George HW Bush was fiscally responsible – unlike Donald Trump

When George HW Bush was laid to rest last week, the encomiums appropriately remarked on his general decency and competence, which tended to be followed by a “but”. For journalists and historians, it is “but he was only a one-term president”. He lost the 1992 election, in part because of the recession of 1990-91. For his fellow Republicans, however, it is “but he broke with the legacy of Ronald Reagan by repudiating his ‘no new taxes’ pledge”. Bush’s electoral defeat was blamed on that supposed betrayal.

But Bush’s mistake was that he made that anti-tax pledge in the first place and stuck to it in the first part of his presidency. His courageous 1990 reversal on fiscal policy set the stage for a decade of economic growth that eventually achieved budget surpluses.

The budget deal that Bush reached with congressional Democrats in 1990 may indeed have contributed to his failure to win re-election in 1992. There is no question that the timing was terrible. The move to fiscal discipline coincided with the onset of a recession, probably made the downturn worse than it otherwise would have been, and slowed the subsequent recovery.

But it is not as clear as some believe that Bush’s reversal on taxes is what cost him re-election. Bush’s prosecution of the war to push Iraq out of Kuwait, following Saddam Hussein’s invasion, was skilful, both diplomatically and militarily. After Operation Desert Storm achieved its aims, Bush’s approval rating reached a sky-high 89%. It was only in the fourth and final year of his term that his poll rating sank miserably. Anger at Bush for reneging on his tax promise can’t explain the 29% low his approval rating hit in July 1992, because the 89% rating came after he did that.

Bush actually had known better than to support the claim that tax cuts would reduce the budget deficit by boosting revenues. When he ran against Reagan for the Republican nomination in 1980, he famously called such claims “voodoo economics”. But he put aside his doubts when he agreed to serve as Reagan’s vice-president, and eventually he issued his fateful vow at the Republican National Convention in August 1988, when he accepted the party’s nomination to succeed Reagan. He predicted that Democrats would repeatedly push him to raise taxes, and he swore that he would forever refuse: “Read my lips: no new taxes.”