Slaying the dragon of debt: Officials’ oral histories tell the political backstory

As a showdown on the federal balance sheet approaches, a new scholarly effort at Berkeley offers unique insights on a long-contested issue: federal deficits and debt. “Slaying the Dragon of Debt,” a project of the Bancroft Library’s Regional Oral History Office (ROHO), features interviews with key federal officials and staffers, from across the political spectrum, who collectively have helped shape the nation’s fiscal affairs since the Ford administration.

ROHO researchers Patrick Sharma and Martin Meeker

ROHO researchers Patrick Sharma and Martin Meeker

On a website unveiled earlier this week, five of the project’s early interviewees recall and reflect on their involvement in the federal budget process. The debut sampling includes former Council of Economic Advisors chair Charles Schultze — whose personal knowledge of U.S. government fiscal policies and politics began with the Kennedy administration — and Annelise Anderson, sharing insights on the evolution of Republican fiscal politics and an eye-witness account of Ronald Reagan’s budget policies during his first presidential term, when she served as associate director of the Office of Management and Budget.

“The economic aspects of federal finances are simple arithmetic: taxes and spending,” says Patrick Sharma, who, along with ROHO research specialist Martin Meeker, is conducting the project interviews. The political tug-of-war over one-year federal shortfalls (deficits) and their accumulation over time (debt), he says, “is in many ways much more crucial and interesting than the economics of it.”

Complete transcripts of the oral-history interviews, along with video highlights, are being made available online as they are completed. The “Slaying the Dragon” website includes a dynamic timeline of fiscal milestones (covering 1970 to 2010), a college-level syllabus and other educational resources. Additional syllabi and suggested readings are to be added in the near future.

Issue with staying power

Debt has been an issue in U.S. politics, Meeker notes, since the founding of the Republic — when states appealed to the new central government for assistance in paying their Revolutionary War bills. The ROHO historians’ initial overarching question concerned a remarkable occurrence: four successive years of budget surpluses, beginning in 1998, during President Clinton’s second term. Following 30 years of deficits, were these surpluses due to particular procedures or legislative measures? To federal monetary policy? To larger historical trends?

U.S. fiscal milestones timeline (detail)

Timeline on U.S. fiscal milestones (detail)

The project’s first year was funded under the auspices of the Shorenstein Program on Politics, Policy, and Values, established last spring at Berkeley. Since that time, the two ROHO researchers have conducted 22 interviews, with more to follow as additional funding permits.

A recent trip to New York City yielded conversations with former Treasury Secretary Robert Rubin, now on the Council of Foreign Relations, and his one-time deputy, Bowman Cutter. The team also queried June O’Neill, former director of the Congressional Budget Office, which was started in 1974 “more or less as an afterthought,” Sharma says, and has become “one of the most respected and powerful technical agencies of government.”

View from the trenches

Meeting not only with Cabinet members and agency leaders but with high-level government staffers — who tend to be quite forthcoming and deeply knowledgeable of the political “backstory” — has proven particularly fruitful.

Sharma has been struck, for example, “by the willingness of some technocrats to admit how economic forecasting is so much more of an art than a science.” And yet estimating the potential fiscal impact of legislative proposals is “the only game in town,” he adds. “It’s quite important to the policymaking process — how bills are scored.”

One sub-theme that has arisen is the Republican Party’s changing stance on fiscal policy. Interviewees — Democrats in particular — have made the point that before the 1980s, Republicans focused primarily on balancing the budget. Today the Republican fiscal agenda is singular: tax cuts — yet the party still uses the rhetoric of budget balance politically. The rhetoric is effective, Sharma believes, largely because of public confusion about the federal budget and the national debt.

“Slaying the Dragon” offers lessons from history aimed at aiding scholars and informing public debate. Interview transcripts and video clips are being made available online as they are completed.

Related information:

Bancroft Library is home to new Shorenstein Program in Politics, Policy and Values (02-02-10 press release)