Americans regularly chastise President Obama and Congress for “not making the tough decisions” on the country’s ballooning debt. In many respects, we have every right to be frustrated. Obama has turned his back on the Bowles-Simpson plan, which included much-needed entitlement reforms, and Congressional Republicans refuse to consider raising revenue in a meaningful way.
But, what happens when our elected officials do make those tough decisions? George H.W. Bush learned the answer in 1992. Two years prior, he had pushed a budget deal that included tax increases alongside spending cuts and paid the ultimate political price: a one-term presidency. This was just one of the many decisions that showed Bush put his country first and political career second.
Under Ronald Reagan, the national debt tripled. Combined with the festering Savings & Loan crisis, Bush was left holding the bag of Reagan’s popular but fiscally unsound policies. Something had to be done to get the country’s balance sheet in order. Recognizing that a Democrat-controlled Congress would only accept a budget deal with tax hikes, Bush had to roll back his now-famous campaign pledge: “Read my lips: no new taxes.”
Bush knew the stakes, confiding to his diary that the budget “could mean a one-term presidency but it’s that important for the country.”
Sensing the chance to cull favor with arch-conservatives, GOP opportunists pounced. Newt Gingrich, House minority whip at the time, left the president at the altar after having agreed to the deal. And former Reagan staffer Pat Buchanan, who would later challenge the president in the primaries, sent out bumper stickers to his supporters with Bush’s “read my lips” tax pledge. They were bolstered by conservative groups such as the National Center for Policy Analysis, which made dire predictions about the budget killing 400,000 jobs.
Not only did the predictions prove false, but the budget’s pay-as-you-go (PAYGO) measures and discretionary spending caps later helped give the government its first balance sheet in the black since 1969. Former Congressional Budget Office director Robert Reischauer called the 1990 deal “the foundation upon which the surpluses of the 1998 to 2001 period were built.”