Advanced Search
Norman Ornstein
Norman Ornstein
Debt and Taxes
ISBN: 081292312X
Debt and Taxes
Professor Ornstein discussed the book he co-wrote with John H. Makin, "Debt and Taxes: How America Got into Its Budget Mess and What to Do About It," published by Times Books Random House. The book details the history, economics and political science of taxes and the national debt. He pointed out that there is much less corruption in the federal government now than in the previous 200 years. However, the public perceives that there is more corruption because of improved communications of all kinds. He suggests that the federal government must somehow gain the trust of U.S. citizens. Only then will taxpayers accept the "pain" of decreasing the national debt.
Debt and Taxes
Program Air Date: March 13, 1994

BRIAN LAMB, HOST:Norman Ornstein, co-author of "Debt and Taxes: The Budget Mess and What to Do About It," where did you get the idea for this book?
NORMAN ORNSTEIN (Author, "Debt and Taxes: The Budget Mess and What To Do About It"): This really arose years ago. My co-author, John Makin, is an economist; I'm a political scientist. We were talking all the time -- we had offices down the hall from one another -- as we moved into the 1980s about what made this era different. Was this really something unique in American history as we began to grapple with these deficits all the time? Was there a way that you could pull an economist and a political scientist who view the world in very different ways, with different expertises, together to kind of look at the same problem through a prism that we could forge? We began working on it mid-1980s and got into history, and the more we got into history, the more we got bogged down. We also found we had some divergent views and had to work all of those through, but we found that, in fact, you could draw some lessons from both professions and from the third profession, history, that are very relevant. We found something that is very difficult, saying something new on this subject that hasn't been said a million times before or won't be said a million times again.
LAMB: What's the newest thing in the book?
ORNSTEIN: Well, I think there are a couple of things that are new here. The first is tying the history to the contemporary side. The second, though, is some of the conclusions we come to and some of the suggestions that we make, because you really don't want to do a book like this without saying where do we go from here. While it's not a detailed platform, when you look at this in historical terms, you step back and instead of just focusing narrowly on whatever fixes you can make -- and those fixes might be big things like entitlement reform -- you step back and think about the whole nature of the tax system.

You realize, for example, that the way in which we have structured our tax system didn't come about through some conscious decision. "Here's what we want; we want this mix of personal and corporate income taxes, of payroll taxes, of excise taxes and the like." It didn't arise out of any grand plan. It arose out of circumstance and put us into a mess, frankly, that I don't think anybody anticipated or would have voted for. Then you can step back and come up with some solutions that may make some sense.
LAMB: When did you decide to become a political scientist?
ORNSTEIN: I decided at a young age, when I was in college, but I was very young in college. I had skipped a number of grades, and being young I really wasn't terribly mature and didn't know what I wanted to do with my life. I started out as a pre-med student and decided after a couple of years that I just didn't have that kind of motivation. I thought about law school, but then I looked at lawyers and decided that that really wasn't what I wanted to do with my life. I was at the University of Minnesota.

I had some teachers there -- a huge school but with unique, at least I found, closeness in the political science department, people who seemed to have interesting lives and lived the kind of lifestyle that I thought would be interesting and worthwhile, and I found some excitement in it. One of my professors had been in Washington for a year as a congressional fellow of the American Political Science Association. He talked about his experiences and tied them to his teaching, and that really energized me and so I decided to go to graduate school in political science.
LAMB: Who was that? What was his name?
ORNSTEIN: His name was Gene Eidenberg, and he, after being in Washington, went to the University of Minnesota to teach. He did some administrative things there, went to the University of Illinois at Chicago Circle and then came back to Washington in the Carter administration as a senior official at HEW then and then moved to be secretary of the Cabinet, later to be a top official of the Democratic national party and then went into business and is now a major figure with MCI, of all things. So he's led a very interesting life.
LAMB: Where are you from?
ORNSTEIN: I was born in Grand Rapids, Minnesota -- not Michigan. I often will have people call me and say, "There's a typographical error on your resume." But Grand Rapids, Minnesota, was the birthplace of Frances Gumm, later Judy Garland. That's what it's known for in northern Minnesota. I moved around a lot as a kid. My father was a traveling salesman, and we took it all seriously. He was from Canada. We lived in Canada for some years, but I basically grew up in the Twin Cities of Minnesota, went to the University of Minnesota and then went on to Ann Arbor to the University of Michigan for graduate school.
LAMB: What year did you get out of the University of Minnesota?
LAMB: How long have you been in Washington total?
ORNSTEIN: I came to Washington after two years in graduate school at Michigan, in 1969, and worked as a congressional fellow after Gene Eidenberg had turned me on to Washington from his experiences as a congressional fellow. I set that as a goal. I came here and spent the year; I went back to Ann Arbor and finished my Ph.D. dissertation. Then I went off to teach in Italy at Johns Hopkins School of Advanced International Studies in Bologna for a year and came back here in 1972 to teach at Catholic University. Basically, except for a year in Stanford at the Center for Advanced Studies in Behavioral Sciences, I've been here ever since.
LAMB: What's a political scientist?
ORNSTEIN: A very good question. Probably in technical terms, a person with a Ph.D. in political science. But I would define a political scientist as somebody who tries to look at political events and political patterns and draw some perspectives, some generalizations, some broad frameworks, some theory out of them. You don't have to be an academic necessarily to do that. What would distinguish a political scientist from, say, the myriad of political analysts we have around Washington, including a vast number who are Democratic analysts, Republican analysts, some of whom are pollsters, some of whom work in campaigns, others of whom just write or are journalists? That sense of historical perspective, the attempt to try to take events and put them into a generalizable state is what would distinguish people like me or my colleague Tom Mann at the Brookings Institution who came here at the same time as I did and others from the general pack, I think.
LAMB: You said earlier that there was a time when you skipped a number of grades? How did you do that?
ORNSTEIN: It was as much moving around from place to place as anything else, but in the end I took 4th and 5th grades together; I took 9th and 10th grades together; I took 11th and 12th grades together. I ended up effectively graduating from high school at the age of 14 and from college at the age of 18.
LAMB: Would you recommend that to someone?
ORNSTEIN: In some ways I'm better off for it, but in other ways I wouldn't recommend it for another person. There's an awful lot of stress and strain and social stress and strain that comes along with that. A grade or two, if you're finding that you want to stay intellectually challenged, can be all right, but my time in high school, especially, involved some real strains when I had friends who were driving and I wasn't. And then you also have to confront the reality later in life when you're no longer the boy wonder.
LAMB: How old are you now?
ORNSTEIN: Forty-five -- and I'm anything but the boy wonder.
LAMB: Do you like politicians?
ORNSTEIN: Yes. I don't like all politicians, but I admire and respect politicians as a class. That puts me in the distinct minority in this country, and I very much recognize it. I am not a politician. I have spent my life, a large part of it, around them. I am a strong believer in the political process that we have in this country that our framers set out. I believe basically that no democracy functions without politics as both a kind of oil that keeps things moving along and a kind of glue that holds things together.

There's an awful lot, including a lot of tradition in this country that's part of what made this country great, that has disdain for politics. It makes this country great because we get our distance from anybody in positions of power, and we make sure they don't get pretenses that they're better than the rest of us. That's all to the good, but it can be taken too far. In my judgment, politics and politicians are required to make things happen. A lot of what they do we aren't going to like very much. You know, the old saw that you should never watch laws or sausages being made is there as an adage for a reason.

There's no question about that, and there's no question that the more we have seen with this remarkable level of disclosure that we have in the system now, which is by and large a terrific phenomenon, nevertheless it's gotten people enraged about the nature of the political process and it's taken the profession politician and turned it into something that is just about as dirty in the society at large and in the press conception of it combined with that as anything that we have. That distresses me, frankly. There's no question, people do wrong things and they should be punished for doing wrong things, but there are an awful lot of people who are street politicians in this country -- Tip O'Neill was one who wouldn't shrink from that term -- who really have been great figures, in my judgment.
LAMB: Do you have someone in history or more than one that you really admire?
ORNSTEIN: There are politicians throughout the course of history that I admire. I admire James Madison. Just looking back at the dynamic by which the Constitution was put together, he may not have been a great president, but he was just an absolutely essential figure in understanding the dynamics of the system and giving us something that really has been great, in my judgment. I really admire others of the framers. I didn't admire Alexander Hamilton much, frankly, before I got into this. I didn't know as much. I hadn't read much about Hamilton, and he really is the most distant, I think, of the major figures in the framing period. But I came to admire him enormously as I read different biographies and aspects of him. I'd admired Jefferson enormously although some of his conceptions of society were a little bit removed. The celebration of the rural life, I think, wouldn't fit today, but as a historic figure, enormously.

And then looking back through the course of history, people who have used politics to make things happen. There's a book that Dick Cheney wrote with his wife Lynne some years ago. Dick is a political scientist, went to the University of Wisconsin, came to Washington as a congressional fellow, in fact, the year before I did, made something of himself. And his wife is a historian. They wrote a book called Kings of the Hill, looking at all of the major powerful speakers throughout history. You read this book, which is a wonderfully written book, and it brought a lot to life for me. There are speakers -- Nicholas Longworth, just to take one example -- who wheeled and dealed and made things happen.

We would view them with disdain today, many would. I don't. If I had one hero throughout the course of American politics, it would be Sam Rayburn, who combined, it seems to me, the best of idealism and pragmatism, of trying to do the right thing and doing what was necessary to make things happen, of having a concept of what his role was that was just an extraordinarily important one during the course of American history.
LAMB: Do you have a personal political ideology?
ORNSTEIN: Yes, we all do. I try -- and I think without the success that you do, Brian -- but I try to carve out a role for myself that is not one that has an ax to grind. I'm fairly visible in the political process; I do a lot of television; I do a lot of commentary, a lot of writing. There are a lot of people who do who are the Democratic Party analyst or the Republican analyst, and I've tried to avoid that and instead carve out less of a subjective ideological or partisan role. I try to step back and analyze and take a viewpoint but not one that works to the benefit of any particular party. I'm not always successful, and certainly people think I have a particular point of view, although oftentimes they're very wrong. But that's the role that I've decided I want to fill and so I don't contribute to campaigns. I don't get involved in any kind of partisan things. I'll go to speak to whichever partisan group wants to speak to them but without putting any kind of a tilt on it.
LAMB: American Enterprise Institute book -- that's what this book is all about and we'll show the audience what we're talking about here -- that's known in some circles as a conservative think tank. Does that give difficulty to you, and is it a conservative think tank?
ORNSTEIN: Everybody tries to put labels on things, and I suppose if you took the viewpoints of every one of the 45 to 50 scholars and fellows at AEI, as it's known, added them up and then took an average, you'd probably find that it was somewhat over to the right of center. Probably if you took the partisan affiliation of the people there, you would find that there were more Republicans than anything else. But just like a university, AEI has a range of viewpoints, especially across a whole set of issues. Just to take one example, the president of the American Enterprise Institute, Chris Demuth, is very strongly for term limits. I'm very strongly against term limits. We've had debates among ourselves.

We have a number of people who are very much identified with the Democratic Party, a lot of people who don't have a partisan affiliation. The Brookings Institution is known as a liberal think tank, but in some areas they have had people who are more conservative than we have had and who are more Republican. So I think it is probably not wise to pick the glib label. Now, the American Enterprise Institute has a motto, which is roughly, the competition of ideas is central to a free society. Basically, behind it is the notion that markets work, that markets everywhere work and that you want to put your stress on markets, and that's true in the economic sphere as it's true in the sphere of ideas and the world of ideas. I believe that, and I think that most of the people at AEI basically believe that. If there's a philosophical framework, it's that.

I find some people assume that I must be a conservative if I'm at the American Enterprise Institute. In some ways that works to my disadvantage; in other ways it works to my advantage because I will often say or write things that go against the grain of what contemporary observers would view as conservative or liberal, although some of those things -- opposition to term limits, for example -- I would view as classically conservative but just doesn't fit the contemporary notion. In some ways it just keeps people from having a real firm sense of where I am politically or ideologically; it keeps them from being able to pigeonhole me, and that's just fine as far as I'm concerned.
LAMB: You say in the acknowledgements to this book that the task was daunting. What did you mean?
ORNSTEIN: Trying to develop generalizations out of the budget process, the fiscal process, the political process, the economic system over 200 years and come up with any conclusions was daunting. Trying, frankly, to write in 300 pages or so what is an economic history of some of these issues -- and we're not historians -- was daunting as well. And also daunting was getting somebody with a different point of view and a different background and making sure that we could write it together and put both of our names on it. Co-authoring a book sometimes is a whole lot harder than writing it yourself.
LAMB: What do you and John Makin disagree about the most?
ORNSTEIN: I hate to characterize John's views exactly, but John is an economist who has some sympathies with the supply-side kind of movement, although I wouldn't pigeonhole him and he wouldn't pigeonhole himself either. There was a time along the way, especially in the mid to late 1980s, when I was more concerned with the impact of deficits than he was and when we had very different viewpoints in terms of what to do in policy terms. We probably have a different partisan perspective as well. It's not a dramatic clash; this is not one person at this end of the spectrum and another person at the other end of the spectrum coming together. It's much more just stressing things a little differently. John comes out of the University of Chicago as an economist. He has the distinctive viewpoint that the University of Chicago represents.
LAMB: Which is?
ORNSTEIN: Which is more of a stress on monetary policy, for example, than on fiscal policy. Also when I look at the way in which we play out economic policy, I instinctively look to the dynamics of the political process. When I look, for example, at the impact of various constitutional amendments or some of the structural changes that might be brought to bear, I first focus on how the political process will channel those things through, distort them, create unintended consequences. He looks at the economic impact.
LAMB: You write about the balanced budget amendment; you write about the line-item veto. Where do come down on both of those?
ORNSTEIN: Against. It's basically what you see if you look at the course of American history is that structure can make a difference. In fact, if you look at the last few years, the pay-as-you-go provisions that were built into the 1990 budget agreement, the so-called hard freeze -- no increase even for inflation on the discretionary part of the budget that was built in in 1993 -- are actually having a serious effect on the budget, much more than some of the other structural changes like Gramm-Rudman, which was tried in the mid-1980s. But any notion that you can come up with some panacea by changing the Constitution or the structures we think is just wrong.

It is a political and economic process joined together, and you can't force behavior in a democratic political system where you have a public that basically wants more services to be provided and they want to pay less for them. You have to work through the dynamics of the political process to make that happen. Both of us also -- and I suspect, me more than John -- really hesitate before going to the Constitution to bring about changes, but that's a nuclear solution and the course of American history would suggest that you don't make those changes lightly; you don't make them without recognizing that you can have a profound effect with unintended consequences and it's something you can't reverse easily. So you don't go into it without recognizing those things, and we would not go into it.
LAMB: Have you ever thought about running for office?
ORNSTEIN: Years ago I thought about running for office, but I haven't thought about that for many, many years even though I spend a lot of time with politicians and around the political process and I'm immersed in some ways in the political process, and I think I have a very good understanding for and feel for the political process, I like the role that I play. It gets a little embarrassing for me sometimes, a little uncomfortable for me because one of the things that I've done over the years is to try and devote some time to encouraging people to go into public service.

I was one of the founders of the National Commission on Public Service that Paul Volker chaired and on its board, and I remain very active in that area and that means not just people into elective office but into appointive office or even into service of another form. I'm very concerned that we've created all kinds of barriers -- real, formal and informal -- to good people even being encouraged to spend time in those things. I crusade to get them out there, but the reality at this point is, when I look at the climate generally and the barriers that we've created, I wouldn't do it right now and I'd have a hard time encouraging somebody else to do it right now. That distresses me, but it keeps me from considering any kind of bid for office.
LAMB: If someone were to follow you around on most days, what would a day be like?
ORNSTEIN: There isn't a real typical day, Brian, but I suppose if you tried to meld together a week and draw a typical day out of it, there'd be a couple of hours on the phone, mostly with journalists. I spend a lot of time with journalists, and I've been caricatured in the past for all of the time I spend with journalists and the quotes that are used. But I find that it's very useful -- I try to do it in part because I think journalists, these days especially, often have no sense of historical perspective or context in the stories they write, and I really try and help provide some of that. You've got people coming onto a beat who just don't know what's been done before or where this fits in, and that's required. I'll often spend time with journalists, showing them things to read or trying to give them a little bit of an education.
LAMB: Where? From your office at AEI? Do you go there everyday?
ORNSTEIN: That's my base, and when I'm in town that's where I go in the morning. I also find that when I talk to journalists, there's a feedback there too. I learn an awful lot because they are people out there on the ground. I'm up on Capitol Hill on an average day once or twice a day. I might be giving a talk, I might be having lunch with somebody -- with one of the members of the House or Senate or a staff person or I might be up just up nosing around trying to find things out. It's really required. I'm on the road a fair amount; I do a lot of lecturing in town and around the country. That would occupy a fair amount of time, and some of that time I spend with journalists and others is at pay phones at the airport as well.
LAMB: There have articles written about you as America's spokesman. When they want the sound bite, they come to Norm Ornstein. How did that start?
ORNSTEIN: Let me say that you're America's spokesman, so I won't take that title, although not with a point of view. That started around the early 1980s. I come to this town on a regular, enduring, full-time basis in 1972 to teach at Catholic University. I taught there for about 13 years, and then I developed an association with the American Enterprise Institute part-time in 1978 or so, continue, but from the first time I arrived I started to write not just for scholarly journals or books for the scholarly audience or the college audience but also write in newspapers and magazines, op-ed pieces or analyses, and I started at a fairly early stage to do some television -- mostly public television early on -- commentary and analysis when the Watergate hearings were going and all of the other things that public television back then with Paul Duke and Jim Lehrer were doing and started doing some things with MacNeil/Lehrer as soon as the show got started.

And I get quoted a lot. As time passed, I get quoted more often by journalists in part because so much was happening in the political process from the mid-1970s on. Reforms were going all over the place. You had Watergate; you had dramatic change. We had impeachment of the president; we had a new president coming in and then a change of party in 1976 and so on. With all of those things you had many more journalists coming to Washington and more of a Washington focus. They were looking for something to say.
LAMB: Let me interrupt. There are a lot of people in this town that can do what you do. What is it? Did you ever analyze your own reasons why they started quoting you?
ORNSTEIN: Yes, I think there were a couple of reasons. One reason was I'd return my phone calls. I was here in town is another reason. But I decided, for better or for worse, right after I'd come here, in part because as a young academic trying to do my own research and do interviews -- you know, I'd call up major figures in politics or in journalism -- sometimes they'd get back to me, other times I just couldn't get through, and I found that frustrating. I said, "Look, I will always return my phone calls. It's a matter of decency and politeness." So calls would come in from whatever place -- whatever newspaper or news service or journalist -- and I tried to make a point every day as I was around of returning every phone call. What I discovered was, for reporters, they place all kinds of calls -- some would get returned; some never would, in the sense that even if you came from States News Service or a smaller newspaper that you'd get a call returned. That helped. It turned out I got criticized for that as being hungry to get my name in the papers, but I did that.

Another thing that made a difference, I believe, is that the natural tendency of an academic, somebody who spends his or her life teaching and doing research, is not to be concise but to speak in almost 50-minute segments. You prepare a lecture; it's a 50-minute period. You have a thesis or a point to make and you expand it to fill 50 minutes. At the same time, you are trained not to go out on a limb, not to make flat statements but to couch them in shades of gray because that's the way the world works, as a social scientist especially. It's an exaggeration, but not much, to say that you could call up many academics and start by saying, "What's your name?" and you'd get a 50-minute discourse on the background and history of the name.

That was a tendency that I had gone away from partly when I started to write for newspapers. You find that the discipline required to write a 750-word column is much greater than if you're writing a scholarly article where there is no particular length. You have to come to the point, you have to have a thesis and then you have to support it. So I would speak plainly to people, and where there was a desire, especially back in the time when you had a flood of journalists coming to Washington who hadn't spent time here before, to get a perspective that could give a little bit of history and background, they'd turn to a lot of people in the academic world and find that they just couldn't give answers, and I would give answers.

So I got quoted a lot, and what happens, of course, is if you get quoted then journalists will say to others, "I need to talk to somebody on this story." And they would say, "Call him. He'll return your call. He'll give you what you need." After a period of time, it became electronic. People would write stories, they'd go to the Nexis or other computerized data bases and they'd see who'd been quoted on previous stories of that sort. So I'd get quoted more and more. Then I got a couple of profiles as the "king of quotes" or "king of the sound bite" -- the same thing happens with television, and that suddenly became a persona. It left me a little uncomfortable, frankly. Everybody likes to get some attention, but if the attention that you get is not about the serious work that you do but about the notion that you're simply glib and you can throw off a clever nine-second burst or six-word quote, that's not really the way you want to become known.
LAMB: Have you ever said to yourself -- I don't want to put words in your mouth -- when you see somebody come at you with a camera and they talk to you on the phone about an issue and you know what they want, you say, "I know exactly how to say it in 10 seconds, and it's going to end up in this piece."
ORNSTEIN: Yes, there's no question that you start to do these things after a while, and you know either when you've said it or before you've said it what it is that's going to be there. I've found, interestingly, what made a difference for me there is when I spent time on the other side of the camera. Back now about 10 years ago, I did a 26-part television series on Congress. It was done in conjunction with the American Political Science Association and WETA, the public television station here in Washington, for use on public television. It was broadcast, but it was also used in the classroom, a sort of telecourse, a full course for credit. Edwin Newman, formerly of NBC, was the host, and I was his co-host and went out and did a lot of pieces.

I would sit in the chair that you're now sitting in and interview people and then go back with the producers and try to edit the pieces to try and fit, whether it was a show on committees or committee assignments or the role of outside groups, and I'd see the frustration that often would come to the television reporter when you'd ask somebody a question -- and you'd know as you'd worked up the script, you only had maybe five minutes out of a 30-minute show to do a piece on one particular area and you'd have some film to use and then you'd want to turn to somebody saying something, and you'd try to extract a comment that was to the point and usable and also somebody looking at you instead of looking all over the place and speaking like this instead of going up and down and up and down, and you'd begin to see what the constraints were on people doing these sorts of things. And that helped.

What I found though, frankly, over the years is that I'll do less of that. I can't return all of my phone calls anymore. Just as an example, I had to go out to San Francisco last week to give a speech, and with the time change and everything, I got out there and it was after the close of business. I had maybe 20 messages, and then the next day I spoke in the morning and then flew back and then got back late in the evening, and I could return a couple of calls, but basically I had another 20 messages or so -- or 25 -- and the next day, I had work to do so I don't return the phone calls.

I found to do all the television that people were asking me to do meant that I'd take sometimes 20 minutes or a half an hour to do an interview in which six or seven words would get used. Often, frankly, those six or seven words are entirely banal or trite; they're a bridge in what's there. For what you get out it, it's not worth the time and effort. And if you're going to get criticized for being on television too much, what's the point? So I pick and choose a little bit more.

The other thing that I've found has happened is that some of the early pieces that were done of me were trying to use me as a way of critiquing the press. The idea was that journalists go in packs; they all quote the same people, they're too lazy to develop their own sources or to go outside the norm, and what they really want to do is express their own point of view. So they'll get somebody who will do that for them and then have that as a kind of disguise. I found that when most of these stories were done around 1978 or `80 or `82, that didn't happen to me very much.

Mostly when journalists would call me, it was because they really didn't know where to start on a story, and I'd help provide some structure, framework, suggest even people that they could talk to or some of the historical analogies, and it was worth it to spend that time. Or a television reporter would come to me, maybe a story on Congress or a story on an issue that related to what Congress was doing who hadn't done it before, been assigned it, and I could help structure a story or provide some perspective. The quid pro quo implicit was, well, we'll use you a little bit in this piece.

So none of that would show up on the air, but I knew it had been provided. But these days more and more I do see the kind of laziness that's there. I do see that often reporters will come, and all they want -- they've already written a story -- is some quote to bolster it. And I don't want any part of that, frankly. I don't see any particular reason to get into that kind of an exchange, so I do less of it.
LAMB: Was this book written with anyone in particular in mind?
ORNSTEIN: The hope was that it would reach a larger audience. It's never going to reach the audience of Michael Crichton or the kinds of best sellers in fiction or nonfiction that other books will. Books about economics, books about history, books that get into some detail aren't going to do that. But the hope was that this would reach an audience that went beyond the academic or the expert in budget or tax policy to a larger lay audience, really the C-SPAN audience of people who have an interest in public affairs, who watch these issues.

The title "Debt and Taxes" obviously is supposed to be clever, playing on the notion of death and taxes. But you look at what's happened with the debates over the budget, the debates over taxes, the debates over health care, over the deficits that we have, and the natural reaction is going to be, "I don't understand any of this." So the hope was you could reach people who really have an interest in public affairs and have a little bit of facility with some of these issues -- but not a lot -- and give them something that would provide them that perspective, some sense of history, some sense of what's happened in the last decade, what makes it unique, what makes it fit with the rest of what's been going on and also some kind of a blueprint for where we might go from here.
LAMB: What do you say to that person who says, "This country is going down the tubes because of debt and taxes?"
ORNSTEIN: You can offer a more hopeful message, although not a Pollyanna-ish message either. We've got a problem; we have several problems. The fact is, we're not going to get out of them with the wave of a magic wand or in a short period of time. We have dug ourselves a hole -- there's no question. There's no question if you look over 200 years, we've dug holes throughout that period of time, but we've always dug our way out of them.
LAMB: Is this the biggest hole we've ever been in?
ORNSTEIN: It's not the biggest we've ever been in. The biggest we've ever been in came after the Second World War, and the fact is, if you look at the kind of crushing debt we had after the Revolutionary War, the crushing debt we had after the Civil War, the First World War, the Second World War, we've had enormous debts built up over short periods of time. But always in the past when we built up large debt, it came with a war or it came with a serious economic devastation, depression at least. Then when we moved to peace and prosperity; we built our way out of it. We've had a history of going into debt and then getting out of debt.

What makes this period disturbing is we've gotten into debt without the major war, without the economic depression, and we've built in structural things that make it difficult. Now, that's the downside. The upside is we've begun to show serious discipline and a recognition of the problem, and we're moving toward a period of economic growth that will probably, if we can continue to show the same kind of discipline and indeed focus on areas of the budget where we haven't shown that discipline, move out of the jam. And it's not that we have to get into a situation where we have a balanced budget or a surplus to get out of the jam. We need to move the debt level down to a point where deficits are manageable given our enormous wealth in this country.
LAMB: How do we compare with the other big countries in the world when it comes to the debt.
ORNSTEIN: It's interesting because you have to look at debt not in absolute terms but in relative terms. Let's face it, if you or I had a $2 million mortgage, say, which is after all a debt -- most individuals have debt with their mortgages -- it would be crushing. If Jay Rockefeller had a $2 million mortgage, it doesn't mean as much or if Bill Gates, the head of Microsoft, with $7 billion had it. So it's relative. You look at debt as a share of the gross domestic product -- the GDP, what we used to call the GNP, gross national product in a country -- and what you find is, we are not out of the norm of most of the Western industrialized democracies. And indeed there are other countries, Japan among them, that have had a much higher debt, much more of a leveraged aspect to things.

Now, that doesn't mean that they're worse off than we are because in a country like Japan, for example, they have had a savings rate in the private sector so much greater than ours that the money's been there to help finance that debt. But now they're beginning to discover the perils of keeping up that kind of a debt as their economy falters and they no longer have the kind of savings rate that they had before, and we're beginning to show signs of greater discipline.
LAMB: What about the tax side of things. How do we compare with other countries on tax?
ORNSTEIN: Contrary to the conventional wisdom, compared to virtually every other Western industrialized democracy, we have lower taxes. Most other Western industrialized democracies have much more extensive social welfare systems funded through the government than we do. That doesn't mean that we should emulate them. You can see from their economic and social problems, in many cases, that they're going to move more to emulate us. That doesn't mean that we shouldn't have even more discipline in terms of what we do with taxes, but we are a lower taxed society than most others are. Of course, that's always been our economic strength, that we have not moved as rapidly or as wholeheartedly towards having government pick off major chunks of the running of the society as other countries have. We've moved in that direction as they all have but a little more slowly and much more reluctantly.
LAMB: This book sells for $25, put out by Times Books.
ORNSTEIN: Yes, which is a unit of Random House.
LAMB: How many books like this would be sold do you think?
ORNSTEIN: Our hope and expectation at least is that we'll sell 20,000 to 25,000 books, something of that sort. It could go higher.
LAMB: How many books have you written in the past?
ORNSTEIN: It's complicated. In some ways it depends on how you define them, but it's up around eight or nine. That includes books in which I have had major contributions but edited and a couple of others where I've been co-authors.
LAMB: How did you break up the book with your co-author?
ORNSTEIN: Originally, which is a few years ago, we each took chapters and wrote drafts of chapters, but as time passed, we'd end up sending the chapters back and forth, running them through both of our word processors to a point where now, with a couple of exceptions, there are a couple of chapters there that are much more distinctively the product of one or the other of us. Most of them it would be very hard for me to go through now and figure out which section was mine and which section was John's.
LAMB: You write a lot about Alexander Hamilton and Thomas Jefferson. In what party would Alexander Hamilton feel the happiest today, and where would Thomas Jefferson feel that?
ORNSTEIN: To paraphrase, I think it was Yogi Berra, if Hamilton and Jefferson were alive today they'd be spinning in their graves. It would be very hard for them to figure out where to go because, of course, the reality is that Jefferson's view of the society and the role of government was that the ideal society was an agrarian society, was one where people were closer to the soil, closer to their roots. He had an enormous affection for the average person, the working person, the downtrodden and great distrust of elites -- governmental elites, economic elites and others -- and believed that the concentration of power in the hands of those elites was something to be avoided. So he didn't want government to get very large, and he didn't want to put a lot of focus on the major industrial elements -- the large factories or others in society.

Alexander Hamilton was much more of a royalist. He loved being around elites; he was an elitist himself. He believed in a very strong and powerful government; he certainly had a strong bent toward an executive and the executive branch, but he also believed in a highly activist role for government. Hamilton saw debt as one of the great engines of growth and prosperity in a country if you managed it appropriately and that you could create the kind of mercantilistic, activist economy and society that would reach out and play a strong role in the rest of the world by managing that debt.

Jefferson hated debt because the more you got into debt, the more government played a role, the more it had to tax, the more it would become a larger force in society. Now, put that together with today. Jefferson is the hero of the Democratic Party. Why is he the hero? Of course, all around the country the Democratic Party throws these Jefferson, Jackson day dinners because he stood with the average person, the working person, the poor person. But his distaste for government, his sense that you want to avoid a major government role at virtually all costs would be right up the alley of Ronald Reagan, who in that sense was very much a Jeffersonian.

Alexander Hamilton has been a hero of the Republicans, and these days, although it's changing a little bit, but you go through the Reagan-Bush years when you had Republicans dominating the executive. Hamilton's notion of a strong and assertive executive was very much a Republican idea. There was that element that they liked very much, and of course they also liked the idea that he stood with business, especially as we would define it today. But the notion of a powerful federal government is something that conservatives today, Republicans, would move away from.

In effect, what you have is each of them has a distinctive character, and we still see it in the ways in which we debate these issues in society, but we have a meld, a blend of their qualities in different politicians. If you look at Ronald Reagan, he has a Jeffersonian philosophy, but he wanted to use Hamiltonian means -- grabbing onto that power -- to make it happen. He was very much an activist president, very much along the lines of Franklin Roosevelt. There's an awful lot of similarity between the two of them in the way in which they approach the use of government. Bill Clinton is in some ways a Jeffersonian, at least in terms of his attachment to the downtrodden and the poor but also is very much a Hamiltonian in terms of his activist approach to governing. So it's hard to make the same distinctions, and it's hard to view these individuals in the heroic terms that the parties do without their having to do an awful lot of revisionism in their history.
LAMB: You write a lot about war and the wars' impact on our economics. Which war had the most impact on us?
ORNSTEIN: I think there's no question, the Second World War had the most impact on us, and we look at the postwar political process, the postwar economic system. The Second World War was dramatically important. But there's also no question that every major war permanently altered the role and size of government, brought about profound changes in the economic process. There's a tidal wave that comes with the war no matter what. When it's a big war, you mobilize the society, you give an overwhelming share of power to a central federal government, as you have to under those circumstances, and you go deeply into debt and you struggle to figure out how you're going to pay for that debt.

Then when the war is over, that tidal wave ends and you flow back, but throughout our history we never moved back to where we had been before. The federal government always ended up being a more activist and larger entity, and the tax system and the role that the government played in the economy permanently changed. That happened with all the major wars. The Second World War, though, because it created a much larger infrastructure in Washington and because with its end it really brought with it the sense that there was a science of economics and a science of governing that could be brought to bear, really stays with us.
LAMB: Why is there a subheading with Wilbur Mills?
ORNSTEIN: If you look at what makes the 1980s and `90s different, it's actually the 1970s. Really, if you look at today and you think about what's different, the notion that we have debt, we have deficits, as we've been talking throughout the course of this period, we've had that always in the past. What makes it different today as much as anything is the fact that the balance of the budget, the nature of the budget, the rigidity built into the budget has all changed, and it changed very significantly as a result of the dynamics of the late `60s and early `70s where Wilbur Mills, now the late Wilbur Mills, a major figure, chairman of the Ways and Means Committee through a central period in American history, a one-time presidential candidate, undoubtedly one of the five most significant members of Congress in the 20th century, at least, had more to do with the changes and has much to do with our fiscal state today as anybody, I believe, including Ronald Reagan.
LAMB: Did you know him?
ORNSTEIN: Yes, I did. I got to know him much better after he left Congress, and many of us will recall- those of us who are more than 20 -- in disgrace. But after the so-called Fanne Fox episode with a woman plunging into the tidal basin after he admitted to having a great alcohol problem and many other difficulties. But Wilbur Mills became a major figure in American politics, from Arkansas, not simply because he gained in seniority but because he had enormous talents. He had an encyclopedic knowledge of the tax code. He had a feel for politics and how to pull majorities together and how to use the rules of the institution to make things happen greater than virtually anybody, and in some ways, of course, what ended up occurring is the dynamic of the late `60s.

Richard Nixon becomes president, a very activist Republican, very hostile to Congress, facing a Democratic Congress, increasingly liberal. They got into a bidding war to some degree during that period of time -- '69, `70, `71, `72 -- which revolved around political maneuvering to see who could be condemned for being heartless, who could be acclaimed for looking out for people. Much of that bidding war focused around Social Security, kind of traditional weapon the Democrats have used against Republicans as much as anything else. We had a yearly process where you could look at the Social Security system, and from 1969 on that yearly process where we'd had for a long period of time real discipline, not increasing payments very much, trying to keep within a framework of fiscal discipline.

Suddenly we had huge increases much outstripping inflation -- 10 percent one year, 15 percent the next year -- partly because we clearly did have a problem with real poverty among the elderly, many people who were only able to subsist on their Social Security pensions and it wasn't enough to get by partly because of this political maneuvering. And as we move closer to 1972, Wilbur Mills decided, despite rather owlish, bespectacled countenance and anything but a pretty face -- not a blow-dried character -- that he was going to run for president.

He began a quixotic and abortive campaign, that this was going to be his vehicle, and we saw even greater increases and it was clearly going to break the fiscal bank. In that after-math we indexed Social Security to inflation, ironically, as an attempt to try and hold down discipline, to keep these payments from going completely out of control, but the timing of it was such that it came just before we had a very sharp increase in the elderly population and just before we had a period of huge double-digit inflation. We indexed all the other entitlement programs at the time; we used a formula for indexing them to inflation so they'd go up automatically, not have Congress have to vote each year, that exaggerated inflation for the elderly to a point where now, just to pick some figures, in 1963 the mandatory programs, so-called, that include basically these entitlements as we now refer to them, made up roughly a third or so along with interest payments of the budget.

Now that's virtually doubled, and the entitlements per se are about 55 percent of the overall federal budget. They're on automatic pilot, they continue to go up, they're extraordinarily popular with the American people, and they're taking the flexibility out of our ability to deal with the budget problem. And of course there's another side to this, Brian, which is that back 30 years ago the tax system had the overwhelming share of revenues coming in, coming from personal and corporate income taxes. The payroll taxes, which are basically the FICA tax that we use to finance Social Security and Medicare were maybe a fifth or so, about 18 percent or so of our overall revenues. Now income taxes have moved sharply down as a percentage, and payroll tax as a share of our revenues has doubled. It's gone up to almost 40 percent of our overall revenues, now beginning to contest income taxes, and it's almost as great as individual income taxes. It's the single largest burden on three-fourths of American workers, and it's not the best way to tax a system.
LAMB: Before we lose time here, you have a section called "Openness," and you write, "The openness that has come to politics and government in Washington is one of the proudest and most valuable achievements of the reform movement, and it is here to stay." But earlier you say, "If voters had not known or seen how these bargaining processes took place and had seen only the results, they might not have been happy about them." There's a lot of unhappiness in town from time to time about this openness. Do you think it's good or bad.
ORNSTEIN: On balance it's better to have it open than not, but we can't get away from it without recognizing we pay an enormous cost. I think, when we look at the role of lobbying, the question of gifts, campaign monies and the rest, we need serious reform, but the single biggest reform you can have to make sure that you don't build in a great deal of corruption in a political process is disclosure. Sunshine has an antiseptic effect, but let's face it, we have to recognize that the more disclosure you have, the more people are going to see things that are a natural advent of a political process, the more disillusioned they're going to become.

What's happened in the last 20 years or so is a great irony, in my judgment, that you'd ask almost any historian who's tracked American politics through 200 years, any veteran who's been around Washington for 30 or 40 or 50 years, and you'd have a consensus that our politics are cleaner today than they've ever been. You have a consensus in the country at large that our politics is dirtier and worse today than it's ever been. Now, how do you put those two things together? There are many reasons for it, but one reason is that stuff that happened 30 or 40 or 50 years ago -- money in paper bags being handed to people, alcoholism, philandering -- that was happening on a much more regular basis, much more frequently, nobody knew about it. Now everybody knows about it. Now every campaign contribution, despite the fact that they're far more limited than they used to be and they are disclosed and they are regulated in a lot of ways that never occurred before, we get stories every day linking them to behavior on the part of members of Congress, adding to the disillusionment and the sense that the system is tilted and that it isn't for real.

We've paid a price for it. The reason that it's in this book about debt and taxes is that clearly one of our difficulties here, one of our great dilemmas as a society is that to solve this kind of a problem requires pain. It's not all in waste, fraud and abuse, which means things that other people get. We all have to pay. How do we make that happen? You make that happen by having a political system that can say to the American people, "Trust us. It's going to hurt now, but it's for a greater good." If what people see leads to less trust, and if they don't think the system is on the up and up, then you can't make some of those tough decisions because the public won't let you. They think that you'll misuse the money.

If you can't make them, you get into a spiral where the disillusionment and cynicism grow, and that's a real problem for us that somehow we're going to have to grapple with. Part of the irony is that we have made some tough decisions, that we have had some real courage on the part of politicians in the past in the overall context, but they have in part through their own actions and setting of expectations set themselves up for a fall. Now one hopes we'll be in a position where we can do a little bit better and begin to get out of this hole.
LAMB: This is what the book looks like, "Debt and Taxes: How America Got into Its Budget Mess and What to Do About It." Co-author, our guest this week, Norman Ornstein. Thank you for joining us.
ORNSTEIN: Thank you, Brian.

Copyright National Cable Satellite Corporation 1994. Personal, noncommercial use of this transcript is permitted. No commercial, political or other use may be made of this transcript without the express permission of National Cable Satellite Corporation.