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On June 5, the nonpartisan Congressional Budget Office sent shockwaves through Washington by announcing<\/a> that U.S. President Donald Trump\u2019s proposed budget reconciliation bill\u2014known as the One Big Beautiful Bill Act<\/a>\u2014would increase the U.S. national debt by $2.4 trillion over the next decade. Many economists fear<\/a> that these levels of debt will worsen inflation and could trigger a financial crisis.<\/p>\n The bill, which has been passed by the House of Representatives and now lies with the Senate, poses a dilemma for Republicans. The legislation\u2019s proposed benefit cuts to programs such as Medicaid, the Affordable Care Act, and the Supplemental Nutrition Assistance Program are unpopular<\/a> with constituents<\/a>, but they help offset the $4 trillion<\/a> cost of extending Trump\u2019s first-term tax cuts.<\/p>\n Most Republican lawmakers will likely decide that they would rather deal with the fallout of slashing constituent benefits than that of raising taxes. But it wasn\u2019t always this way.<\/p>\n In 1990, President George H.W. Bush worked with congressional Democrats on a historic deficit-reduction package that cut spending and increased taxes, contradicting his campaign promise. Although deficit reduction was essential for a healthier fiscal balance, the political fury over Bush\u2019s decision was so severe that it caused most Republicans to swear off tax hikes for good.<\/p>\n After the extraordinarily<\/span> difficult economic situation of the 1970s<\/a>, President Ronald Reagan argued that the economy needed new solutions. To him and fellow conservatives, the answer was cutting taxes to free up private-sector investment. Reagan had seen firsthand how capping California property taxes in 1978 had been a political boon for Republicans and hoped this approach would translate on the national stage.<\/p>\n During the 1980s, Republicans made tax cuts as much of a priority as fighting communism. Reagan\u2019s signature domestic legislation was a massive supply-side tax cut<\/a> in 1981 that primarily benefited wealthier Americans. Despite this historic package, Reaganite Republicans were frustrated that fiscal conservatives within their party, such as Kansas Sen. Robert Dole, remained open<\/a> to the necessity of tax hikes.<\/p>\n In 1983, a group of younger Reaganites who disliked the senior Republican establishment formed the Conservative Opportunity Society (COS), a small House caucus promising to be more aggressive in fighting Democrats. They steadily gained strength under the direction of Georgia Rep. Newt Gingrich, who in 1981 had headed<\/a> a working group to promote Reagan\u2019s tax cuts.<\/p>\n These Republicans worked alongside anti-tax organizations such as Grover Norquist\u2019s Americans for Tax Reform. During the 1986 midterms, Norquist introduced<\/a> the Taxpayer Protection Pledge, a public statement that asked politicians to commit to opposing all tax increases. Over time, the pledge would become a near-requirement for Republicans. As the professor Michael Graetz documents<\/a> in his book, The Power to Destroy: How the Antitax Movement Hijacked America, <\/em>Norquist was a key player in the anti-tax movement, which left an indelible mark on American politics.<\/p>\n As Reagan\u2019s vice president, Bush was never very comfortable within this new anti-tax orthodoxy. He was a quintessential patrician\u2014an establishment Republican with deep government experience and close bipartisan ties on Capitol Hill. A moderate by nature and temperament, Bush believed in the virtues of public service and appreciated the art of political compromise. He certainly didn\u2019t like taxes but believed that sometimes they were necessary for the health of the nation.<\/p>\n As a result, when Bush himself campaigned for president, he pivoted to the right to prove his party credentials. His campaign embraced patriotic jingoism<\/a>, low-ball smears<\/a>, and reactionary backlash politics<\/a>. And though Bush had dismissed<\/a> Reagan\u2019s supply-side agenda as \u201cvoodoo economics\u201d in 1980, at the 1988 Republican National Convention, he famously promised delegates: \u201cRead my lips: No new taxes.\u201d<\/p>\n Bush\u2019s anti-tax rhetoric helped him win the election, but once he took office, economic conditions in the United States had changed. By 1990, Reagan\u2019s defense spending buildup, tax cuts, and Bush\u2019s bailout<\/a> of the savings and loans industry had caused deficits to skyrocket. From 1980 to 1990, the U.S. national debt increased<\/a> from $908 billion to $3.2 trillion. As he processed the magnitude of the problem, Bush instantly sensed his dilemma: \u201cI cannot break my \u2018Read the Lips\u2019 pledge,\u201d he wrote in his diary in 1989. \u201cI would be totally destroyed if I did.\u201d Yet economists warned that rising debt and deficits would accelerate conditions for a recession. Federal Reserve Chairman Alan Greenspan said<\/a> he would not consider lowering interest rates, which could boost the economy, until Bush reached a deal to reduce the deficit.<\/p>\n Plus, the Bush administration was beholden to the Balanced Budget and Emergency Deficit Control Act of 1985, which mandated that if Congress did not meet deficit reduction targets, automatic, across-the-board funding sequestrations would go into effect. A Republican president, whose party had staked so much of its reputation on being \u201ctough on defense,\u201d could not be seen as condoning military spending reductions.<\/p>\n Facing these harsh realities, the Bush administration entered into intense budget negotiations with congressional Democrats. Bush understood that he needed to be flexible, and on May 8, 1990, the White House shifted<\/a> its \u201cno new taxes\u201d stance for the first time, saying that there would be \u201cno preconditions\u201d to budget negotiations.<\/p>\n On June 26, the president took a bigger step. Buried in a seemingly dry statement<\/a>, Bush revealed that the deficit package would likely need to include \u201ctax revenue increases,\u201d among other measures. The media instantly understood the implications. A Washington Post<\/em> article<\/a> published the next day characterized Bush\u2019s statement as \u201cthe most significant policy reversal of his presidency and \u2026 a political gamble by the president.\u201d The television host David Letterman joked<\/a> that Bush\u2019s catchphrase should be updated to, \u201cRead my lips: I was lying.\u201d<\/p>\n Following Bush\u2019s statement, Pennsylvania Rep. Robert Walker, a key COS member, collected<\/a> 90 signatures from House Republicans saying that they would oppose Bush\u2019s tax hike. Conservative talk radio shows, which had proliferated<\/a> since the late 1980s, blasted Bush\u2019s proposal; avid listeners called in to agree.<\/p>\n On Sept. 30, Bush finally reached a deal<\/a> with congressional Democrats. The package increased tax rates and excise taxes, reduced spending on Medicare, and imposed cuts to defense spending and discretionary programs. But in total, it would cut the deficit by $500 billion over five years. Bush understood the risks, but he was willing to take the chance.<\/p>\n During a private White House meeting in early October, Bush and congressional leaders from both parties\u2014including Gingrich, the House minority whip\u2014reviewed the bill. Everyone seemed to be on board; the president believed<\/a> that though Gingrich expressed opposition to tax increases, he would eventually fall in line.<\/p>\n But with one month left until the midterms, all hell broke loose. At the final meeting before a Rose Garden ceremony to celebrate the breakthrough, Gingrich told<\/a> Bush he did not think the bill would pass and revoked his support. \u201cYou know I can\u2019t do it. This breaks your word; it is a huge mistake, and I won\u2019t do it,\u201d he said. When the group entered the Rose Garden to announce the deal, Gingrich made a dramatic exit in front of the cameras, publicly signaling his opposition. Following the event, Director of the Office of Management and Budget Richard Darman dismissed<\/a> Gingrich as a \u201cmedia phenomenon\u201d without real political power.<\/p>\n Meanwhile, Gingrich marched back to Capitol Hill to whip up some opposition. Ultimately, the House rejected<\/a> Bush\u2019s deficit-reduction package by a vote of 254 to 179. By fighting rather than acquiescing to Bush\u2019s proposal, Gingrich later recalled<\/a>, \u201cIt became a two-week national story, and it heightened the awareness that he had broken his word.\u201d This awareness, in turn, diminished Bush\u2019s popularity among voters and his standing within the Republican Party.<\/p>\n Following a brief government shutdown, the Bush administration and Congress agreed to a revised deal, which still raised taxes and cut spending. The president signed it into law on Nov. 5, 1990, one day before the midterms.<\/p>\n The next few years confirmed to Republicans that it was Gingrich, not Bush, who was right about taxes. Republicans fared poorly in the 1990 midterms, and Democrats increased their majorities in the House and Senate. In 1992, following a tough primary challenge from former Nixon speechwriter and television host Patrick Buchanan\u2014a controversial, far-right populist who called Bush \u201cKing George<\/a>\u201d over the tax debacle\u2014the president lost the general election to Democrat Bill Clinton.<\/p>\n In the 1994 midterms, Gingrich and the Republican Party rallied against Clinton\u2019s tax hikes and reclaimed control of Congress for the first time since having lost power in the 1954 elections. Sensing that a new boss was in town, Republicans elected Gingrich as speaker of the House.<\/p>\n When the party retook control of the White House in 2001, President George W. Bush learned from his father\u2019s political missteps and made tax cuts a priority, even though presidents had traditionally raised taxes in times of war.<\/p>\n Though the elder Bush had successfully negotiated a major deficit reduction package, he suffered politically from his decision. \u201cNo new taxes\u201d became one of the most infamous broken campaign pledges in American history. With Gingrich\u2019s coup, the Republican Party had cemented the new anti-tax orthodoxy and left moderates like Bush behind.<\/p>\n Republicans today continue<\/span> to operate under the shadow of the Bush-Gingrich showdown of 1990. Trump\u2019s proposed budget reconciliation bill will significantly increase the debt, yet Republicans refuse to even contemplate allowing Trump\u2019s first-term tax cuts to expire. They will not repeat what they believe to be Bush\u2019s historic mistake.<\/p>\n Instead, they are attempting to balance the budget on the backs of veterans, the poor, and other vulnerable Americans who rely on public benefits, as investment in science and technology hangs in the balance.<\/p>\n Though Bush suffered for it politically, his decision to compromise, even though it meant raising taxes, should be seen as a model for what today\u2019s lawmakers must do if they are serious about protecting the United States\u2019 fiscal future.<\/p>\n<\/p><\/div>\n
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