David Stockman on TARP, the Fed, Ron Paul and Reagan [FULL VERSION]

At the very start of the "Reagan revolution," David Stockman exposed the myth that Ronald Reagan and the modern Republican Party are dedicated to small government.

In 1981, the 35-year-old Stockman gave up his Michigan seat in Congress to become Reagan's budget director. A vocal critic of what he continues to call the "welfare-warfare state," Stockman had signed on because he believed in the limited government rhetoric that Reagan espoused. Once inside the White House, Stockman quickly became disenchanted, and gave an interview to journalist William Greider that became the basis for an explosive Atlantic Monthly article in which Stockman admitted that Reagan's spending cuts had been a "Trojan horse" used to justify tax cuts. In his 1985 memoir, The Triumph of Politics, Stockman chronicled Reagan's reluctance to fulfill his campaign promise of shrinking the size and scope of government and balancing the budget. The result? The gross federal debt tripled while Reagan was in office.

Last fall, Stockman was the GOP-defector du jour once more, arguing against extending George W. Bush's tax rates in the New York Times, on 60 Minutes, the Colbert Report, Parker-Spitzer, ABC, NPR, and MSNBC. Stockman's argument - that it's irresponsible to cut taxes when cumulative U.S. debt is steadily mounting as a percentage of GDP - is based on the simple principle that balanced budgets come only when revenues actually meet expenditures. If we're not willing to actually shrink government spending, he says, then we should pay full freight now, rather than forcing our children and grandchildren to foot the bill down the line.

Here's what didn't come across in Stockman's media blitz: Since writing The Triumph of Politics he says he has "completed his homework" by reading libertarian economists such as Ludwig von Mises, Friedrich Hayek, and Murray Rothbard. He thinks TARP was a big-government boondoggle and the bailouts of GM and Chrysler unconscionable. Stimulus spending is a hoax. He sees the abandonment of the gold standard in favor of floating exchange rates as the root cause of both the country's fiscal problems and the 2008 financial crisis. He says that Rep. Ron Paul (R-Texas) is the only politician today "who gets it" and he's hopeful that Paul's growing power may begin to shed light on "the scholastic arrogance" of the Federal Reserve. He's still against the welfare-warfare state and he thinks government should be cut down to size.
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Reason.tv's Nick Gillespie sat down with Stockman for a wide-ranging discussion that touched on tax cuts, monetary policy, TARP, Ronald Reagan, his tenure as a Michigan Congressman, and the gold standard. The complete 42-minute interview is here.

If you're in a hurry, check out the eight-and-a-half minute cut with selections from the same interview:

Camera by Jim Epstein and Hawk Jensen. Edited by Epstein and Joshua Swain.

Go to Reason.tv for downloadable version of this and all our videos and subscribe to Reason.tv's YouTube channel to receive automatic notification when new material goes live.

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[gxtt]

I would like to see more of Reason's interviews run or offered at full length like this. I found it very enjoyable to not guess what fell between the edits. No matter what side of a socio-economic-political debate you find yourself on, it pays to know the opinion of others, as you formulate or express your own opinion.

[OnCall101Villa]

IT'S A TARP

[Luke Avedon]

Fantastic interview!

[mdcory3470]

My new financial hero! What an awesome book!

[pipeman451]

Stockman understands the numbers and the theft of it all. However when does the financial system get held to account. When do they pay for their depression. So far I hear the worker is to bail them out. When do those that make billions have to pay back the 14 to 20 trillion used to bail them out. Well never that's when

[IelfphilRV]

AAAAAAAHAHAHAHA

[stdpozer]

What will be the outcome when the bond bubble burst

[Austin Analog]

you're so wrong about the age cut off - the budget and scare tactic over SS have been in the news since the early 80s at least... I expected not to receive SS back then, that's why I started saving when I did....and I know other's my age (nearing 60) that feel and felt the same way...

[34lbs]

... Obama bombs children....

[RepublicConstitution]

Everyone over 50 believes in Social Security but virtually everyone I talk to under 45 understands they will likely never see a penny of it and would prefer it to disappear if we can get our own money and invest it.

[pretorious700]

Yes

haha

[stevenfaec]

The singer?