woody_zimmerman_118_2007Many years ago, when I was first learning the ropes of simulation and modeling, I worked for a research organization funded by the U. S. Navy. In those early days of mathematical modeling, we often obtained computer programs built by other organizations. Sometimes we adapted them for our customer’s use. This occurred in one particular case with a program that supposedly analyzed the requirements of both the Air Force and the Navy for the same type of plane.

I don’t recall the exact airplane, but we experimented with different sets of parameters for the two services to see what results would be produced. Various inputs caused the program to predict that the Air Force should have differing numbers of the aircraft, but no amount of tinkering with inputs produced any answer for the Navy except the single printed line: THE NAVY GETS 944 AIRPLANES.

This result was a temporary mystery, until one of our team members examined the program’s source-code. It was written in an early programming language called FORTRAN, which allowed numbers and text to be printed via FORMAT statements. Such a statement could specify printed text, or text plus numerical values produced by the program’s calculations. As expected, we found a FORMAT statement for the line we had seen. But there was no place for a numeric variable to be printed. Instead, the FORMAT statement read exactly as we had seen. “944” was hard-wired into the printed text. If any other result was calculated via the program’s various algorithms, it was not rendered as output.

At first, we were outraged by this deception, but later we were bemused and even amused. How many studies (reaching to what level), we wondered, had relied on this program’s comparative “analyses”? Was any national defense policy influenced by those studies? We would never know. We could only hope that the Navy’s operational capabilities had not been significantly impacted by the bogus “944” result. Thus, we learned to obey Ronald Reagan’s maxim, “Trust but verify,” long before he spoke it.

I relate this curious anecdote because it is eerily familiar in today’s political climate. More on that in a moment, but first a little background...

As the country heads for a political “showdown” over disparate visions offered by the two main political parties, positions are hardening significantly. Democrats advocate an ever-expanding government role, with a populace increasingly dependent on government benefits. Republicans champion a diminished role for government – more closely approximating the role scoped out in the Constitution – with greater personal freedom and self-reliance as the natural product. The nation is deeply conflicted over the visions, with many individuals viscerally uncomfortable with having to make an exclusive choice.

These visions are not new. What is new is for the political parties to be so exclusively aligned with the separate visions that very little crossover is possible. This hard line has been much decried by both sides as “unwillingness to compromise.” Democrats can legitimately say this of Republicans, who had a long history of compromising with Democrats on important legislation. During 60+ years of almost exclusive Democrat control of Congress, Republicans became the party that would “go along to get along.” Republicans like Gerald Ford (R-MI) and Robert Dole (R-KS) served their entire public careers in that time when “compromise” was Republicans’ middle name. Democrats were the Big Dog, and Republicans followed dutifully behind and minded their manners. Washington was a Democrat town.

During that era, the Republican vision – if it could be called that – was much muted and moderated. One wag said Republicans’ slogan should be: “Vote Republican. We’re not as bad as you think…” Another said Democrats were the Party of “Yes!” while Republicans were the Party of “OK, but not so much...” A true conservative vision for not just holding back the tide of expanding government, but actually reducing its size and scope, did not emerge until the 1960s, and did not gain ascendancy until the Reagan era.

Even after a conservative vision became defined – with Ronald Reagan as its champion – Republicans’ instinct to reach across the aisle persisted. Again and again they compromised on issues where a strong conservative stance might have made a real difference. That compulsion to compromise sometimes produced calamitous results for Republicans, as in 1990 when Democrats induced President George H. W. Bush to compromise-away his “no new taxes” pledge in order to “control the deficit”. (Does that sound familiar?) Reagan conservatives – both Republicans and Democrats – who had elected Mr. Bush in 1988, left him in 1992, allowing Bill Clinton to sneak in the back door with only 43% of the popular vote.

The political landscape is different now, however. Stiffened by the influence of the strongly conservative Tea Party, Republicans will no longer compromise on key issues, such as Obamacare and tax increases. This infuriates Democrats, who long for those halcyon days when Republicans could always be depended upon to come their way on key issues of the Democrat agenda.

On the other hand, stories of Democrats’ willingness to compromise are much exaggerated – almost to the level of mythology. Democrats’ concept of compromise has always been: “You guys come over to our side on this…” This explains Mr. Obama’s petulant complaints about Republican intransigence, as well as more extreme charges of “lack of patriotism” and “disloyalty.” Democrats simply cannot understand what happened to those good old “reasonable” Republicans, who could always be counted on to roll right over for the sake of comity and good will. Democrats are shocked (shocked is wot they are!) to find that compromise actually means that both sides move away from their positions to a middle ground.

I mentioned the “944 airplanes” anecdote because Democrats’ analyses of most current financial issues so dependably produce the result: “Higher taxes are needed.” Whatever the parameters of the situation, Democrats always call for higher taxes. This leads one to suspect that no real Democrat analysis of fiscal issues is going on. Democrats’ statements on federal finances are the political equivalent of that old FORMAT statement, where a non-analytical result is hard-wired in.

Democrats might reasonably observe that the same is true of Republicans. No matter the situation, their solution always seems to be: “Lower taxes, fewer regulations, and more oil-drilling.” Dems have a point here, but it is not necessarily the only point to be made. Republicans do at least have validating data. John Kennedy, Ronald Reagan, and George W. Bush all implemented versions of the lower-taxes vision, with very positive results. Critics will point to George W. Bush as a negative example, but they are confusing the banking crisis – caused by the politically generated sub-prime mortgage mess – with the results of the Bush tax cuts of 2001-’02. Low taxes did not cause the Crash of 2008 – however much Obamaphiles may claim it to be so. The banking crisis was caused by millions of mortgage loans to people who should not have received them. Unluckily for Mr. Bush, those chickens came home to roost on his watch. Before that happened, the economy was booming – largely due to the tax cuts.

Democrats, on the other hand, can cite no positive results from higher taxes. The 1950s were a prosperous, low-inflation era when tax-rates were sky-high. (The top tax rate was 92% on incomes over $400,000 a year.) But the prosperity happened despite those high rates, not because of them. Indeed, very few people – possibly none – paid taxes at those rates. Anyone smart enough to make that kind of money in the 1950s was smart enough to shield it from high taxes – as no end of economists have pointed out. The prosperity was driven by post-war pent-up demand. By 1960, that demand had run its course, the steelworkers threw the country into a recession with a six-month strike, and the high-tax doldrums had set in. Being a rich guy himself, President Kennedy correctly saw that those high rates were holding the country back. The 1960s boomed because of tax-cuts enacted after JFK’s death.

Mr. Reagan’s significant tax-cuts set the country on the longest peacetime boom in American history, through the 1980s. This is obvious to people like me, who lived through it. I mention it only because so many people now of voting age did not live through it, and because so much disinformation has been spread about the era. Politicians eager to discredit Reagan’s Supply-side Economics, for their own political purposes, have deceived many younger voters into thinking that lower taxes are unfair, unsound, and fundamentally harmful to the economy.

New champions of the conservative vision need to understand that much of the nation’s thinking on these matters will remain confused until we can remove the Democrats’ “Higher Taxes” FORMAT statement from our economic “program.” The president runs around the country babbling about taxing the rich, like one of those toys that talks when you push a button. Children in the fifth grade know that this won’t help us. The higher-taxes mantra is rubbish. It has to be stopped and corrected before we can move ahead.