New Taxes, 1990

Note to students: The best preparation for taking the reading quiz is to pay close attention to the key terms as you read. Each question in the question banks is directly linked to these key terms and phrases.

The brewing tensions between conservative legislators and activists and Republican presidents who needed to build broad national coalitions and accept some liberal policies in the post-1960s period came to a head with a budget debate in 1990. The presidency of George H.W. Bush, who succeeded Reagan, had been much more contentious than that of Reagan's. Many conservative activists never trusted Bush, who had been vice president from 1981 to 1989. He was seen as a product of Washington and a politician more prone to compromise than fulfilling the goals of the right.

During his first 4 years in office, Bush had agreed to a number of compromises on domestic policy that angered the base of his party, such as legislation expanding the role of the government to enforce civil rights and the environment. His time in office had scared many conservative Republicans who feared that Reagan had been more of an aberration than they thought. They believed that the party would shift back to the center, as it had been under Nixon, if Congressional Republicans did not act.

Image of William McGurn with a quote from National Review publication that George Bush his turned his back on the Republican Party.

In 1990, the federal deficit had become a major issue of debate. The deficit had been increasing throughout the 1980s, in large part as a result of Reagan's fiscal policies. Tax cuts, increased military spending, and sustained domestic spending came together in a dangerous brew that left the budget imbalanced. Fiscal conservatives in both parties argued that rising deficits would crowd out private investment and lead to high interest rates, all of which would cripple economic growth again.

To deal with the deficit, fiscal conservatives in Congress had attempted to find ways to balance the budget for much of the decade. Following tax hikes in 1982 and 1983, a bipartisan coalition had passed a series of budgetary reforms in the mid-1980s. They required Congress to raise taxes or cut spending each time that it enacted a new program. But Congress had found ways to get around the new rules each time. The pressure mounted in 1990 as Democrats pushed in Congress for some kind of deal that included both tax increases and spending cuts.

Chart of US Gross Federal Deficit as a Percentage of the GDP between 1941 and 2001 showing the highest in 1945 and again rising in 1932.

President Bush was in a bind in 1990. In his 1988 campaign against the Democratic presidential candidate Massachusetts Governor Mike Dukakis, he had wanted to reassure conservatives that he would not betray them. In his acceptance speech at the Republican convention, Bush energized the right by promising: "Read my Lips! No New Taxes!" But now, two years later, Bush was pressured by moderate Democrats and Republicans to tame the deficit by agreeing to a budget deal that would cut spending and raise taxes. He knew such a deal would have terrible political ramifications in his own party.

In the midst of negotiations, Democrats hesitated, fearing that they would agree to spending cuts but the president would not give them tax increases; they required a public assurance. On June 26, 1990, Bush took an enormous political risk by stating publicly: "It is clear to me that both the size of the deficit problem and the need for a package that can be enacted require all of the following: entitlement and mandatory program reform; tax revenue increases; growth incentives; discretionary spending reductions; orderly reductions in defense expenditures; and budget process reform…."

President Bush Presidential Campaign Statement, 1998, and Newspaper Headlines after Bush Raises Taxes
Image with quotes from President Bush Presidential Campaign Statement, 1988 (correct heading of image from 1998 to 1988) and newspaper headlines after Bush raises taxes showing the contradiction.

Bush then entered into an agreement with congressional Democrats that cut $324 billion in spending and raised $159 billion in taxes. When the president told Republican members of Congress what he had agreed to, Newt Gingrich of the Republican House leadership was so furious that he bolted out of the room. Gingrich called the tax hike the "fiscal equivalent of Yalta," comparing Bush to FDR, whom conservatives at the time had accused of acquiescing to Russian demands at a diplomatic conference at the end of WWII. Gingrich said that Bush's Budget Director Richard Darman was a "technocrat" who resembled the Democratic candidate Dukakis. "Ideological battles matter," he asserted. "If they didn't, we'd have President Dukakis.

Bush was so furious with these and other remarks from the congressman that he would not even shake his hand during a White House ceremony. A few Republicans were not happy with Gingrich, feeling that he was embarrassing the president. New York Republican Norman Lent captured many moderate Republicans' frustrations with conservatives when he said, "He's exalting ideology at the expense of running a government."

But many congressional conservatives came down on Gingrich's side and would never forgive Bush for what he had done. "George Bush," said former Nixon speechwriter and conservative pundit Patrick Buchanan, "if you'll pardon the expression . . . has come out of the closet as an Eastern Establishment liberal."

Table with information about Omnibus Budget Reconciliation Act of 1990 showing which party was voting in favor/opposing in House and Senate.

Gingrich saw this as a betrayal of the right and vowed that they would never allow this to happen again. He had often been frustrated with President Reagan and saw this as yet another example of how Republican presidents could not be trusted. He decided that he would pursue conservative goals, particularly tax cuts, which he felt were sacrosanct to the party, through other means.

Gingrich was a powerful force in Washington. Since being elected in 1978, he had perfected the legislative tools of the opposition, using ethics rules to undermine his opponents and television and other forms of communication to attack Democrats as well as compromising Republicans. He practiced a tough style of politics where he used legislative tools to destroy or threaten to destroy the reputations of his opponents in order to shape legislation and make it adhere to the conservative line. In 1988 and 1989 he headed a crusade against Democratic Speaker Jim Wright, focusing on allegations of ethics violations that culminated in the speaker's resignation. The 1990 Bush budget deal left him with a bitter taste in his mouth. Now he focused on winning control of Congress and using Capitol Hill as the base of operations for the right.

In 1992 Bush ran for reelection against the Democratic presidential candidate, Arkansas Governor Bill Clinton. Gingrich and many other conservatives were lukewarm in their support for Bush. Clinton won a great disappointment to the right who had to watch a Democrat win the highest office at a time they believed should be the triumph of conservatism. Many attributed the loss to Bush's turn around on taxes.

GOPAC Memo
Two tables listing optimistic positive governing words and contrasting words.

The 1992 election set many in the party, particularly congressional Republicans, on a path of no more compromises with Democrats, especially on core issues like taxes. They would use rough political tactics to achieve victories in the Congress, regardless of which party controlled the White House. Better to say no and face the charge of obstructionism than enter into more deals with their opponents and leave New Deal and Great Society programs intact.

In 1994, when Republicans gained the majority and control of the House of Representatives for the first time in nearly 50 years, they elected Newt Gingrich as Speaker of the House and leader of their majority. It was widely accepted that his legislative, confrontational style of congressional conservatism — a far cry from the intellectual outlook that resulted in the creation of Heritage — was triumphant.

In that 1994 election, Gingrich and his allies also had developed an effective media strategy that capitalized on the new 24-hour cable-based news media that formed after the creation of the cable station CNN in 1980. CNN had pioneered the constant 24-hour news presentation and ongoing news cycle. Prior to CNN, broadcast news had presented the news once in the evening, having all day to gather the news, check the facts, and edit the reports for best news quality.

CNN, however, reported the news as it happened. Its producers were more willing to broadcast information quickly without tight editorial control. Thus, when congressmen or politicians gave interviews to CNN, they were assured that whatever they said would appear instantaneously. They would have editorial control, rather than the news organizations. Gingrich became especially adept at releasing information about congressional negotiations and scandalous accusations that entered into the media before opponents had a time to respond.

Congressional Republicans also took advantage of another development. Since 1949, the Federal Communication Commission (FCC) had a regulation, called the "Fairness Doctrine," that required television stations to present both sides in a political debate. In 1987, the FCC abandoned the regulation, allowing openly partisan programming on cable stations. Congressional Republicans coordinated messages with hosts on partisan forums, talk radio, and the new cable channel Fox News, created in 1996. Though they did not have the bully pulpit of the White House, Republicans could shape the agenda in Washington by coordinating the flow of information through these new media outlets.

Newt Gingrich on Political Communication
Image with quote of Newt Gingrich, Al Gore, and President Bill Clinton on political communication.

The transformation of conservatism between the 1970s and 1990s was as important as the triumph of right-wing politics. Though many historians have traced the Age of Reagan and the shift of national politics in a rightward direction, what was equally important were the changes that occurred within the conservative movement during these years. As conservatives shifted from the politics of opposition to the politics of governance, they were forced to confront the persistence of liberal institutions, policies, and ideas, as well as the difficulty of maintaining a broad governing coalition that was capable of winning presidential elections.

Over time, much of the enthusiasm and energy that shaped conservatism dampened as presidents like Reagan confronted the obstacles of power. By the early 1990s, many conservatives shifted their energy away from the executive branch and toward legislative politics. In Congress, they were determined to use a more confrontational and partisan style of governance that would make compromise with Democrats more difficult and keep Republicans more aligned with the principles of the right.

Prominent Conservative Leaders in the 2000s