When Ronald Reagan delivered his farewell address more than two decades ago, he cited one regret: a continuing deficit he had put the nation on track to eliminate.
"I've been asked if I have any regrets. Well, I do," said Reagan. "The deficit is one. I've been talking a great deal about that lately, but tonight isn't for arguments, and I'm going to hold my tongue."
In the days leading up to that speech, Reagan had indeed spoken repeatedly about the deficit, explaining its sources and how it could be eliminated with characteristic passion and analytical accuracy.
On Dec. 13, 1988, Reagan gave a speech to a group of his political appointees. He told them he believed that in the "Washington colony," as he called it, there was an "iron triangle" working to expand government beyond its constitutional limits and, in the process, drive up deficit spending.
"It sometimes seems to many Americans that what might be called a 'triangle of institutions' -- parts of Congress, the media and special interest groups -- is transforming and placing out of focus our constitutional balance, particularly in the areas of spending and foreign policy," Reagan said. "Some have used the term 'iron triangle' to describe something like what I'm talking about. And with apologies to them, I'll borrow that term."
Reagan predicted Americans would rise up against this "iron triangle" and take their government back.
"Fundamentally, the American people know what's up, and they don't like it," Reagan said. "They may re-elect their congressmen, but they trust Congress itself less and less. They may watch or read the media, but they stop believing it, and they show more and more dislike for special interest influence. The only question is: When will they say once and for all that they've had enough? The strength of our nation has never been with the Washington colony, but with the American people. The budget deficit is the colony's last stand."
About a month after this speech, Reagan introduced his final budget. He said it would put the nation "on track to a balanced budget and a modest surplus by fiscal year 1993."
How could this be -- given the fiscal crisis we face today?
As Reagan explained to his political appointees, economic growth spurred by the industry of the American people as well as by his tax cuts was causing federal tax revenues to increase. If growth in the federal government could be held to a slower rate than growth in federal tax revenues, the deficit could be eliminated.
"And why do we have deficits? It's not because of a lack of revenues," Reagan told his appointees in December 1988. "Federal revenues have grown by $375 billion since 1981, but spending has grown by $450 billion."