Obama Should Take a Lesson from George H.W. Bush

Bush didn't love raising taxes, but he knew he had no choice


Back in the day, when I was a White House speechwriter for President George H.W. Bush, I was assigned to write his speech at the Medal of Freedom awards. Earlier this year, Bush became a recipient, when President Obama awarded him one of our nation's highest honors. "Over the arc of his life, President Bush has served our nation as a tremendous force for good," Obama said, "and we proudly salute him for his unwavering devotion to our country and our world." Obama has a special affection for Bush 41, and even with the bipartisan debt ceiling deal in the rearview mirror, 44 would be smart to take a page from 41's playbook. [Read more from Mary Kate Cary in the new U.S. News Weekly iPad app.]

Let's rewind back to the 1990 budget negotiations, when the Republican president was trying to hammer out a compromise with the Democratic House and Senate. Almost as soon as he was sworn in, Bush faced a bailout of the savings and loan industry, which proved very costly to the federal government. Add to that the invasion of Kuwait by Saddam Hussein during the budget negotiations, and the writing was on the wall: The president needed to get the deficit under control. Interest rates were much higher than they are today, and Federal Reserve Chairman Alan Green­span made it clear that he wasn't interested in lowering rates until something was done about the deficit. [Check out a roundup of political cartoons on the deficit.]

The Bush administration's original budget deal contained structural reforms of the federal budget and even a new catastrophic healthcare plan. The only problem was that House and Senate Democrats, led by Speaker Tom Foley and Majority Leader George Mitchell, wouldn't agree to it unless it had new taxes. As former Senate Minority Leader Alan Simpson put it later in an interview: "Nobody understands that when President Bush agreed to that, it was the biggest act of courage that any president had ever done. We had to do this for the good of the country."

The measure passed the Senate 63-37 in a bipartisan vote. But then it went to the House, where Republicans opposed the deal's new tax on fuel, and Democrats did, too, on the grounds that the taxes weren't big enough. Sure enough, the budget deal was voted down in the House. Bush followed through on his threat to veto a short-term continuing resolution in place of a budget, and the government shut down for three days—an unpleasant consequence but not nearly as dangerous as failing to raise the debt ceiling. At the time, half a million American troops were on their way to the first Persian Gulf war, and with Democrats in both houses insisting on a tax increase, Bush felt that he needed to reach an agreement quickly to keep the country moving forward. He knew that there would be no budget without Democratic approval. [See political cartoons on Democrats.]

So the negotiators reconvened. The second budget deal raised taxes on the wealthiest Americans and imposed new taxes on tobacco and luxury items, much to Republicans' chagrin. In exchange, Bush got Democrats to agree to significant caps on discretionary spending. It became, until now, the single biggest deficit reduction package ever passed by Congress. And it laid the foundation for the prolonged economic growth of the 1990s.

Bush accomplished that deal at great personal cost. He knew when he made the decision that there was a good chance it meant he'd be a one-term president because he was breaking his now-famous read-my-lips campaign pledge. As the negotiations wore on, he didn't grandstand or call congressional leaders to high-profile meetings at the White House on a daily basis. Instead, he convened the meetings at Andrews Air Force Base, a neutral site on the outskirts of town. He didn't hold constant news conferences, didn't lecture anyone to "eat our peas," or call his opponents intransigent. Most important, he didn't keep changing the deal offered to the other side, and he put forth real numbers to cut spending, rather than fuzzy projections. When the final deal was struck, he announced it in a two-sentence press release thumb-tacked to the bulletin board in the press office.