organization ruled them illegal), slapped a 29 percent tariff on Canadian lumber, and signed a five-year farm bill that reversed the trend toward a free market in agriculture—begun during the Clinton administration—and gave Europe just the excuse it needs to maintain its own elaborate system of farm subsidies. By caving into special interests to buy domestic political support, Bush weakened the intellectual case for free trade and undermined the dwindling band of free trade advocates in Congress.
In regulatory policy, too, the Administration frequently has confused support for business interests with a free market philosophy. While the Administration rightly renounced the Kyoto treaty on global warming and made some good appointments to regulatory commissions, it provided loan guarantees and bailouts for the airline and insurance industries after 9-11 and supported giving tax-free subsidies to corporations to cover their retirees’ prescription drug costs. Reacting to liberal outcries, the President signed the costly Sarbanes-Oxley Act, preempting state regulation of corporations, and the McCain-Feingold law limiting political contributions, a proposal he once declared unconstitutional.
The 2001 tax cuts reveal the President’s lack of free market understanding.Bartlett argues that even the 2001 Bush tax cuts reveal the President’s lack of free market understanding. Instead of cutting marginal rates for the upper brackets immediately to create incentives to work and invest, the Bush tax plan phased in rate cuts, which muted their effect. It dribbled out tax credits and rebates, which advanced conservative social goals—e.g. ending the “marriage penalty,” giving a charity deduction to non-itemizers, and doubling the child tax credit—but produced very little economic effect. It maximized revenue loss, but did nothing to bring down the size of government (Milton Friedman’s “starve the beast” theory). Finally, the law was purposely set to expire on January 1, 2011, returning rates, including those for the estate tax, back to 2001 levels. Pity the wealthy taxpayer who takes ill in 2010.
Reviewers of Impostor have welcomed its candid skewering of Administration posturing. But some complain that Bartlett ignores Bush foreign policy, especially the Iraq war, whose final outcome will determine the Administration’s place in history. And they say he overstates the fiscal achievements of the Reagan Administration, which produced what were at the time record deficits.
Bartlett rather sensibly responds that he is not a foreign policy expert and thinks it best to focus on areas where he knows something. It’s not clear whether he believes the Iraq war is as significant as both the Administration and its critics believe. Of the Reagan deficits, he concludes that they demonstrate that Republicans were wrong to believe that cutting taxes will force politicians to cut government spending: “[T]he starve the beast theory does not work. But continued belief in the idea that it does has unfortunately weakened what little support there was for spending cuts…”
The subtitle of Impostor is a bit misleading. Bartlett doesn’t believe the nation will repudiate its debts and declare bankruptcy. Instead he expects that politicians will drastically raise taxes, and soon. He predicts an unexpected yet quite foreseeable “crisis” will burst the bubble of public optimism—perhaps a spike in interest rates or a sudden collapse of the stock market—and that will be the tipping point focusing the public’s attention on the federal deficit and leading politicians to call for massive tax hikes.
Bartlett writes to warn his fellow conservative Republicans, at least the kind interested in economics. Because they have been bamboozled into supporting Bush policy priorities out of a fear of giving aid and comfort to the enemy (Democrats and terrorists), he warns that they are unprepared for the tsunami of entitlement spending that is on its way and that must be paid for. Once retired, the baby boomers will demand all their benefits. That will push the politicians to “reform” the tax code (i.e. raise taxes) to pay for them.
Bartlett warns that conservatives have been bamboozled into supporting Bush policy priorities.
Some say the resignation of White House chief of staff Andrew Card signals an impending Administration shake-up that will bring new ideas and energy to the ship of state. The President is replacing Card with Joshua Bolten, the director of the Office of Management and Budget. That’s like promoting the navigator of the Titanic to helmsman on the forward deck. Now he can advise the captain as he looks directly at the iceberg he’s set course for.
Written in deceptively simple language, Bruce Bartlett’s book is a product of long personal experience, extensive economic research, and a wide-ranging selection of media coverage of the Bush era. It deserves every bit of the publicity it’s receiving.
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