He is smarter and much, much meaner, but Asa Hutchinson still does a good imitation of Forrest Gump.
Gump was the mentally deficient film character whose account of his travels put him at the center of most of the epochal events of the last half of the 20th century.
In a speech to the North Little Rock Rotary Club, Hutchinson, the Republican candidate for governor, took a good measure of the credit for ending the mammoth federal budget deficits begun under President Reagan. You see, he arrived in Congress in 1997 as the representative from the Third Congressional District just in time, by his account, to help the Republicans fashion a budget package that ended deficit spending.
Here, according to the Arkansas Democrat-Gazette, is what he told the Rotary:
“When I went to Congress in 1997 we had a $200 billion deficit. We had deficits as far as you could see in the future and we hadn’t had tax cuts in 16 years. Well, we wanted to enact tax cuts to spur our economy on, to put more trust and confidence and money in the entrepreneurs of our country. We did that, and people said you’ll never be able to pay for the needs and address the problems of the deficit. Well, we enacted tax cuts and balanced the budget three years ahead of time and reduced that $200 billion and balanced the budget.”
That is something to brag about, if it were only true. It is a wild distortion of what happened, and the memories of most Americans cannot be so short that they do not recognize it. But the secret of the successful Republican political strategy in recent times is the expectation that people will always accept pleasant fantasy over disagreeable reality.
First, the government did not run a $200 billion deficit in 1997. When Congress passed and President Clinton signed the budget act to which Hutchinson referred, at the end of July 1997, the treasury had already begun to run in the black. The fiscal year that ended two months later accumulated a deficit of only $21.9 billion, the smallest deficit since 1974.
When Democrat Bill Halter called his hand, Hutchinson’s office said he did not mean that the deficit was $200 billion for 1997 but that there were forecasts then of $200 billion in cumulative deficits over the next five years. But he said what he said.
Those $200 billion deficits were products of the Ronald Reagan and George Bush I administrations. The peak was Bush I’s last year, $290 billion. It went down every year, by big chunks, after the spring of 1993 when Clinton passed, without a single Republican vote, a budget that raised taxes on the well-to-do and slashed spending.
Federal Reserve Chairman Alan Greenspan, testifying two months after Congress passed the 1997 budget act, said the Clinton budget act in 1993 had pushed interest rates down and set off an unprecedented demand for capital equipment and labor — what we call business growth and jobs.
That is important to remember because it is what supply-siders like George W. Bush and, apparently, Hutchinson, say will happen when you cut taxes on the rich and corporations. It just doesn’t seem to happen for them.
But let’s go back to that history that Hutchinson was relating: the reversal that took us from “deficits as far as you could see” to big fat surpluses.
Here is what happened: The deficit had shrunk from $290 billion in Bush I’s last year to $127 billion in 1996 and the gap between revenues and spending continued shrinking early in the ’97 fiscal year until it disappeared and began to run in the black.
Congressional Republicans wanted a big tax cut for the rich and corporations but Clinton resisted. That July they finally struck a deal: smaller tax cuts for the fat cats (capital gains, taxes on rich estates and the alternative minimum tax on corporations) that the Republicans wanted and tax cuts for the middle class that Clinton wanted, mainly child-care and education tax credits. Moreover, they cut Medicare and some other entitlement spending but, at Clinton’s insistence, financed a vast expansion of Medicaid to insure medical care for low-income children.
All the tax cuts for fat cats did not kick in immediately but were to be phased in over several years, so the immediate impact of the budget package the following year, 1998, was projected to fatten the deficit slightly, not shrink it.
But the deficits were already gone. The government would run a surplus of $69.2 billion in 1998, the largest in American history to that point, and then $125.6 billion in 1999 and $236.4 billion in 2000. Big surpluses were forecast through 2020. But by 2002, when the ’97 tax cuts kicked in fully and were to have their impact, the country was running massive deficits again, thanks to more tax cuts for the rich.
Republicans look at the economy with funhouse mirrors. They always look tall and thin.
Here’s the question the Rotarians should have posed to Hutchinson: If the tax cuts for the wealthy caused an instant surplus back in 1997 why did the even bigger tax cuts that were part of Bush II’s economic program — supported by Congressman Hutchinson — seem to produce the opposite: giant deficits as far as you could see?
Hutchinson didn’t bring it up.