NYT's Calmes Celebrates Notorious 1990 Tax-Hiking Deal, Pits 'Genial' Dem Tom Foley, 'Pugnacious' Sununu

New York Times White House reporter Jackie Calmes celebrated President George H.W. Bush's 1990 budget deal "achievement" in her "Debt Reckoning" column Thursday, part of a new feature on the debate over the "fiscal cliff": "Looking for Lessons In the 1990 Budget Deal." The deal was blasted by conservatives as a disaster which failed to close the deficit as promised, because the proposed spending cuts never came, while income tax rates dutifully rose.

Calmes, who almost always takes the Democrats side in budget disputes, even took sides in her descriptions, calling former Democratic House Speaker Tom Foley "genial" while pronouncing former Republican White House chief of staff John Sununu "pugnacious."

Thomas S. Foley, a Democrat, and John H. Sununu, a Republican, were two of the Big 8 who, in 1990, negotiated a landmark bipartisan budget deal between the White House and Congress. On Wednesday, they were in accord again, agreeing that President Obama and Congressional leaders face a tougher task reaching a compromise now, in more polarized times.

Mr. Foley, the genial House speaker 22 years ago, and Mr. Sununu, the pugnacious White House chief of staff to the first President Bush, joined other players from the 1990 budget negotiations on Capitol Hill on Wednesday to discuss what lessons that prolonged showdown may hold for current leaders, who have much less time to avoid the fiscal crisis bearing down in January.

Then, as now, the government was divided -- Republicans held the White House and Democrats controlled Congress in 1990 -- and officials faced a self-imposed deadline for a deficit-reduction agreement. Without a deal, huge across-the-board spending cuts would occur that would have jolted the economy, just as they would now. Republicans also opposed any tax increases then, yet without those increases Democrats would not agree to domestic spending cuts.

Calmes used the euphemism "higher revenues," though the actual deal resulted in the top marginal tax rate rising from 28% to 31% and installed a counterproductiuve luxury tax that was soon repealed.

The serious negotiations in the fall of 1990 followed months of maneuvering, including meetings at Andrews Air Force Base to escape reporters. What made success possible, both sides agree, was the president’s written acknowledgment in midsummer that higher revenues had to be part of a deal, along with spending cuts.

That act violated Mr. Bush’s “no new taxes” campaign vow in 1988. So, while the 1990 deal is widely considered a Bush achievement, and a factor in the prosperity and balanced budgets that followed in the Clinton years, it helped cost Mr. Bush re-election after many anti-tax Republicans mutinied. Even his son, running for president in 2000, all but ignored the achievement and explicitly ruled out a job in a presidency of his own for his father’s budget director, Richard G. Darman, who has since died.

Americans for Tax Reform has this to say about that taxing "achievement."

All $137 billion in tax hikes went through. Most notable was raising the top marginal tax rate from 28 percent (the Reagan low) to 31 percent (itself a setup for the 1993 Clinton tax hike of this rate all the way up to 39.6 percent). There were also increases in "sin" taxes and the Medicare payroll tax, as well as the yacht "luxury tax" that President Obama seems so intent on re-visiting on the jet plane manufacturers.

Not only did the $274 billion in promised baseline spending cuts never materialize--baseline spending was actually $22 billion higher than what CBO projected it would be before the deal. This despite another tax hike/baseline spending cut deal in 1993 (the Clinton tax hike) and the GOP takeover of Congress in 1995.

The lesson is simple--tax hikes are real in these deals, but the spending cut promises are a fraud, plain and simple. Raising taxes for fake spending cuts is no deal at all.