A Two-Step Approach to Solving the Budget Impasse: Echoes

Two decades ago, President George H.W. Bush, Senate Majority Leader George Mitchell and House Speaker Tom Foley agreed to "the largest and most comprehensive deficit reduction package in U.S. history," according to the president's Council of Economic Advisers, on which I served as a member at the time. We estimated that the deal would "reduce the Federal deficit by a total of nearly one-half trillion dollars over the next 5 years."

Economists still debate whether the deal actually reduced the deficit over those five years, let alone by a half trillion dollars. But there's little debate that by agreeing to the Democrats' request to increase tax rates, Bush lost the White House in 1992 to Bill Clinton, who then raised taxes again, with the top rate going up to 39.6 percent, well above the 28 percent rate before the 1990 deal.