Rand Paul Thinks Republicans Aren’t Fiscally Conservative Because of Budgetary History That He Doesn’t Know

by Patrick Brennan

Ramesh and Reason’s Nick Gillespie have been going back and forth over Rand Paul’s claim (from a number of years ago) that Jimmy Carter was a more fiscally conservative president than Ronald Reagan. Mother Jones collected a series of appearances over the years in which the Kentuckian argues that Reagan’s budget performance, compared with Carter’s, is evidence Republicans don’t really mean it when they claim the mantle of fiscal conservatism. Gillespie argues that Reagan’s deficits means he wasn’t a fiscal conservative, while Ramesh argues (and Nick seems to agree to some extent) that probably a better measure is rate of increases in spending — and Reagan increased spending more slowly than Carter, the opposite of what Paul claims.

A few points on that debate: Gillespie calls Reagan “the founder of Groupon government,” a very nice phrase by which he means he set us on a trajectory of getting more government than we’re really paying for, pushing costs onto future generations/customers. But the metric he cites for this, that taxpayers under Reagan paid 82 cents for every dollar government spent, is in line with the number he cites as the historical average, 84 cents (the historical average doesn’t extend before 1974, though).

In reality, we have Groupon government because with an aging population and rising health-care costs, providing the same programs the government has run since the 1960s has gotten much more expensive and Americans have refused to raise taxes or kill those programs. Gillespie is right that Reagan didn’t do much to address this. But on that front by Gillespie’s measure, where thriftiness is as much about balancing the budget as it is having a small budget, Reagan didn’t do badly, either: He increased the payroll tax and raised the retirement age over time.

Paul’s less sophisticated argument for why Reagan is evidence that Republicans aren’t fiscal conservatives: Spending, including domestic spending, increased more rapidly under Reagan than it did Carter; so Reagan ran deficits several times larger than his predecessor; therefore Republicans aren’t really fiscally conservative. The first two premises are false.

When his duplicitous rants were publicized, he told Mother Jones the following: “I have always been and continue to be a great supporter of Ronald Reagan’s tax cuts and the millions of jobs they created. Clearly spending during his tenure did not lessen, but he also had to contend with Democrat majorities in Congress.” There are a few problems with this: Paul must not be very concerned about the Groupon government Gillespie’s worried about, if he was a supporter of tax cuts when the deficit was rising. He still hasn’t gotten around to admitting that spending didn’t drop under Reagan largely because there was a Cold War to fight.

Moreover, in Paul’s earlier comments about Reagan and fiscal conservatism, he appears to have made no mention of the Democratic Congress he faced (if he did, his spokesmen haven’t pointed it out). There’s a debate to be had on why Reagan walked back from some of his small-government promises, but Paul’s moving from relying on one explanation to another that tells us much less about Republicans and fiscal conservatism. (One, you might note, was useful as an insurgent Republican candidate running against the establishment in Kentucky; the other is more useful in trying to be the first libertarian to win the presidential nomination in Reagan’s party.)

Perhaps that’s because Paul has looked back at the facts and realized that they don’t look anything like he said they do. Here’s how.

He claims that Reagan’s first budget had a gap “three times bigger than Jimmy Carter’s largest deficit.” Even without adjusting for the size of the economy, this isn’t true: Reagan’s first budget, Fiscal Year 1982, ran a inflation-adjusted deficit of $270 billion. The previous year, Carter saw his largest deficit, $180 billion — Reagan’s first budget ran up a deficit 1.5 times bigger, not 3 times. Paul is off by a factor of two here, and Reagan never ran up a deficit that was three times the size of Carter’s largest. (In nominal terms, a.k.a. grossly misleading ones, Paul is still wrong.)

The confusion here may result from the fact that, in another appearance, Paul claims that Carter’s last budget involved between $34 and $36 billion in debt — less than half of what it was ($79 billion in 1981 dollars). These might seem like minor mistakes, but they’re not, for one, and two, if you want to use the numbers, get them right.

“Each successive year, the deficit rose throughout Reagan’s two terms,” Paul claims. This is nonsense: In inflation-adjusted terms, it peaked in 1983, and fell substantially in the years following. (It’s possible Paul meant “the debt” when he said “the deficit” — this was true every year under Carter, too, and this is really not a mistake a senator should make.)

But Reagan did run deficits. Paul wants to claim that’s because he was a thorough-going spendthrift.

Domestic spending, he claimed in at least three separate speeches, rose faster under Reagan than it did under Carter. This is complete nonsense: Domestic discretionary spending rose under Carter, and dropped under Reagan:

Yes, this doesn’t count entitlements — “domestic spending” almost always refers to domestic discretionary spending, as opposed to defense discretionary spending, a distinction Paul made (there are three main budget categories, plus interest). This is because in large part, year to year, no one, neither the president nor congress, decides how much we do in mandatory spending (entitlements and interest); they can only be slowed in the future, so even if Paul meant that, unconventionally, it’s unfair to blame Reagan (or Carter, or Obama, or whatever). If you include mandatory domestic spending — Social Security, etc., some of which Reagan reformed for the long term — Paul’s still wrong. Spending at home, if you include entitlements and interest, did increase under Reagan, but not more quickly than under Carter.

Reagan did, of course, as the above chart shows, increase defense spending hugely, something Gillespie took issue with. But Reagan did so at a time of great national insecurity, without going to war. This happens to be basically, most days of the week, the philosophy Paul calls for: His long-term budget consistently increases spending on the military and he’s proposed spending billions more than President Obama on missile defense in Eastern Europe, while he cautions against waging actual wars.

Increased defense spending is part of the reason for Reagan’s deficits. The U.S. also went through a couple recessions and Reagan cut taxes — all three explanations aren’t really sins against conservative fiscal responsibility.

But yes, Reagan’s deficits were big. Is it because spending exploded? Well, it did go up, but not much more rapidly than it has over the past 40 years (Reagan years shaded):

And Reagan cut taxes substantially, which, combined with a couple recessions, meant that revenues barely rose for most of his term:

Revenues did rise eventually, but raising the same amount of revenue in 1986 that you did in 1981 is a big problem in a growing country.

The one accurate point Paul has, that deficits rose, overstates the case too. “Federal deficits exploded under Reagan,” he said in one speech. “The deficit went through the roof under Reagan,” he said at another. This is, most people would agree, exaggerated — and as I cited above, he also has claimed that deficits continued to rise, which is objectively wrong. Why? Deficits rose to pretty high levels for a couple years, but they weren’t of an entirely different scale than what was seen under Carter or in the years after (the Reagan years are highlighted):

Paul’s right that Reagan never signed a balanced budget. That’s disappointing to some fiscal conservatives, though many wouldn’t have wanted a balanced budget during the Cold War. For other reasons, plenty of conservatives — of the National Review stripe and of the Paulite stripe — were disappointed with Reagan. But that’s very different from Paul’s claims that he was outright fiscally irresponsible compared with his peers, a case Paul can only construct when so many of his claims are outright false.

The senator says doesn’t doubt Reagan’s spirit, he says, just the “follow-through” and “effort” he put in. That’s a little hard to buy when Reagan was negotiating with a Democratic Congress. There are shades of the kind of wishful thinking that motivated defunding Obamacare here — if Reagan had just tried harder, he could have somehow convinced Democrats to do something unthinkable (likely at huge cost to our security, the economy, or both). Paul acknowledged Reagan’s reality when Mother Jones brought his earlier comments to light. For years, though, he’s been peddling random misleading numbers about Reagan’s fiscal conservatism — if he thinks he has a case for why Republicans need to be more fiscally conservative than Reagan was, I hope he has some better numbers somewhere to back it up.

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