More Revisionist History

William Saletan in Slate reports on the Democratic Presidential candidates’ performance at a picnic hosted by the Governor of Iowa. It’s all pretty depressing. The war and related issues loomed large:
“The alleged misrepresentation of U.S. intelligence about Iraqi weapons of mass destruction is catching fire on the Democratic campaign trail, if not among the general public.” All of the candidates waxed eloquent on this theme, and Bob Graham, the one Democrat other than Lieberman who has a chance to stake out a responsible position on security, has “veered sharply in the dovish direction.”
Saletan’s description of Dennis Kucinich is funny: “He showed up in a ridiculous golf shirt that accented his lack of shoulders. His mouth barely reached the mike. Then this angry little socialist elf launched into a tirade worthy of William Jennings Bryan. He vowed to tear up NAFTA and the agricultural ‘monopolies.’…He dropped his voice two octaves, wrapped one hand around the mike, and croaked the word ‘waaaaaar’ into it like a rock star. He even sang ‘The Star-Spangled Banner.’ The crowd loved it. Somebody toss a dollar in his guitar case so he can buy a quart of milk.”
But what I really want to comment on is this description of Howard Dean, “far and away the most interesting player in the race.” Saletan adds, “Not since Clinton have Democrats seen a talent like this.” Here’s what Dean had to say in Iowa:
“When Ronald Reagan came into office, he cut taxes, we had big deficits, and we lost 2 million jobs. When Bill Clinton came into office, he raised taxes without a single Republican vote; we balanced the budget; we gained 6 and a half million jobs. George Bush has already lost 2 and a half million. I want a balanced budget because that’s how you get jobs in this country is to balance the books.”
Saletan thinks Dean is on to something: “When you hear Dean talk like this, you wonder why no one else can make the party’s case so simply.”
Well, yeah, it’s easy to make your case simply when you just make up the facts. “We lost 2 million jobs”? My recollection is that net job creation during the Reagan administration was 16 million. (Trunk will correct me if I’m wrong; we wrote several dozen newspaper and magazine articles about this at the time.) History records that the tax cuts enacted early in the Reagan administration were one of the greatest engines of economic growth and job creation in American history. It’s one thing to get away with a whopper like Dean’s when you’re talking to an audience of party faithful in Iowa. It would be something else in a general election.
More broadly, it is interesting that the “populist” wing of the Democratic party has adopted the green-eyeshade theory that balancing the budget is the key to creating jobs. This is a reversal of all historical precedent. Until now, the liberal position has always been that in times of economic slowdown, it is appropriate for the government to run a deficit to stimulate demand. That is the Keynesian approach which for many years was endorsed by virtually all Democrats. In 1994, the Republican Congress was pressing for a balanced budget amendment, and the Democrats resisted the amendment, successfully, on the basis of that reasoning.
What accounts for the change? Sheer opportunism, I think, rather than any change in economic theory. The Democrats simply want to take advantage of the fact that during the Clinton years, a growing economy balanced the budget (as opposed to budget balancing causing the economy to grow). While, conversely, the slowing economy inherited by President Bush, aggravated by the terrorist attacks, has led to budget deficits. For a party trying to get back into power, one economic theory is apparently as good as another.

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