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than in the original agreement.
    “The American people have had enough of [being told] that somehow we can confront the deficit and it doesn’t involve pain,” Panetta told a reporter at the time. “The fact is that it does.” The final deal cut spending by $2 for every $1 of tax increases and, to the consternation of some Republicans, raised the top marginal income tax rate (the levy on each additional dollar of income) to 31 percent from 28 percent, the level to which it had been lowered in the Tax Reform Act of 1986.
    The vote tally for the 1990 deal underscores just how much Congress has changed. A Republican president relied on a majority of House Democrats (181 yes and 47 no) to overcome the opposition of a majority of House Republicans (74 yes and 126 no) to raise taxes and cut spending. Today, the idea that a president could appeal to a mixed-party center to win approval of any measure seems as quaint as a typewriter.
    “For Democrats during that period, with Republican presidents, we made the fundamental decision that governing was good politics for us [in terms of] maintaining our power,” Panetta recalled recently with the hindsight of more than twenty years. “I don’t get a sense today that either side thinks that governing is necessarily good politics.”
    The law did cut the deficit from what it otherwise would have been—a concept always easier for economists to grasp than the public—but still the deficit grew. The economy deteriorated, revenues fell short of projections, and spending on Medicare and Medicaid rose faster than anticipated. Rising deficits tarnished the image of a compromise born of a broken presidential promise. Bush later told TV interviewer Barbara Walters that the deal was “a mistake because itundermined to some degree my credibility with the American people.” But he insisted it hadn’t hurt the economy. Republicans often suggest otherwise and even today blame the deal for triggering a recession that began three months before it passed Congress. Darman, who died in 2008, blamed the recession on the Fed for not cutting interest rates quickly enough.
    From the vantage point of twenty years, the evidence favors those who say the deal restrained deficits from what they otherwise would have been. “The record shows that the 1990 budget deal was extremely effective in reducing deficits; the budget surpluses of the late 1990s owe much to the policies put in place by George H. W. Bush that his son and party later repudiated,” says Bruce Bartlett, a veteran of the Reagan and firstBush administrations who has become a critic of Republican fiscal policy.
    Beyond the important details of spending and taxes, the 1990 deal made two significant changes:
    It established a pay-as-you-go rule that made it hard for Congress to cut taxes or increase benefits without offsetting tax increases or spending cuts. For more than a decade, this rule restrained Congress from significant expansion of government benefits. A decade later, when this rule lapsed, Congress and the president did exactly what the rule sought to avoid: expanded Medicare to cover prescription drugs without funding the new program.
    After bumping up spending in the first year to buy congressional backing for the deal, the 1990 agreement also set multiyear caps on annual appropriations for the first time. Congress was, essentially, tying its own hands, or at least promising to do so. In one sense, the caps held. Adjusted for inflation, annually appropriated spending in 1996 was 13 percent below the 1990 level. But the total masks a key factor: “The Soviet Union fell apart, and there was no justification for such a huge military,” says Bob Reischauer. In 1990, outlays for defense were $300 billion, and outlays for domestic programs subject to annual appropriations were $200 billion. Six years later, they were even at $266 billion each.
    The 1990 deal was only a down payment, though. Debate over how much the government should