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Now With Alex
updated 3/26/2013 2:50:51 PM ET 2013-03-26T18:50:51

Republicans like Reagan, Bushes 41 and 43, and Paul Ryan once believed in racking up large deficits in order to generate economic growth. Why is their Party now calling for deficit cutting at all costs?

Much of what you hear from Republicans these days is how much they care about a balanced budget, but it wasn’t always like that.

While Democratic and Republican presidents lowered the federal deficit for decades leading up to 1980, President Reagan exploded the debt, as did Bushes 41 and 43. And Jonathan Chait writes about how House Budget Committee Chair Paul Ryan, who is now calling for a balanced budget in ten years, was once part of the group demanding that President George W. Bush increase the deficit.

Chait said on NOW with Alex Wagner Tuesday, “George W. Bush was quite the supply-sider…he was arguing that deficits don’t matter. And Paul Ryan was to his right, saying the tax cuts are  too small.”

Asked about how Ryan rebranded himself as a deficit hawk, Chait replied, “It’s quite a con.”

Joy Reid filled-in for Alex Wagner on Tuesday. Watch her full discussion with Jonathan Chait and the NOW panel about why the Republican Party is trying to bear hug the idea deficit cutting.

Video: Will the GOP be the party of Reagan, Ryan, or Rand when it comes to budgets?

  1. Closed captioning of: Will the GOP be the party of Reagan, Ryan, or Rand when it comes to budgets?

    >>> we owe the american people a balanced budget .

    >> republicans want to balance the budget .

    >> i would say a balanced budget is going to help grow our economy.

    >> a balanced budget means more jobs. it means more opportunities.

    >> balancing the budget is necessary for a healthy economy.

    >> the republican party has adopted a singular economic message, you of it over the next few weeks. a balanced budget will save the economy. the rallying behind the paul ryan plan. a budget that slashes spending by $4.6 trillion, 68% of which comes from programs for the poor. and for working-class americans. ryan 's budget promises to balance the books in just ten years. roughly three times as fast as the budget he released a year ago and which was adopted by the romney campaign. but jonathan chait repinds us that paul ryan didn't always buy into this anti-deficit message. in fact he argued for quite the opposite. chait writes, he began as a disciple of jack kemp . ryan was a leader of the wing of republicans demanding that bush increase the deficit even more. he castigated bush's tax cuts as far too small. that's right. ryan once believed that his party didn't take on enough debt. ryan said during bush's first term quote, they fear increases in the debt and they were overlooking issues of growth, opportunity and free markets . in fact, republicans didn't used to be the party of deficit cutting at all. this graph shows the federal debt as a percentage of gdp. you can see that from 1960 , until 1980 , both parties worked to keep the debt down. but that changed when presidents reagan and bush came along and the debt ballooned. president clinton began reigning in the debt before president george w. bush came along and exploded it once again. paul o'neill, the treasury secretary under bush 43 once wrote that dick cheney told him, you know, paul , reagan proved deficits don't matter. now the party has decided cutting the federal debt is a winning method, despite polls showing their aproefl rating tanking and bucking the legacy of ronald reagan . consider rand paul 's vision for america. rand's budget proposes balancing the budget in five years, instead of ten, by closing four federal agencies , including the department of education , privatizing medicare and hiking the social security retirement age . the gop is indeed at a crossroads, will it be the party of reagan , ryan or rand. and i've got to turn first to jonathan chait , who has written several columns, in which you explode this ridiculous and maddening myth about paul ryan being a deficit hawk this guy has not been a deficit hawk .

    >> he's not he was the leader of the wing of ultrasupply siders. george w. bush was quite a supply sider. he was arguing that deficits don't matter. and paul ryan was to his right saying no, the tax cuts are too small, bush wanted to privatize social security in 2005 . and paul ryan was the leader with this privatization plan, that added $1 trillion in debt, so much debt that the bush administration said this is irresponsible.

    >> he voted for the bush tax cuts .

    >> he voted for the wars, everything that exploded the deficit. how did he gain credibility as the deficit cutter?

    >> it's quite a con. it's hard to think of a word for what he's done other than a con. now there's always the case that when democrats have the white house , republicans start framing their ideology in terms of deficits. and stop framing their ideology in terms of deficits when they actually have power.

    >> and jared bernstein i have to turn to you. please for once and for all, explode this myth ma somehow just reducing the deficit in and of itself somehow produces jobs, where did the link come from? and explain to us why it is not true?

    >> well, it's not true because the historical record shows it not to be true. to be a little bit more fair to the supply-siders themselves and even ryan , it's not that they were saying all of these cuts will lead to a large budget deficit . they were saying all the cuts will lead to enough growth in economy and jobs that we'll collect enough revenue to offset the cuts. here's the where the history comes in to answer your question, very simply there's absolutely no evidence linking deficits going up or going down to job growth or even to a gdp growth . to the contrary, the fiscal debt or the deficit is very much an outcome of the growth. so we hit the great recession, the debt and the deficit goes way up. that's kind of an automatic function of an economy snapping into gear where the government helps to offset the deep recession. you come out of recession, you start growing again and those things go down.

    >> josh barrow, one of my favorite columnists, as well as jonathan chait , had a great column in bloomberg in which he talked about the other piece of what i think is a big fraud, arguing that government should behave the way a family behaves. this is what barrow wrote. he wrote overthe lifetime the individual is supposed to be working to pay down debts and bills so he r or she can stop working in old age. government does not have a life cycle . it makes more sense to compare government to a corporation. how, we keep arguing that the government needs to reduce its debt for the reasons that a family would. but that is a bogus argument?

    >> unfortunately, obama made that a couple of years ago in his speech. one of his great mistakes it gave the republicans a stick to hit him over the head with. it's the old paradox of thrift. one person starts to save, it may make sense on the individual level. if everybody does it, you get big recession and high unemployment. the deficit has always been a canard. when you're in office, you don't take that much notice of the deficit. it's not number one priority. when you're out of office, it's a way to hit the people who are in office.

    >> i think that's a good point, lee, it isn't lost on me and i don't think it's lost on many people that when people like paul ryan talk about cutting the deficit. they always want to do so by going after programs they're ideologically opposed to. programs for feeding seniors, feeding children, cutting the department of education . they don't want to cut the deficit, they want to do it to get rid of programs they don't like.

    >> it's killing two birds with one stone. jared makes a great point. the way things are supposed to work is when we come out of these recessions we're supposed to grow and everything is supposed to get better. that's not happening yet. not happening yet and we have at the same time the incredible income inch quality issue. whatever you think about the tax cuts , when you have a middle class that doesn't have the economic oomph, that's a numbers problem. we need to get the middle class -- helping the middle class will help the overall growth picture, which will help the debt problem, which is significant, we'll come to a point where the debt is eating into our economy. but not as far as most people think. it is an issue.

    >> the only time in my, i guess in any of our lifetimes, the only time we actually saw debt as a share of gdp start to come down was when the economy was growing very strongly in the latter '90s and we were achieving full employment .

    >> what some don't notice is the deficit is --

    >> and resulting --

    >> 3.5% maybe next year.

    >> obama has brought the deficit down.

    >> but with the sharp reduction in the deficits, which brings me to the point that john made. the democrats in a lot of ways, even the president ceded the notion that you've got to bring down the deficit. there was a notion put forward in the house that i think mirrors what president obama believes in. it had in it $2.1 trillion in stimulus spending to create 7 million jobs, 4.2 trillion in tax hikes, including 49% income tax . all of those things we believe the president is for, but it seems that the white house and a lot of democrats are trending more toward what patty murray did. which is more modest. an equal balance of spending cuts and revenue. why have democrats conceded the point we've got to do sharp deficit reduction.

    >> i think the cuts is somewhat of an issue in the long run. you want to be increasing the short-term deficit until unemployment comes down. but over the medium to long run the deficit is a little too high. it's not the catastrophe, that hawks say. but the other thing to say about the 1990s is we have growth and deficits came down. but you also have two big bills under george bush and bill clinton to reduce the deficit and that contributed quite a bit.

    >> after the break, north dakota is just one of four states that has only one abortion clinic . yet, the sioux state seems to have a fixation with passing even more restrictive abortion legislation. so much so that even republicans are complaining. what's going on in north dakota , next. victor! i

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