People are continuing to comment on William Greider's article "The Education of David Stockman". The article itself is online as part of the Atlantic's magazine archive, with all of its famous passages about:
Stockman thought he had taken care of embarrassing questions about future deficits with a device he referred to as the "magic asterisk.".. [which] would blithely denote all of the future deficit problems that were to be taken care of with additional budget reductions...
Stockman... hoped ["recalibration"] could be executed discreetly over the coming months to eliminate the out-year deficits for 1983 and 1984 that alarmed Wall Street--without alarming political Washington...
Stockman... cheerfully conceded that the administration's own budget numbers were constructed... [by] mixing cuts from the original 1981 budget left by Jimmy Carter with new baseline projections from the Congressional Budget Office in a way that... did not add up.... "None of us really understands what's going on with all these numbers," Stockman confessed.... "People are getting from A to B and it's not clear how they are getting there. It's not clear how we got there..."
Stockman on equity:
- "Kemp-Roth was always a Trojan horse to bring down the top rate." A Trojan horse? This seemed a cynical concession for Stockman to make in private conversation while the Reagan Administration was still selling the supply-side doctrine to Congress...
*"It's kind of hard to sell 'trickle down,'" [Stockman] explained, "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..."
[It] was not generally understood [in early February] that the new budget director had already lost a major component of his revolution—another set of proposals, which he called "Chapter II," that was not sent to Capitol Hill because the President had vetoed its most controversial elements. Stockman had thought "Chapter II" would help him... provide substantially increased revenues... mollify liberal critics... it was aimed primarily at tax expenditures (popularly known as "loopholes") benefiting oil and other business interests.... Two weeks later, Stockman cheerfully explained that the President had rejected his "tax-expenditures" savings. The "Chapter II" issues had seemed crucial to Stockman when he was preparing them, but he dismissed them as inconsequential now that he had lost.... "I call them equity ornaments. They're not really too good. They're not essential to the economics of the thing..."
"We are interested in curtailing weak claims rather than weak clients.... The fear of the liberal remnant is that we will only attack weak clients. We have to show that we are willing to attack powerful clients with weak claims. I think that's critical to our success--both political and economic success..."
Greider and Stockma on the magnitude of the budget problem created by the Reagan tax cuts:
Another young man... might have seized the moment to claim his full share of praise. Stockman did appear on the Sunday talk shows, and was interviewed by the usual columnists. But in private, he was surprisingly modest.... Stockman was willing to dismiss the accomplishment as less significant than the participants realized... much more traumatic budget decisions still confronted them... the budget-resolution numbers were an exaggeration.... "There was less there than met the eye. Nobody has figured it out yet. Let's say that you and I walked outside and I waved a wand and said, I've just lowered the temperature from 110 to 78. Would you believe me? What this was was a cut from an artificial CBO base..."
"Do you realize the greed that came to the forefront?" Stockman asked with wonder. "The hogs were really feeding. The greed level, the level of opportunism, just got out of control..."
[T]he budget director made an extraordinary confession in private: the original agenda of budget reductions... was... inadequate.... How... did Ronald Reagan expect to balance the federal budget?... Stockman said... "The thing was put together so fast that it probably should have been put together differently..."
The initial [budget] figures were frightening--"absolutely shocking," [Stockman] confided.... OMB... predicted that if the new President went ahead with his 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.... [Stockman and] like-minded supply-side economists... discarded orthodox premises.... New investment, new jobs, and growing profits—and Stockman's historic bull market. "It's based on valid economic analysis," [Stockman] 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..."
Stockman... conceded that his... [belief] that dramatic political action would somehow alter the marketplace expectations... had been wrong.... "I take the performance of the bond market deadly seriously. I think it's the best measure there is... of what, on balance, relevant people think about what we're doing.... It means we're going to have to make changes.... We're still not winning. We're not winning..."
Stockman on the incompetence of him and his team at OMB:
- "The reason we did it wrong--not wrong, but less than the optimum--was that we said, Hey, we have to get a program out fast.... [W]e didn't think it all the way through. We didn't add up all the numbers. We didn't make all the thorough, comprehensive calculations.... [W]e ended up with a list... of things to be done, rather than starting... [by] asking, 'What is the overall fiscal policy required to reach the target?'..."
Stockman on the cluelessness of the White House staff:
If the new administration would not cut defense or Social Security... 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."... 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..."
Reagan's policy-makers knew that their plan was wrong, or at least inadequate... but the President went ahead and conveyed the opposite impression.... Reagan appeared on network TV to rally the nation in support of the Gramm-Latta resolution... when Stockman knew they still had not found the solution...
But what is not readily available online--not anywhere, as best as I can tell--as Greider's introduction to the article:
I think that most of the people defending Greider have not read Greider's introduction, which in my view at least provides interesting reading.