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Re-Reading George H.W. Bush’s Lips

Summary:
The late president showed a “profile in courage” in 1990, when he met the Democrats halfway to achieve fiscal responsibility. Unfortunately, his presidency was the last time any Republican has tried to live up to the label of fiscal conservative. CAMBRIDGE – When President George H.W. Bush was laid to rest last week, the encomiums appropriately remarked on his general decency and competence, which tended to be followed by a “but.” For journalists and historians, it is “but he was only a one-term president.” He lost the 1992 election, in part because of the recession of 1990-1991. For his fellow Republicans, however, it is “but he broke with the legacy of Ronald Reagan by repudiating his ‘no new taxes’ pledge.” Bush’s electoral

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The late president showed a “profile in courage” in 1990, when he met the Democrats halfway to achieve fiscal responsibility. Unfortunately, his presidency was the last time any Republican has tried to live up to the label of fiscal conservative.

CAMBRIDGE – When President George H.W. Bush was laid to rest last week, the encomiums appropriately remarked on his general decency and competence, which tended to be followed by a “but.” For journalists and historians, it is “but he was only a one-term president.” He lost the 1992 election, in part because of the recession of 1990-1991. For his fellow Republicans, however, it is “but he broke with the legacy of Ronald Reagan by repudiating his ‘no new taxes’ pledge.” Bush’s electoral defeat was blamed on that supposed betrayal.

But Bush’s mistake was that he made that anti-tax pledge in the first place and stuck to it in the first part of his presidency. His courageous 1990 reversal on fiscal policy set the stage for a decade of economic growth that eventually achieved budget surpluses.

The budget deal that Bush reached with congressional Democrats in 1990 may indeed have contributed to his failure to win re-election in 1992. There is no question that the timing was terrible. The move to fiscal discipline coincided with the onset of a recession, probably made the downturn worse than it otherwise would have been, and slowed the subsequent recovery.

But it is not as clear as some believe that Bush’s reversal on taxes is what cost him re-election. Bush’s prosecution of the war to push Iraq out of Kuwait, following Saddam Hussein’s invasion, was skillful, both diplomatically and militarily. After Operation Desert Storm achieved its aims, Bush’s approval rating reached a sky-high 89%. It was only in the fourth and final year of his term that his poll rating sank miserably. Anger at Bush for reneging on his tax promise can’t explain the 29% low his approval rating hit in July 1992, because the 89% rating came after he did that.

Bush actually had known better than to support the claim that tax cuts would reduce the budget deficit by boosting revenues. When he ran against Reagan for the Republican nomination in 1980, he famously

Jeffrey Frankel
Jeffrey Frankel, a professor at Harvard University's Kennedy School of Government, previously served as a member of President Bill Clinton’s Council of Economic Advisers. He directs the Program in International Finance and Macroeconomics at the US National Bureau of Economic Research, where he is a member of the Business Cycle Dating Committee, the official US arbiter of recession and recovery.

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