David Wessel

“Everyone thinks there’s a lot, but there’s nothing that a majority wants to cut. The average person doesn’t want less government. They just want the government to cost less.”

Bush was elected in 1988 with one memorable promise: “Read my lips, no new taxes.” Republican poster Richard Wirthlin once called them “the six most destructive words in the history of presidential politics.”

In all, $1 of every $5 the federal government spent in 2011 went to defense, and about 20 cents of that $1 was spent on the wars in Iraq and Afghanistan.

“Tax reform”—the always popular, always politically treacherous goal of making the tax code simpler and smarter—“is really difficult when you can’t throw money at it. Losers always squeak louder than winners cheer.”

The federal government was smaller—4.3 percent of GDP in 1931—and narrower. About 70 percent of the spending went for three things: Defense, veterans’ benefits, and interest payments on the national debt. “The federal budget was not then, as it later became, a machine constantly generating new programs and expansions of old ones,” Herbert Stein wrote.

“The fiscal path we are on today is simply not sustainable. These deficits that we are incurring on an annual basis are like a cancer, and they are truly going to destroy this country from within unless we have the common sense to do something about it.

“We face the most predictable economic crisis in history.”

Reagan enjoyed many victories as president. But starving the beast was not one of them. When he left office, federal spending was 20 percent higher, adjusted for inflation, than it had been when he arrived, and he never found a way to pay for it. In the twenty years before Reagan became president—under Kennedy, Johnson, Nixon, and Carter—the budget deficit averaged well under 1 percent of GDP. In Reagan’s eight years, it averaged 4.25 percent of GDP.

Panetta summed up Reaganomics in a single sentence: “A significant tax cut was enacted at the same time that defense spending went up and…entitlement programs were also expanding.”

The overarching lesson: Bringing the deficit down to sustainable levels takes big changes. Little ones won’t do it.

In a city riddled with dysfunctional institutions, the CBO has become one of the few organs of Congress that actually work. It is the arbiter of facts, a call-it-as-we-see-it outfit that is viewed as largely immune to political pressure.

Eliminating the federal workforce entirely would have pared the federal budget deficit in 2011 by only one-third.

Back in 1955, when the federal debt was much smaller, less than 5 percent was held by foreigners. Foreign holdings began to climb in 1970 and surged in the 2000s. Today, foreign governments and private investors hold nearly half of all the U.S. government debt outstanding.