Stockman, David

===

recanted pretty quickly?

merri ok

pension?

tozzi?

===

very good summary

an no lnx

The real reason Republicans oppose efforts to cancel student debt

Thom Hartmann April 12, 2024

I don’t get it and I’m hoping you can help me figure it out. Why do Republicans oppose President Biden’s efforts to cancel student debt?

This Tuesday, seven states, led by Missouri’s Republican Attorney General, sued the Biden administration to stop his most recent attempt to reduce student debt. In a separate lawsuit, ten other Republican-controlled states filed a separate lawsuit to try to block the same Biden effort.

The week before, somebody slipped this little gem into Maria Cantwell’s must-pass legislation reauthorizing the Federal Aviation Administration (FAA) (my inquiry to her press office was never answered):

“The Secretary, the Secretary of the Treasury, or the Attorney General may not take any action to cancel or forgive the outstanding balances, or portion of balances, on any Federal Direct Unsubsidized Stafford Loan, or otherwise modify the terms or conditions of a Federal Direct Unsubsidized Stafford Loan, made to an eligible student, except as authorized by an Act of Congress.”

READ: White rural rage: The secret political force shaping America's future

In other words, it appears, they’re trying to use the force of law to prevent President Biden from forgiving a large category of student loans. As Forbes noted:

“A proposed bill in Congress would ban mass student loan forgiveness for borrowers who attended certain professional training programs, and advocates are sounding the alarm that this could be a concerning precedent.”

But why?

— No banks are being hurt by these loans being forgiven: they’re all federal loans funded by the government. When the loan is forgiven, the debt simply vanishes: it doesn’t cost any of us a penny and isn’t hurting the big bank donors to the GOP.

— Forgiving student debt is an economic stimulus, freeing people up to buy a new home, start a new business, or just begin the family they’d been putting off because of economic uncertainty. Everybody benefits.

The closest I can come to thinking of a motive for these Republicans is that they think that Biden is essentially “buying” the votes of people whose loans were forgiven, but they’re smart enough to know that people’s politics are influenced by far more than something that simple.

Rightwingers with student debt aren’t going to start voting Democratic; if anything, they’ll take the relief and then brag about how they’re going to vote for Trump anyway.

So, what is it?

Is it that Republicans simply think having Americans in debt somehow works to their advantage? If so, how does that work?

Or is it the old, “You made the commitment, now you must follow through or society will crumble in a mess of lawlessness” argument?

When you search on the phrase “student debt forgiveness” one of the top hits that comes up is a Fox “News” article by a woman who paid off her loans in full.

“There are millions of Americans like me,” the author writes, “for whom debt forgiveness is an infuriating slap in the face after years of hard work and sacrifice. Those used to be qualities we encouraged as an American culture, and if Biden gets his way, we’ll be sending a very different message to the next generation.”

If this is the Republican’s main argument, it is, to be charitable, bullsh*t.

Forgiving student debt is not a slap at anybody; it’s righting a moral wrong inflicted on millions of Americans by Ronald Reagan and his morbidly rich Republican buddies.

Student debt is evil.

It’s a crime against our nation, hobbling opportunity and weakening our intellectual infrastructure. It maintains and in many cases rigidifies the racial and class caste systems today’s Americans inherited from our eras of slavery and indenture.

Combine this decision with the six Republicans on the Court ending affirmative action and legalizing discrimination and it’s clear this is exactly what the rightwing billionaires who put them on the Court and support their lavish vacations and lifestyles want.

They really don’t care about improving the lives of everyday Americans; their philosophy is, “I got mine; screw you.” Educated themselves, they’re now working to “pull up the ladder” behind them and thus maintain their elite status.

As history shows, this harms countries in real and measurable ways.

Every nation’s single biggest long-term asset is a well-educated populace, and student debt diminishes that.

Every other advanced democracy on the planet understands this.

That’s why student debt at the scale we have in America literally does not exist anywhere else in the rest of the developed world.

American students, in fact, are going to college for free right now in Germany, Iceland, France, Norway, Finland, Sweden, Slovenia, and the Czech Republic, because pretty much anybody can go to college for free in those countries and dozens of others.

“Student debt?” The rest of the developed world doesn’t know what you’re talking about.

Student debt also largely didn’t exist in America before the Reagan Revolution. It was created by Republicans here in the 1980s — intentionally — and if we can overcome Republican opposition, we can intentionally end it here and join the rest of the world in once again benefiting from an educated populace.

Forty years on from the Reagan Revolution, student debt has crippled three generations of young Americans: over 44 million people carry the burden, totaling a $2+ trillion drag on our economy that benefits nobody except the banks earning interest on the debt and the politicians they pay off.

But that doesn’t begin to describe the damage student debt has done to America since Reagan, in his first year as governor of California, ended free tuition at the University of California and cut state aid to that college system by 20 percent across-the-board.

After having destroyed low income Californians’ ability to get a college education in the 1970s, Reagan then took his anti-education program national as president in 1981.

When asked why he’d taken a meat-axe to higher education and was pricing college out of the reach of most Americans, he said, much like Ted Cruz might today, that college students were “too liberal” and America “should not subsidize intellectual curiosity.”

It was the 1980s version of today’s “war on woke”: Reagan hated college students.

On May 1, 1970, Governor Reagan announced that students protesting the Vietnam war across America were “brats,” “freaks” and “cowardly fascists,” adding, as The New York Times noted at the time:

“If it takes a bloodbath, let’s get it over with. No more appeasement!”

Four days later four were dead at Kent State, having been murdered by National Guard riflemen using live ammunition against anti-war protesters.

Before Reagan became president, states paid 65 percent of the costs of colleges, and federal aid covered another 15 or so percent, leaving students to cover the remaining 20 percent with their tuition payments.

It’s why when I attended college in the late 1960s — before Reagan — I could pay my tuition working a weekend job as a DJ at a local radio station and washing dishes at Bob’s Big Boy restaurant on Trowbridge Road in East Lansing.

That’s how it works — at a minimum — in most developed nations, although in many European and Asian countries college is not only free, but the government pays students a stipend to cover books and rent.

Here in America, though, the numbers are pretty much reversed from pre-1980 as a result of Reaganomics, with students now covering about 80 percent of the costs. Thus the need for student loans here in the USA.

As soon as he became president, Reagan went after federal aid to students with a fanatic fervor. Devin Fergus documented for The Washington Post how, as a result, student debt first became a thing across the United States during the early ‘80s:

“No federal program suffered deeper cuts than student aid. Spending on higher education was slashed by some 25 percent between 1980 and 1985. ... Students eligible for grant assistance freshmen year had to take out student loans to cover their second year.”

It became a mantra for conservatives, particularly in Reagan’s cabinet. Let the kids pay for their own damn “liberal educations.”

Reagan’s college educated Director of the Office of Management and Budget, David Stockman, told a reporter in 1981:

“I don’t accept the notion that the federal government has an obligation to fund generous grants to anybody who wants to go to college. It seems to me that if people want to go to college bad enough then there is opportunity and responsibility on their part to finance their way through the best way they can. … I would suggest that we could probably cut it a lot more.”

After all, cutting taxes for the morbidly rich was Reagan’s first and main priority, a position the GOP holds to this day. Cutting education could “reduce the cost of government” and thus justify more tax cuts for billionaires.

Reagan’s first Education Secretary, Terrel Bell, wrote in his memoir:

“Stockman and all the true believers identified all the drag and drain on the economy with the ‘tax-eaters’: people on welfare, those drawing unemployment insurance, students on loans and grants, the elderly bleeding the public purse with Medicare, the poor exploiting Medicaid.”

Reagan’s next Education Secretary, William Bennett, was even more blunt about how America should deal with the “problem” of uneducated people who can’t afford college, particularly if they were African American:

“I do know that it’s true that if you wanted to reduce crime,” Bennett famously said, “you could -- if that were your sole purpose, you could abort every black baby in this country, and your crime rate would go down.”

These doctrines became an article of faith across the GOP and remain so to this day, as we saw this week with the Republicans suing to stop Biden from forgiving any more loans.

Reagan’s OMB Director David Stockman told Congress that students were “tax eaters … [and] a drain and drag on the American economy.” Student aid, he said, “isn’t a proper obligation of the taxpayer.”

This was where, when, and how today’s student debt crisis was kicked off in 1981.

Before Reagan, though, America had a different perspective.

Both my father and my wife Louise’s father served in the military during World War II and both went to college on the GI Bill. My dad dropped out after two years and went to work in a steel plant because mom got pregnant with me; Louise’s dad, who’d grown up dirt poor, went all the way for his law degree and ended up as Assistant Attorney General for the State of Michigan.

They were two among almost 8 million young men and women who not only got free tuition from the 1944 GI Bill but also received a stipend to pay for room, board, and books. And the result — the return on our government’s investment in those 8 million educations — was substantial.

The best book on that time and subject is Edward Humes’ Over Here: How the GI Bill Transformed the American Dream, summarized by Mary Paulsell for the Columbia Daily Tribune:

“[That] groundbreaking legislation gave our nation 14 Nobel Prize winners, three Supreme Court justices, three presidents, 12 senators, 24 Pulitzer Prize winners, 238,000 teachers, 91,000 scientists, 67,000 doctors, 450,000 engineers, 240,000 accountants, 17,000 journalists, 22,000 dentists and millions of lawyers, nurses, artists, actors, writers, pilots and entrepreneurs.”

Free education literally built America’s middle class.

When people have an education, they not only raise the competence and vitality of a nation; they also earn more money, which stimulates the economy. Because they earn more, they pay more in taxes, which helps pay back the government for the cost of that education.

In 1952 dollars, the GI Bill’s educational benefit cost the nation $7 billion. The increased economic output over the next 40 years that could be traced directly to that educational cost was $35.6 billion, and the extra taxes received from those higher-wage-earners was $12.8 billion, both in 1952 dollars.

In other words, the US government invested $7 billion and got a $48.4 billion return on that investment, about a $7 return for every $1 invested.

In addition, that educated workforce made it possible for America to lead the world in innovation, R&D, and new business development for three generations.

We invented the transistor, the integrated circuit, the internet, new generations of miracle drugs, sent men to the moon and reshaped science.

Presidents Thomas Jefferson and Abraham Lincoln knew this simple concept that seems so hard for Reagan and generations of Republicans since to understand: when you invest in young people, you’re investing in your nation.

Jefferson founded the University of Virginia as a 100% tuition-free school; it was one of his three proudest achievements, ranking higher on the epitaph he wrote for his own tombstone than his having been both president and vice president.

Lincoln was equally proud of the free and low-tuition colleges he started. As the state of North Dakota notes:

“Lincoln signed the Morrill Act on July 2, 1862, giving each state a minimum of 90,000 acres of land to sell, to establish colleges of engineering, agriculture, and military science. … Proceeds from the sale of these lands were to be invested in a perpetual endowment fund which would provide support for colleges of agriculture and mechanical arts in each of the states.”

Fully 76 free or very-low-tuition state colleges were started because of Lincoln’s effort and since have educated millions of Americans including my mom, who graduated from land-grant Michigan State University in the 1940s, having easily paid her minimal tuition working as a summer lifeguard in her home town of Charlevoix, Michigan.

Every other developed country in the world knows this, too: student debt is rare or even nonexistent in most western democracies. Not only is college free or close to free in almost all of the developed world; many countries even offer a stipend for monthly expenses like our GI Bill did back in the day.

As mentioned earlier, thousands of American students are currently studying in Germany at the moment for free. Hundreds of thousands of American students are also getting free college educations right now in Iceland, Denmark, Norway, Finland, Sweden, Slovenia, and the Czech Republic, among others.

Republican policies of starving education and cranking up student debt have made US banks a lot of money, but they’ve cut America’s scientific leadership in the world and, since the institution of trickle-down Reaganomics, stopped three generations of young people from starting businesses, having families, and buying homes.

The damage to working class and poor Americans, both economic and human, is devastating. Even worse for America, it’s a double challenge for minorities.

And now Republicans are telling our young people who weren’t members of the “Lucky Sperm Club” with wealthy or legacy parents that they’re simply out of luck. And, as noted, the GOP is celebrating.

Which raises the question: how gullible do these Republicans think their voters are?

Marjorie Taylor Greene wrote on Twitter that student loan forgiveness was “completely unfair.” She’s the same Republican congresswoman who had $183,504 in PPP loans forgiven, and happily banked that government money without a complaint.

Republican members of Congress, in fact, seem to be among those in the front of the debt-forgiveness line with their hands out, even as billionaires bankroll their campaigns and backstop their lifestyles.

As the Center for American Progress noted on Twitter in response to a GOP tweet whining that, “If you take out a loan, you pay it back”:

Member —— Amount in PPP Loans Forgiven

Matt Gaetz (R-FL) - $476,000

Marjorie Taylor Greene - $183,504

Greg Pence (R-IN) - $79,441

Vern Buchanan (R-FL) - $2,800,000

Kevin Hern (R-OK) - $1,070,000

Roger Williams (R-TX) - $1,430,000

Brett Guthrie (R-KY) - $4,300,000

Ralph Norman (R-SC) $306,250

Ralph Abraham (R-AL) - $38,000

Mike Kelly (R-PA) - $974,100

Vicki Hartzler (R-MO) - $451,200

Markwayne Mullin (R-OK) - $988,700

Carol Miller (R-WV) - $3,100,000

Every single one of these Republican members of Congress has echoed Greene’s criticism of student debt relief or supported efforts to block it. Every single one also eagerly welcomed forgiveness of their Covid-era debts.

So, yeah, Republicans are complete hypocrites about forgiving loan debt, in addition to pushing policies that actually hurt our nation (not to mention the generations coming up).

President Biden has already forgiven over $143 billion in student debt and this week proposed to extend that debt relief from the 4 million he has reached so far to as many as 20 million people. It’s a great start, but if we really want America to soar, we need to go way beyond that.

Just like for-profit health insurance (which was prohibited in most states before the Reagan Revolution: the companies had to be organized as nonprofits), student loans are a malignancy attached to our republic by Republicans trying to increase profits for their donors while extracting more and more cash from working-class families.

If Democrats can regain control of the House and hold the Senate and White House this fall, they must not only zero-out existing student debt across our nation but revive the post-war government support for education — from Jefferson and Lincoln to the GI Bill and college subsidies — that the Reagan, Bush, Bush, and Trump administrations have destroyed.

Then, and only then, can the true “making America great again” begin.

READ: White rural rage: The secret political force shaping America's future

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Office of Management and Budget[

Stockman became one of the most controversial OMB directors ever during a tenure that lasted until his resignation during August 1985. Committed to the doctrine of supply-side economics, he assisted the approval of the "Reagan Budget" (the Gramm-Latta Budget), which Stockman hoped to be a serious curtailment of the "welfare state", gaining a reputation as a tough negotiator with House Speaker Tip O'Neill's Democratic-controlled House of Representatives and Majority Leader Howard Baker's Republican-controlled Senate. During this period, although only in his 30s, Stockman became well known to the public during the contentious political wrangling concerning the role of the federal government in American society.

Stockman's influence within the Reagan Administration decreased after the Atlantic Monthly magazine published the infamous 18,246 word article, "The Education of David Stockman",^[7] in its December 1981 issue, based on lengthy interviews Stockman gave to reporter William Greider.

The White House's public relations team thereafter attempted to limit the article's damage to Reagan's perceived fiscal-leadership skills. Stockman was quoted as referring to Reagan's tax act as: "I mean, Kemp-Roth [Reagan's 1981 tax cut] was always a Trojan horse to bring down the top rate.... It's kind of hard to sell 'trickle down.' So the supply-side formula was the only way to get a tax policy that was really 'trickle down.' Supply-side is 'trickle-down' theory."^[7] Of the budget process during his first year on the job, Stockman was quoted as saying: "None of us really understands what's going on with all these numbers," which was used as the subtitle of the article.^[7]

After Stockman's first year at OMB and after "being taken to the woodshed by the president" due to his candor with Atlantic Monthly's William Greider, Stockman became inspired with the projected trend of increasingly large federal deficits and the rapidly expanding national debt. On 1 August 1985, he resigned OMB and later wrote a memoir of his experience in the Reagan Administration titled The Triumph of Politics: Why the Reagan Revolution Failed (ISBN 0060155604), in which he specifically criticized the failure of congressional Republicans to endorse a reduction of government spending as necessary offsets to the large tax decreases, in order to avoid the creation of large deficits and an increasing national debt.

===

kos

David Stockman, President Reagan’s director of Office of Management and Budget, is at it again. This time on All In with Chris Hayes he gave a stinging observation of what the Republican Party has become. In effect he defines them as a coalition of ideological gangs. Turns out he defines them as a gang of cons.

Following is a representative snippet of the segment where he breaks down the ideological gangs.

Chris Hayes: Now former Congressman David Stockman, Republican from Michigan. He was the director of the Office Of Management and Budget during the Reagan administration. He is the author of “The Great Deformation, The Corruption of Capitalism in America”. … You are someone who has kind of been in and out of the Conservative movement. You were a kind of a ‘purgee’ in certain ways. … How do you kind of understand this.

David Stockman: This isn’t surprising. The Republicans are no longer a political party. They are a gang, a coalition of ideological gangs. You have the neo cons, the tax cons, the social cons, and the just cons. … On the fundamental fiscal issues they don’t agree at all. It’s totally fractured. The neo cons want a bigger defense budget. We have a 650 billion dollar war machine. They did not get the memo that the cold war ended over 25 years ago. There are a few thousand terrorists left. You don’t need a war machine that big.

By the way, when Clinton left the Whitehouse it was 400 billion dollars in today’s dollars. So they argue we can’t do sequester. We ought to be cutting much more. So that divides the party. Then you have the tax cons who still believe in the magic napkin. Just grow your way out of it. We’ve had 30 years to prove you can’t. … We have the social cons, the social issue people who don’t care. An then all the Republicans who have been talking about big spending who won’t stand up and take on social security means testing. Not cutting the people who need it. …

Chris Hayes: I would love nothing more as someone who does not want to see means testing of social security but I would love nothing than the Republican Party to take your advice and come out for means testing for Social Security.

David Stockman was the architect of Reagan’s supply side policies. He admitted in an article in the Atlantic Monthly, “The Education of David Stockman,”http://www.theatlantic.com/magazine/archive/1981/12/the-education-of-david-stockman/305760/ that the huge Reagan tax cut was a Trojan horse to bring down the top tax rate. He also admitted that supply side theory was just a method of selling trickle-down economics by a different and acceptable name.

Stockman has remained conservative. He has all but dispatched the possibility of trickle-down economics, supply side economics working. He has been trying to atone for the severe damage Republican policies have exacted on the American economy for many years now. Hopefully more of his comrades, the ideological gangs, will begin to listen.

No. They’re not bad people. I hit the wall when Collins & Aikman, a company my firm invested in, collapsed. It’s only when you’re splattered out on the floor when you look up. Why did I have an automobile supplier leveraged five or six times in an industry that was dangerous? Well, it was because J.P. Morgan and Deutsche Bank wanted to hand out the money. My point in the book is that bad policy causes smart people to engage in activities that wouldn’t occur in the free market.

If we didn’t have a massive bias in the tax code for debt and capital gains, and we didn’t have a monetary policy that was driving interest rates to absurdly low levels, most of this massive leveraging wouldn’t occur. I don’t hold it against someone who makes a killing. I’m saying this kind of start-stop, boom-bust monetary policy is pointless, and it’s one of the mechanisms by which windfalls are shifted to the 1 percent.

You’re still nominally a Republican. But you have some pretty harsh words for Mitt Romney, the party’s nominee for president last year.

I call the chapter “Willard M. Romney and the Truman Show of Bubble Finance.”

- See more at: http://www.thedailybeast.com/articles/2013/04/01/david-stockman-on-the-great-deformation-and-our-economic-doom.html#sthash.yOC0aJMT.dpuf

atlantic 4/13

The GOP program has the supply-side, low-tax position at its core. If it won't generate the results they promise, why is it still such a part of the Republican agenda?

Because Republicans claim that we had this great Golden Age in the 1980s, that there was a boom in the 1990s, and that everything was going well during the George W. Bush era until some mysterious comet came in from deep space and caused a meltdown in 2008. My argument is that this was mostly a phony prosperity built on massive additions to public and private debt. That so-called prosperity came from the printing press in the Eccles Building run by Alan Greenspan and Ben Bernanke. The "prosperity" didn't come from tax cuts made by Republican policy makers.

But if cutting taxes doesn't

rubicon was ~ ike cut spending earns a tax cut; RR reversed

http://www.theatlantic.com/politics/archive/2013/04/were-going-to-have-a-crisis-david-stockmans-stark-warning-for-america/274554/

===

12/81

http://www.theatlantic.com/magazine/archive/1981/12/the-education-of-david-stockman/305760/

...

While ideology would guide Stockman in his new job, he would be confronted with a large and tangible political problem: how to resolve the three-sided dilemma created by Ronald Reagan's contradictory campaign promises. In private, Stockman agreed that his former congressional mentor, John Anderson, running as an independent candidate for President in 1980, had asked the right question: How is it possible to raise defense spending, cut income taxes, and balace the budget, all at the same time? Anderson had taunted Reagan with that question, again and again, and most conventional political thinkers, from orthodox Republican to Keynesian liberal, agreed with Anderson that it could not be done.

But Stockman was confident, even cocky, that he and some of his fellow conservatives had the answer. It was a theory of economics—the supply-side theory—that promised an end to the twin aggravations of the 1970s: high inflation and stagnant growth in America's productivity. "We've got to figure out a way to make John Anderson's question fit into a plausible policy path over the next three years," Stockman said. "Actually, it isn't all that hard to do."

The supply-side approach, which Stockman had only lately embraced, assumed first of all, that dramatic action by the new President, especially the commitment to a three-year reduction of the income tax, coupled with tight monetary control, would signal investors that a new era was dawning, that the growth of government would be displaced by the robust growth of the private sector. If economic behavior in a climate of high inflation is primarily based on expectations about the future value of money, then swift and dramatic action by the President could reverse the gloomy assumptions in the disordered financial markets. As inflation abated, interest rates dropped, and productive employment grew, those marketplace developments would, in turn, help Stockman balance the federal budget.

"The whole thing is premised on faith," Stockman explained. "On a belief about how the world works." As he prepared the script in his mind, his natural optimism led to bullish forecasts, which were even more robust than the Reagan Administration's public promises. "The inflation premium melts away like the morning mist," Stockman predicted. "It could be cut in half in a very short period of time if the policy is credible. That sets off adjustments and changes in perception that cascade through the economy. You have a bull market in '81, after April, of historic proportions."

How The World Works. It was a favorite phrase of Stockman's, frequently invoked in conversation to indicate a coherent view of things, an ideology that was whole and consistent. Stockman took ideology seriously, and this distinguished him from other bright, ambitious politicians who were content to deal with public questions one at a time, without imposing a consistent philosophical framework upon them...

After graduation, he enrolled at Harvard Divinity School, thinking he might become a great moral philosopher in the tradition of Christian social activists. (He was perhaps also thinking like so many other students of the time, that divinity school would extend his deferment from the draft.) At Michigan State, he had dropped the study of agriculture and moved into the humanities. At Harvard, he dropped theology and moved into the social sciences (though he never received training as an economist). "I guess I always had a strong intellectual bent, so I needed a strong theory of how the world worked."

When he found the divinity courses uninspiring, he began taking political science and history—studying under neo-conservatives such asJames Q. Wilson,Nathan Glazer, and Daniel Patrick Moynihan—and discovered, he said, "that it was possible to have a sophisticated view of the world without being a Marxist." In a Harvard seminar, he made a connection with John Anderson, who was looking for a bright young idea man to help prepare issues for the House Republican Conference, which Anderson chaired. The Illinois congressman was moving gradually leftward in his views; Stockman was continuing his intellectual search in the opposite direction....

In early January, Stockman and his staff were assembling dozens of position papers on program reductions and studying the internal forecasts for the federal budget and the national economy. The initial figures were frightening—"absolutely shocking," he confided—yet he seemed oddly exhilarated by the bad news, and was bubbling with new plans for coping with these horrendous numbers. An OMB computer, programmed as a model of the nation's economic behavior, was instructed to estimate the impact of Reagan's program on the federal budget. It predicted that if the new President went ahead withhis promised three-year tax reduction and his increase in defense spending, the Reagan Administration would be faced with a series of federal deficits without precedent in peacetime—ranging from $82 billion in 1982 to $116 billion in 1984.Even Stockman blinked. If those were the numbers included in President Reagan's first budget message, the following month, the financial markets that Stockman sought to reassure would instead be panicked. Interest rates, already high, would go higher; the expectation of long-term inflation would be confirmed.

Stockman saw opportunity in these shocking projections. "All the conventional estimates just wind up as mud," he said. "As absurdities. What they basically say, to boil it down, is that the world doesn't work."

Stockman set about doing two things.First, he changed the OMB computer.Assisted by like-minded supply-side economists, the new team discarded orthodox premises of how the economy would behave. Instead of a continuing double-digit inflation, the new computer model assumed a swift decline in prices and interest rates. Instead of the continuing pattern of slow economic growth, the new model was based on a dramatic surge in the nation's productivity. New investment, new jobs, and growing profits—and Stockman's historic bull market. "It's based on valid economic analysis," he said, "but it's the inverse of the last four years. When we go public, this is going to set off a wide-open debate on how the economy works, a great battle over the conventional theories of economic performance."

The original apostles of supply-side, particularly Representative Jack Kemp, of New York, and the economist Arthur B. Laffer, dismissed budget-cutting as inconsequential to the economic problems, but Stockman was trying to fuse new theory and old. "Laffer sold us a bill of goods," he said, then corrected his words: "Laffer wasn't wrong—he didn't go far enough."...

THE underlying problem of the deficits first surfaced, to Stockman's embarrassment, in the Senate Budget Committee in mid-April, when committee Republicans choked on the three-year projections supplied by the nonpartisan Congressional Budget Office. Three Republican senators refused to vote for a long-term budget measure that predicted continuing deficits of $60 billion, instead of a balanced budget by 1984.

Stockman thought he had taken care of embarrassing questions about future deficits with a device he referred to as the "magic asterisk." (Senator Howard Baker had dubbed it that in strategy sessions, Stockman said.) The "magic asterisk" would blithely denote all of the future deficit problems that were to be taken care of with additional budget reductions, to be announced by the President at a later date. Thus, everyone could finesse the hard questions, for now....

Reagan's policy-makers knew that their plan was wrong, or at least inadequate to its promised effects, but the President went ahead and conveyed the opposite impression to the American public. With the cool sincerity of an experienced television actor, Reagan appeared on network TV to rally the nation in support of the Gramm-Latta resolution, promising a new era of fiscal control and balanced budgets, when Stockman knew they still had not found the solution. This practice of offering the public eloquent reassurances despite privately held doubts was not new, of course. Every contemporary President—starting with Lyndon Johnson, in his attempt to cover up the true cost of the war in Vietnam—had been caught, sooner or later, in contradictions between promises and economic realities. The legacy was a deep popular skepticism about anything a President promised about the economy. Barely four months in office, Ronald Reagan was already adding to the legacy...

Stockman saw three main areas of opportunity for closing the gap: defense, Social Security, and health costs, meaning Medicare and Medicaid. And there was a fourth: the Reagan tax cut; if it could be modified in the course of the congressional negotiations already under way, this would make for additional savings on the revenue side. The public alarm over the deficits was, to some extent, "fortuitous," from Stockman's viewpoint, because the Wall Street message supported the sermon that he was delivering to his fellow policy-makers at the White House: the agonies of budget reduction were only beginning, and, more to the point, the Reagan Administration could not keep its promise of balanced budgets unless it was willing to back away from its promised defense spending, its 10-10-10 tax-cut plan, and the President's pledge to exempt from cutbacks the so-called "safety-net" programs. Stockman would deliver this speech, in different forms, all through the summer ahead, trying to create the leverage for action on those fronts, particularly on defense. He later explained his strategy:

"I put together a list of twenty social programs that have to be zeroed out completely, like Job Corps, Head Start, women and children's feeding programs, on and on. And another twenty-five that have to be cut by 50 percent: general revenue sharing, CETA manpower training, etcetera, etcetera. And then huge bites that would have to be taken out of Social Security. I mean really fierce, blood-and-guts stuff—widows' benefits and orphans' benefits, things like that. And still it didn't add up to $40 billion. So that sort of created a new awareness of the defense budget...

[soc sec reform]

...Stockman himself had been a late convert to supply-side theology, and now he was beginning to leave the church. The theory of "expectations" wasn't working. He could see that. And Stockman's institutional role as budget director forced him to look constantly at aspects of the political economy that the other supply-siders tended to dismiss. Whatever the reason, Stockman was creating some distance between himself and the supply-side purists; eventually, he would become the target of their nasty barbs. For his part, Stockman began to disparage the grand theory as a kind of convenient illusion—new rhetoric to cover old Republican doctrine....

In early June, it fell apart. The tax lobbyists of Washington, when they saw the outlines of the Reagan tax bill, mobilized the business community, the influential economic sectors from oil to real estate. In a matter of days, they created the political environment in which they flourish best—a bidding war between the two parties. First the Democrats revealed that their tax bill would be more generous than Reagan's in its depreciation rules. Despite Stockman's self-confidence, the White House quickly retreated—scrapped its revised and leaner proposal, and began matching the Democrats, billion for billion, in tax concessions. The final tax legislation would yield, in total, an astounding revenue loss for the federal government of $750 billion over the next five years....

GENERALLY, he did not lose his temper, but on a pleasant afternoon in early September, Stockman returned from a meeting at the White House in a terrible black mood. In his ornately appointed office at OMB, he slammed his papers down on the desk and waved away associates. At the Oval Office that afternoon, Stockman had lost the great argument he had been carefully preparing since February: there would be no major retrenchment in the defense budget. Over the summer, Stockman had made converts, one by one, in the Cabinet and among the President's senior advisers. But he could not convince the only hawk who mattered—Ronald Reagan. When the President announced that he would reduce the Pentagon budget by only $13 billion over the next three years, it seemed a pitiful sum compared with what he proposed for domestic programs, hardly a scratch on the military complex, which was growing toward $350 billion a year....

fred Upton was born in St. Joseph, Michigan, the son of Elizabeth B. (née Vial) and Stephen Edward Upton.^[3] Upton attended Shattuck-Saint Mary's, graduating in 1971.^[4] He earned a B.A. in journalism from the University of Michigan in 1975. He was a member of the Alpha Delta Phi fraternity, Peninsular Chapter and became a sports editor at The Michigan Daily and thought he might someday cover the Chicago Cubs.^[5] He served on the congressional staff of U.S. Congressman David Stockman (R-MI) from 1976-80. He was in the Office of Management and Budget (OMB) under Ronald Reagan from 1981–85, while Stockman served as OMB Director

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