Thatcher: Power With Responsibility

Bruce Bartlett notes that by Tea Party standards, Margaret Thatcher would count as some kind of Communist:

To those familiar with Mrs. Thatcher’s tax policies, these data are not surprising. Although she cut the top personal income tax rate to 60 percent from 83 percent immediately upon taking office, the basic tax rate was only reduced to 30 percent from 33 percent. And in 1980, the 25 percent lower rate of taxation was eliminated so that 30 percent became the lowest tax rate. More importantly, Mrs. Thatcher paid for her 1979 tax cut by nearly doubling the value-added tax to 15 percent, from 8 percent. Among those who thought Mrs. Thatcher was making a dreadful mistake was the American economist Arthur Laffer.

Something that I think is worth noting about this is that, of course, Thatcher was operating in a system that put very few procedural constraints on the Tory majority in parliament. On the one hand, that allowed her to implement dramatic changes in U.K. public policy. But on the other hand, it meant that there was no tactical advantage to be gained by adopting public negotiating positions at odds with her real policy agenda. A British politician who believes that reducing high-end income taxes and replacing the lost revenue with regression consumption taxes is a good idea has no good options other than stating that this is the case and then doing it. An American politician with identical beliefs might nonetheless believe that the best strategy is to profess opposition to all forms of revenue and profess willingness to destroy the global economy in fanatical pursuit of that goal and then only very reluctantly accept the Thatcherite “compromise” once rival politicians are willing to put it on the table.

Or consider Social Security and Medicare. When Republican politicians last had majorities and were empowered to make dramatic changes to Medicare, what they did was massively increase Medicare spending by dramatically expanding the scope of the Medicare entitlement. Now, they not only want to eliminate Medicare, they want Democrats to agree to eliminate Medicareso that they can evade political accountability. Thatcher, again, didn’t have the option of this kind of weird bluffing game. If she intended to eliminate the National Health Service, she was going to have to eliminate the National Health Service and take the hit. There was no way to try to coerce Labour into doing it for her.

Everyone is linking today to David Brooks’ column about the “fanaticism” of congressional Republicans. This kind of fanaticism is, however, fairly rational in a political system that’s come to be dominated by high-stakes negotiations rather than responsible governing majorities.