15 November 2012

The Miracle of Advertising: Or Why are Republicans Still Considered Fiscal Conservatives?

The Republicans have preserved their brand to include a reputation for fiscal conservatism. This is impressive.

Reagan took office promising tax cuts and less government. His was an important reminder that we can't turn to the government for solutions to every problem. He was a big advocate of free markets. 

What was the reality? Well, measuring taxes as a percentage of GDP, he did lower taxes from what they were under Jimmy Carter. In the four years under Carter, taxes averaged 18.4% of GDP. In the eight years under Reagan, they averaged 18.2%. So, not a particularly big cut in taxes, but what about spending?

Under Carter, spending as a percentage of GDP averaged 20.8%. Under Reagan it averaged 22.3%.

Hard to reconcile this with fiscal conservatism. Reagan dropped taxes .2% and raised spending 1.5% of GDP. Unsurprisingly, Reagan created big deficits, hardly the mark of a fiscal conservative.

George W. Bush actually reduced government spending as a percentage of GDP from his predecessor. Under Clinton, government spending averaged 19.8% of GDP. Bush got that down to 19.6%, a drop of .2%. That cut was small but the the cut in taxes was huge. Bush got those down 1.4% of GDP, from Clinton's 19% to 17.6%. Like Reagan, Bush drove up the deficit. Again, not a sign of fiscal conservatism. 

Fiscal conservative is not the right term. Tax cutter is. But as I've argued before: if you merely lower your monthly payment on your credit card but don't actually lower your spending, you hardly qualify as a fiscal conservative. The miracle is, voters still seem to think that it does.

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