David Wessel

The Reagan presidency was styled as a turning point in American politics: the end of the New Deal and the beginning of an era in which the government would retreat from the economy. Ronald Reagan made three significant fiscal promises during his campaign for president: cut taxes, rebuild the nation’s defenses, and balance the budget. He delivered on the first two, but not on the third.

In response to years of calls to control “spending” and “smaller government,” Congress and presidents have discovered something simple: giving people a tax break—a credit, a loophole, a deduction—makes them happy without increasing government “spending” and can accomplish the same objective. Practically and economically, there’s no difference between getting $1,000 in cash from the government and getting a $1,000 voucher that you can use to reduce your taxes. Either results in a federal budget deficit that’s $1,000 bigger than it would have been had a tax break not been created. But the first is called “spending” (boos, hisses) and the second is called “a tax cut” (applause, cheers). The first is formally recorded on the budget books as an outflow of money. The second doesn’t show up in the outflow and inflow accounting. It is revenue that wasn’t collected.

Today, the idea that a president could appeal to a mixed-party center to win approval of any measure seems as quaint is a typewriter.

In classical tragedy, this is known as the denouement. In Washington, it could be just farce.