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not be achieved, the system allowed a way-out-of-the-ordinary tax cut to become law.”
    Whatever the reasons—Darman later (and characteristically) offered a ten-point explanation—the result was the 1981 tax cut without the hoped-for spending cuts. Stockman famously predicted deficits of “$200 billion a year as far as the eye can see,” numbers that sounded huge at the time. He was prescient. The 1980s broke a pattern in which thefederal government ran big deficits only in wartime. The deficits topped $200 billion a year from 1983 through 1992. They would have been even bigger if Reagan hadn’t flinched on taxes, accepting significant tax increases in 1982 and 1984.
    Reagan enjoyed many victories as president. But starving the beast was not one of them. When he left office, federal spending was 20 percent higher, adjusted for inflation, than it had been when he arrived, and he never found a way to pay for it. In the twenty years before Reagan became president—under Kennedy, Johnson, Nixon, and Carter—the budget deficit averaged well under 1 percent of GDP. In Reagan’s eight years, it averaged 4.25 percent of GDP.
    Panetta summed up Reaganomics in a single sentence: “A significant tax cut was enacted at the same time that defense spending went up and … entitlement programs were also expanding.” When Reagan turned the presidency over to George H. W. Bush, the deficit was 2.8 percent of GDP—and rising.
THE ARRIVAL OF SURPLUSES: READING GEORGE H. W. BUSH’s LIPS
    Bush was elected in 1988 with one memorable promise: “Read my lips, no new taxes.” Republican pollster Richard Wirthlin once called them “the six most destructive words in the history of presidential politics.”
    When Bush assumed the presidency, Panetta was chairmanof the House Budget Committee, the panel created in the 1974 reforms of the budget process. From that perch, he decried “a borrow, bailout, and buy-out binger that pervades our society and puts our future economic security at risk,” warning further—in phrases that are heard again today—that “our capacity to govern” was being tested.
    “Both Democrats and Republicans talked about reducing this deficit, but neither wanted an approach to touch their favorite programs,” he recalled years later. “The Republicans said they would balance the budget, but they did not want to raise taxes, and they did not want to cut defense. The Democrats, on the other hand, said, ‘We want to balance the budget, but we don’t want to cut domestic programs, we don’t want to reduce any entitlement programs. What we want to do is reduce defense and raise taxes.’
    “So,” Panetta went on, “the very areas that had to be part of a solution were the areas that both parties staked out as holy territory that couldn’t be touched. That created the dilemma.” He was talking about 1990, but he could just as easily have been talking about 2012.
    About eighteen months after taking the oath of office, George H. W. Bush ate his words. In June 1990, after a two-hour breakfast at the White House with congressional leaders from both parties, Bush’s press office issued a statement: “It is clear to me”—the last two words were inserted at the insistence of the Senate Democratic leader, George Mitchell—“that both the size of the deficit problem and the need for a package thatcan be enacted require all of the following.…” The laundry list that followed included the politically salient phrase “tax revenue increases.”
    After three torturous months of negotiations, much of it at Andrews Air Force Base outside Washington, Richard Darman and the president’s other advisers cut a deal with Panetta and the congressional Democrats, who had a majority in Congress. Newt Gingrich, then the number two House Republican, led a rebellion—and the deal was rejected by the House. After three weeks, a new deal was cut. To woo more Democratic votes, tax rates on the rich were pushed higher