The Magic Asterisk: Lessons from the Master, David Stockman, on Fiscal Policy Republican Style
William Greider's ethics suck. They always have. In 1981 he allowed his people to write and his bosses to print stories on the front page of the Washington Post that he knew were false.
But he writes well:
The Education of David Stockman: The Magic Asterisk: Even by Washington standards, where overachieving young people with excessive adrenalin are commonplace, Stockman was busy. Back and forth, back and forth he went, from his vast office at the Old Executive Office Building, with its classic high ceilings and its fireplace, to the cloakrooms and hideaway offices and hearing chambers of the Capitol, to the West Wing of the White House. Usually, he carried an impossible stack of books and papers under his arm, like a harried high school student who has not been given a locker.... [Stockman] began to believe that the Reagan budget package, despite its scale, perhaps because of its scale, could survive.... amendment that should have passed," Stockman reflected afterward. "The fact that [the Chaffee amendment] didn't win tells me that the political logic has changed."...
Stockman... cheerfully conceded that the administration's own budget numbers were constructed on similar shaky premises, mixing cuts from the original 1981 budget left by Jimmy Carter with new baseline projections from the Congressional Budget Office in a way that, fundamentally, did not add up.... "None of us really understands what's going on with all these numbers," Stockman confessed at one point.... The "random elements" were working in Stockman's behalf in the House of Representatives. He had a good fix on what Jones would produce as the Democratic alternative, in part because he had a spy in the Democratic meetings--Phil Gramm, of Texas, a like-minded conservative.... Did [Democratic congressional leader] Jones know that one of his Democratic committee members was really on the other side? "No," said Stockman. "That's how I know what's in Jones's budget."...
The Reagan program was moving toward a series of dramatic victories in Congress. Beyond the brilliant tactical maneuvering, however, and concealed by the public victories, Stockman was privately staring at another reality--a gloomy portent that the economic theory behind the President's program wasn't working.... The markets not only failed to rally, they went into a new decline.... Investment analysts, however, were looking closely at the Stockman budget figures... and what they saw were enormous deficits ahead... cutting taxes and pumping up the defense budget would [not] produce... balanced budgets....
Stockman agreed.... "They're concerned about the out-year budget posture, not about the near-term economic situation. The Kaufmans don't dispute our diagnosis at all. They dispute our remedy. They don't think it adds up ... I take the performance of the bond market deadly seriously. I think it's the best measure there is. The bond markets represent worldwide psychology, worldwide perception and evaluation of what, on balance, relevant people think about what we're doing ... It means we're going to have to make changes ... I wouldn't say we are losing. We're still not winning. We're not winning."
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.... 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.... The "magic asterisk" might suffice for the political debate in Congress, but it would not answer the fundamental question.... How, in fact, did Ronald Reagan expect to balance the federal budget?"... "It means," Stockman said, "that you have to have some recalibration in the policy. The thing was put together so fast that it probably should have been put together differently."...
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.... [T]he fundamental arithmetic of the federal budget, which Stockman and others had brushed aside in the heady days of January, was now back to haunt them. If the new administration would not cut defense or Social Security or major "safety-net" programs that Reagan had put off limits, then it must savage the smaller slice remaining. Otherwise, balancing the budget in 1984 became an empty promise....
[Stockman] had to begin educating "the West Wing guys" on the necessity for major revisions in their basic plan. He was surprisingly optimistic. "They are now understanding all those things," Stockman said. "A month ago, they didn't. They really thought you could find $144 billion worth of waste, fraud, and abuse. So at least I've made a lot of headway internally"...
