When George HW Bush was laid to rest last week, the encomiums appropriately remarked on his general decency and competence, which tended to be followed by a “but”. For journalists and historians, it is “but he was only a one-term president”. He lost the 1992 election, in part because of the recession of 1990-91. For his fellow Republicans, however, it is “but he broke with the legacy of Ronald Reagan by repudiating his ‘no new taxes’ pledge”. Bush’s electoral defeat was blamed on that supposed betrayal.

But Bush’s mistake was that he made that anti-tax pledge in the first place and stuck to it in the first part of his presidency. His courageous 1990 reversal on fiscal policy set the stage for a decade of economic growth that eventually achieved budget surpluses.

The budget deal that Bush reached with congressional Democrats in 1990 may indeed have contributed to his failure to win re-election in 1992. There is no question that the timing was terrible. The move to fiscal discipline coincided with the onset of a recession, probably made the downturn worse than it otherwise would have been, and slowed the subsequent recovery.

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But it is not as clear as some believe that Bush’s reversal on taxes is what cost him re-election. Bush’s prosecution of the war to push Iraq out of Kuwait, following Saddam Hussein’s invasion, was skilful, both diplomatically and militarily. After Operation Desert Storm achieved its aims, Bush’s approval rating reached a sky-high 89%. It was only in the fourth and final year of his term that his poll rating sank miserably. Anger at Bush for reneging on his tax promise can’t explain the 29% low his approval rating hit in July 1992, because the 89% rating came after he did that.

Bush actually had known better than to support the claim that tax cuts would reduce the budget deficit by boosting revenues. When he ran against Reagan for the Republican nomination in 1980, he famously called such claims “voodoo economics”. But he put aside his doubts when he agreed to serve as Reagan’s vice-president, and eventually he issued his fateful vow at the Republican National Convention in August 1988, when he accepted the party’s nomination to succeed Reagan. He predicted that Democrats would repeatedly push him to raise taxes, and he swore that he would forever refuse: “Read my lips: no new taxes.”

But the economy at the end of the 1980s was at the peak of the business cycle. This was a proper time to begin addressing the longstanding budget deficit. As Keynes famously said, “The boom, not the slump, is the right time for austerity at the Treasury.” Instead, Bush agreed to double down on the Reagan-era policies that had produced record peacetime deficits. And the bet paid off, in the sense that the tax pledge helped him win the election.

After a year and a half in office, Bush decided to address the long-postponed deficit problem that he had inherited. He entered into difficult negotiations with the congressional leadership. The Democrats controlled both houses of Congress and refused to agree to restrain domestic spending unless taxes also contributed to fiscal consolidation. Thus, in June 1990, Bush admitted that any agreement to cut the deficit would require tax increases.

This was universally viewed as a retraction of his “no new taxes” pledge. The taxes that were raised were, in fact, old taxes. But that was considered a technicality. On 9 October, the House and Senate announced a budget plan, narrowly avoiding a full government shutdown.

The Budget Enforcement Act of 1990 legislated caps on discretionary spending and created constraints known as “pay-as-you-go” (paygo) rules: if Congress wanted to cut a tax or increase entitlement spending it had to pay for the cost in some other part of the budget. When Bill Clinton became president in January 1993, he sent legislation to Congress to renew the system of spending caps and paygo. It passed, though without a single Republican vote.

The fiscal system instituted by Bush remained in place throughout the remainder of Clinton’s eight-year presidency. Tight budget policy, together with strong economic growth, steadily reduced the deficit and converted it to rising surpluses in 1998, 1999 and 2000. But in January 2001, after Bush’s son, George W. Bush, assumed office, the Republicans allowed the budget caps and paygo rule to lapse. They cut taxes and raised spending rapidly, resulting in the return of record deficits.

This is not irrelevant ancient history. George HW Bush showed a “profile in courage” in meeting the Democrats halfway to achieve fiscal responsibility. His presidency is the last time any Republican president has tried to live up to the label of fiscal conservative.

Republicans since Bush have followed his lead in one respect: a pattern of pro-cyclical fiscal policy. They engaged in fiscal expansion during the recovery of 2001-07 and then fought Barack Obama’s attempts to respond to the 2007-09 recession with fiscal stimulus. As a result, the recovery from the Great Recession was slower than it had to be, just as had been the case with the 1990-91 recession.

Over the last year Donald Trump has pursued an even more flagrantly pro-cyclical fiscal expansion, with ill-timed tax cuts and spending increases. The result could be an even worse mess than Bush 43 left behind in 2008.

• Jeffrey Frankel is a professor at Harvard University’s Kennedy School of Government. He served as a member of President Bill Clinton’s Council of Economic Advisers

© Project Syndicate 2018