Ron Paul wrongly suggests Ronald Reagan reluctantly agreed to a "debt ceiling compromise" in 1987. There was no disagreement over raising the debt ceiling. In fact, Reagan said he had "no objection whatsoever" to raising the debt ceiling. Reagan opposed the main provision of the legislation that threatened to impose deep spending cuts, including to the military, if the president and Congress did not reduce the deficit by a certain amount.
Paul, the populist Texas congressman who is running for the Republican presidential nomination, released a TV ad July 14 that will air in Iowa and New Hampshire. The ad — titled "Conviction, Not Compromise!" — calls on Republican leaders to cut spending, balance the budget and not increase the debt limit.
The ad starts by invoking a Republican icon, former President Ronald Reagan.
Ron Paul Presidential Campaign TV ad, July 14: In the '80s, they did it to Reagan. A debt ceiling compromise. Democrats promising spending cuts, but delivering only tax hikes.
While the announcer talks about a "debt ceiling compromise," the screen displays an image of a sentence from a Sept. 27, 1987, New York Times story. The ad highlights key words of the sentence (shown here in bold): "Mr. Reagan reluctantly agreed Saturday to sign the legislation, which also raises the government debt ceiling to avert a Federal default, but said he would veto any tax increases aimed at meeting the deficit target."
What legislation did Reagan reluctantly agree to sign? It was called the Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987, and Reagan objected to it because it would have required automatic spending cuts under certain circumstances that he feared would have compromised national defense. It's true the legislation also included a provision to raise the debt ceiling from $2.3 trillion to $2.8 trillion. But raising the debt ceiling was not in dispute; there was bipartisan agreement that it needed to be done.
A little background: In 1987, Reagan and the Congress had a disagreement over the fiscal year 1988 budget and how to enforce the Balanced Budget Act of 1985, also known as Gramm-Rudman-Hollings after the three chief sponsors. The U.S. Supreme Court ruled in 1986 that the process for imposing automatic spending cuts required by Gramm-Rudman-Hollings was unconstitutional because it violated the separation of powers. In response, Congress passed the Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987 to fix the constitutional defect. But Reagan objected to the legislation because it would have required an estimated $23 billion in automatic spending cuts in the 1988 budget, if Congress and the president failed to reduce the deficit.
New York Times, Sept. 27, 1987: The new enforcement mechanism, which puts teeth in the 1985 budget-balancing law, requires automatic spending cuts if Congress and the White House do not agree on how to reduce the deficit to specified levels. It will mandate $23 billion in savings in the budget for the 1988 fiscal year, which begins Oct. 1.
Reagan reluctantly signed the legislation on Sept. 29, warning of the potential harm to the military. He also made it clear that he supported raising the debt ceiling — saying that was the only reason he signed the bill.
Reagan, Sept. 29, 1987: The first provision extends the Federal Government's authority to borrow funds. This is an action that we just take to prevent the Government from defaulting on its obligations, and I have no objection whatsoever to doing so. In short, this extension of the debt limit is necessary and unavoidable.
But the second provision is one to which it is my duty as President to voice the strongest possible objection. For this second provision involves a so-called fix of the Gramm-Rudman-Hollings deficit reduction law — a fix that doesn't fix things in the right way.
It was the 17th and last time the debt ceiling was permanently raised or temporarily expanded under Reagan. The debt ceiling in his eight years rose from $935 billion to $2.8 trillion.
But the 1987 dispute was not over raising the debt ceiling. It was an old-fashioned guns-and-butter dispute, with Reagan seeking to preserve military spending and Democrats seeking to preserve domestic spending in order to comply with the balanced budget act. In the end, Reagan struck a budget agreement to avoid any automatic spending cuts. On Nov. 20, 1987, Reagan and Democratic leaders announced a deal in which the GOP president dropped his demand for no tax increases in exchange for smaller military cuts. The New York Times reported that the deal included $9 billion in tax increases, $9.6 billion in one-time fee increases, and $11.6 billion in spending cuts — including $5 billion in military spending cuts. Reagan signed a final version of the budget on Dec. 23, 1987.
Reagan, Nov. 20, 1987: This agreement is probably not the best deal that could be made, but it is a good solid beginning. It provides the necessary services for our people, maintains our national security, and does so at a level that does not overburden the average American taxpayer — in a word, fairness.
Correction, July 27: This story was updated to reflect that President Ronald Reagan signed 17 bills that permanently or temporarily raised the debt ceiling, not 18 as originally reported. He did sign 18 debt-ceiling bills, but one changed the effective date of the new debt limit without raising or lowering the amount.
– Eugene Kiely