The Magic Asterisk: Lessons from the Master, David Stockman, on Fiscal Policy Republican Style
Washington Post Death Spiral Watch (Robert Samuelson Edition)

More David Stockman Magic Asterisk Blogging

Michael Kinsley:

IN THE LAND OF THE MAGIC ASTERISK: [Stockman's] book turns out to be... a rich description of life inside the seemingly most successful [Reagan] Presidency of modern times. (And no one so far has challenged the accuracy of Mr. Stockman's recollection, as opposed to his analysis or his character.)...

The Reagan stories are priceless. There are repeated scenes of the President sitting in amiable silence through policy discussions until some word or phrase -''Medicare,'' perhaps, or ''oil depletion allowance'' -sets him off on an anecdote, usually revealing that he has totally misunderstood the preceding conversation. A reference to the Cabinet's failure to cut personnel costs leads to a long and familiar anecdote about filing cabinets. Senator Bob Dole comes by to plead for cuts in programs other than welfare. Mr. Dole utters the word, ''welfare.'' Mr. Stockman thinks, ''I wish he hadn't said that.'' And sure enough, '' 'Bob's getting at the same thing we found in California,' the President observed right on cue. He went on to make a point precisely the opposite of Dole's.''

Cabinet members take skillful advantage of the Commander in Chief's capacity for befuddlement. Secretary of Transportation Drew Lewis convinces him that quotas on Japanese cars are not a violation of free trade because Government regulations have hampered American producers. (Japanese cars must meet the same regulations, of course.) Secretary of Defense Caspar W. Weinberger shows up for a meeting intended to settle whether the defense buildup should be $1.46 trillion over five years or only $1.33 trillion. His chief prop is a cartoon of three soldiers - one, a pygmy without a rifle, representing the Carter budget; one, ''a four-eyed wimp . . . carrying a tiny rifle,'' representing $1.33 trillion, Mr. Stockman's defense budget; and one, ''G.I. Joe himself . . . all decked out in helmet and flak jacket and pointing an M-60 machine gun,'' representing $1.46 trillion. This is how Presidential decisions are made. Mr. Stockman makes clear that Mr. Weinberger himself had absolutely no idea how to spend all this money at the time he argued it was essential to our national security. He would get as much as he could, then go back to the Pentagon and figure out what to do with it.

When they weren't bamboozling the President, the Reaganites were bamboozling the citizenry. Exhibit No. 1 of Administration mendacity in this book is David Stockman himself. In his campaign for director of the Office of Management and Budget, Mr. Stockman got the columnist Robert Novak to write that there was ''a movement growing'' to give him the job. ''At the time [ Mr. Novak ] wrote it,'' Mr. Stockman now says, ''it was a movement of three or four'' people. (Mr. Novak, Mr. Stockman explains, ''was dealing in truth, not just news.'') Within a month after taking office, Mr. Stockman had developed the two techniques he used throughout his tenure to mislead the public about the huge budget deficits he knew were coming, and to disguise repeated political defeats as victory.

One technique, called ''rosy scenario,'' involved making impossibly optimistic assumptions about future growth, inflation, interest rates and so on. ''If the [ Securities and Exchange Commission ] had jurisdiction over the White House,'' Mr. Stockman writes, ''we might have all had time for a course in remedial economics at Allenwood Penitentiary.'' The other technique, known as the ''magic asterisk,'' consisted of hiding phony cuts in the small print of various budget documents in order to exaggerate the Administration's success in spending reduction and to minimize the projected deficit.

In the summer of 1981, an aide to Pete Domenici, the Senate Budget Committee chairman, demanded that Mr. Stockman eliminate one of his magic asterisks. The result would have been a ''horrendous'' projected deficit for 1984 of $60 billion. (Ah, nostalgia! The actual 1984 deficit turned out to be $185.3 billion.) So Mr. Stockman got the columnist Mr. Novak and The Wall Street Journal editorial page to denounce Mr. Domenici as a dastardly betrayer of the Reagan revolution (as if honestly predicting a large deficit is the same as wanting one), and Mr. Domenici - unnerved - backed down and ''beat a tactical retreat.'' The deception survived.

Even Mr. Stockman's contrite description of his ''trip to the woodshed'' lunch with President Reagan, after the notorious Atlantic article in which he spilled the beans the first time, turns out to have been a lie. Or, as he puts it, a ''metaphor.'' Mr. Stockman now says that President Reagan was actually quite forgiving when they met. He says he and other White House officials concocted the woodshed story in order to distract the press from his substantive indiscretions....

Mr. Stockman reserves his most withering contempt for Republicans, in the Cabinet and the Congress. And rightly so. They are the ones who bray the loudest about free enterprise and cutting back on Government, and they are the ones whose clients tend to be the least deserving. Yet here is Senator Howard H. Baker Jr. defending the Clinch River breeder reactor, ''a subsidized nuclear-power demonstration plant,'' and - even better - here is Edwin Meese 3d, then still in the White House, protecting the ludicrous program that stipulated the number of fruits that could be marketed each week. Mr. Meese ''always came to the lick log with his Adam Smith tie on and usually left without his shirt,'' Mr. Stockman writes....

Mr. Reagan got to the White House by decrying deficits as a focus of evil second only to the Soviet Union. He was going to save the economy by balancing the budget. Tax cuts, according to some extreme enthusiasts, would pay for themselves.... Mr. Stockman is rightly vicious about his former comrades in arms, the supply-siders - Representative Jack Kemp, the economist Arthur Laffer, the writer Jude Wanniski - who condemn Mr. Volcker for the recession, dismiss all tough political choices as ''the root canal theory of politics'' and insist that ''growth and gold'' are the painless solution to everything...