The Legacy of George H.W. Bush: Some Further NotesPosted: December 17, 2018
“For where the rewards of virtue are greatest, there the noblest citizens are enlisted in the service of the state.” – Pericles’s Funeral Oration, as told by Thucydides
At least from the time of ancient Athens to this day, we extol the virtuous actions of those who have died, less as a tribute to them—after all, they have passed on—than as a challenge to ourselves and our youth to find actions to emulate. In recent decades, we have also become much more sensitized to the danger of sentimentalizing history by ignoring the limitations and prejudices of our past.
In this vein, to the many tributes made on behalf of our 41st president, I want to make two observations on the president’s legacy that have become especially relevant at a time when public officials attack good budget and tax policy, and private citizens attack those who engage in major philanthropic endeavors or public service, modern-day forms of “noblesse oblige.”
In doing so, I don’t mean to discount the continuing cost of his failures, as reflected in Lee Atwater attacks, race-baiting Willie Horton ads, and nonsensical “No new taxes” pledges. This is a time to celebrate the good a person has accomplished.
Memories of Bush’s pragmatism on budget and tax policy
President Bush’s interests and strength in working with people was nowhere better served than in the field of foreign affairs. But that skill—and willingness to do the right thing, even at personal cost—also played out in budget and tax policy.
Much attention has focused on the controversy surrounding the president’s willingness to violate his “No new taxes” pledge in agreeing to a 1990 budget agreement. Less attention has been paid to the ways that Republicans have largely repudiated that budget agreement, while Democrats have largely used that repudiation to exaggerate their own success through a slightly smaller budget agreement in 1993 under President Clinton.
Consider: each agreement reduced the deficit by $500 billion over five years, but in 1990, $500 billion was larger in real, inflation-adjusted, terms and as a share of GDP. Both bills significantly expanded the earned income tax credit, but the 1990 increase was larger, though phased in partly during the Clinton administration. Perhaps the most important part of both bills was acceptance of a so-called pay-as-you-go rule that in the 1990s essentially required new tax cuts and new entitlement spending to be paid for.
These two bills represented the primary legislative budget achievements of the decade. What then brought down the deficit so much by the turn of the century? A temporary stock market increase led to a large increase in revenues through capital gains recognition. Health cost growth slowed temporarily through the expansion of health maintenance organizations and preferred provider organizations. And the baby boomers entered peak earning and productivity years. Finally, there was a long stalemate on major give-away legislation reinforced by the pay-as-you-go rule.
George H.W. Bush’s pragmatism also had a significant effect on the successes of the Reagan administration. At the start of that administration, a war broke out between the more ideological and the more pragmatic sides of that administration. As is usual with almost all administrations, the ideologues eventually move on, as their strength comes from protesting and tearing down, not governing.
Among the pragmatists who accompanied then–vice president Bush to Washington and helped create many of the domestic successes for President Reagan was a group sometimes called the Texas Mafia (an appellation often meant to be friendly), who knew and often had worked with the vice president. These included James Baker and my friend and then-boss John E. (Buck) Chapoton.
Baker’s successes as White House chief of staff and as Treasury secretary (later secretary of state under President Bush) are well known. Less recognized, Buck played a significant role as an assistant secretary in leading the Tax Policy Office at Treasury through 1982 and 1984 deficit-reduction agreements and 1983 Social Security agreements—all of which had tax increases. He then negotiated the minefield that allowed us on the Treasury staff to develop the tax reform study of 1984 that led to the Tax Reform Act of 1986.
Buck, who at one time lived in Houston around the corner from the future president, also tells me a story about an issue that came up in the early 1980s and has been rejuvenated recently in the Trump administration: attempted Office of Management and Budget overview of Treasury regulations. Buck decided to call the vice president, who then had oversight over deregulatory matters.
Buck says he started having second thoughts about his boldness in making the call. He realized he could no longer call him “George,” and, when the vice president got on the line, Buck felt the need to stand up and address him by his title. He explained to the vice president that slowing down interpretative, rather than policy, regulations would hurt, not help, taxpayers who needed the information. The vice president had no problem accepting this pragmatic advice, and whether he later interceded, the problem for the most part was solved.
These examples show how success follows from a willingness to work and listen to people, a lack of fear of having smart people around oneself, and a readiness—no, more than that, a sense of obligation—to tackle important problems when they need to be tackled.
Extolling those who help society from a position of advantage
In many policy arenas, it is common to attack those with power and wealth. After all, often that power or wealth may not have been earned or distributed fairly by some standards, as in the case of inheritance or luck or being among the winners in a winner-take-all economy.
Those attacks often extend to what I will call the “oblige” side of “noblesse oblige”—the obligations rather than entitlements of the wealthy. Why should buildings be named after contributors or charitable deductions be allowed, or, for that matter, the famous be extolled for actions no finer than those taken daily by some of our relatives?
The answer, I think, obvious. We want those who succeed or have success handed to them to feel great obligation toward society. We want them to join, not separate, themselves from us. We want them to join the military when action is required. We want them to share their wealth.
Someone who makes $1 million and gives it away to true charitable causes contributes more to society than someone who makes the same amount and pays $300,000 in taxes. Removing incentives to give, an increasing tendency in modern tax policy, expands alternative uses of their money for conspicuous or wasteful consumption, empowering their heirs, or exercising political power to further aggrandize their wealth.
Antitrust and tax policy can and should focus on the entitlement or noblesse side of noblesse oblige, but such policies must build up wealth from the bottom, not simply level it from the top.
When the George H.W. Bushes of the world feel compelled to return to society some of the gifts it has made to them, and to be willing to accept the cost of rightful action, we’re all better off. Thank you, Mr. President, for this reminder in the midst of today’s raw political circus.