In 1980, Ronald Reagan won the presidency and sought to bring in a new age of fiscal austerity while also increasing the Pentagon’s budget. Supply-side economics, which essentially argued that tax cuts would pay for themselves by inducing economic growth, was just coming into vogue, and fiscally conservative dogma about tax cuts requiring budget cuts was out. The man in charge of reconciling all of Reagan’s promises was David Stockman, a former Michigan representative, whom Reagan named to lead the Office of Management and Budget. The question the new administration faced was: “How is it possible to raise defense spending, cut income taxes, and balance the budget—all at the same time?” Part of Stockman’s education was the revelation that it was not.
Stockman agreed to a series of embargoed interviews with William Greider, then an assistant managing editor at The Washington Post and later a prominent progressive economics commentator; he died in 2019. Over the course of eight months, in 1981, the men met regularly for breakfast at the Hay-Adams hotel, across from the White House, under an agreement that their conversations about the administration’s new policies would be made public later—“after the season’s battles were over.”
Like Musk today, Stockman was able to use the strong support of the president to move quickly and overwhelm members of the Cabinet or Congress who might have objected. “Stockman’s agency did in a few weeks what normally consumes months; the process was made easier because the normal opposition forces had no time to marshal either their arguments or their constituents and because the President was fully in tune with Stockman,” Greider wrote.
But Stockman couldn’t overcome math. Once you account for defense spending (which Reagan wanted to increase), Social Security, Medicare, Medicaid, veterans’ and federal retirees’ benefits, and interest payments on the national debt, he could mess around with only 17 percent of all federal spending in order to balance the budget. “One might denounce particular programs as wasteful, as unnecessary and ineffective, even crazy”—that sounds a lot like Musk lately—“but David Stockman knew that he could not escape these basic dimensions of federal spending,” Greider wrote. Today, according to the Center on Budget and Policy Priorities, excluding the same programs leaves roughly 21 percent of the budget to play with, but the basic challenges are the same. When Musk promised to find at least $1 trillion in cuts to the roughly $7 trillion federal budget, he was either lying or ill-informed.