Was Dick Cheney right about deficits? In 2002, a month before he gave George W. Bush’s first treasury secretary, Paul O’Neill, the news that he was fired, then-Vice President Dick Cheney is supposed to have told O’Neill, “You know, Paul, Reagan proved deficits don’t matter. We won the midterms.” Cheney was not making an economic case that deficits don’t matter. He was making a political case, with his reference to the midterm elections of 2002.

Polls show that many Republicans favor tax cuts, even if that means higher deficits. Ever since Ronald Reagan was elected in 1980, the Republican answer to every policy question has been tax cuts. Democrats and the dwindling number of Republican fiscal conservatives think that Republican conservatives are crazy. And they are crazy — crazy like a fox.

Republican strategy is based on the fact that the American public is deeply confused. Americans may be against big government in the abstract, but they favor more spending on most government programs that are specified by name, except for foreign aid. At the same time, majorities favor cutting taxes and balancing the budget. This might be called the Budgetary Trilemma. When asked whether they favor higher spending, lower taxes or a balanced budget, Americans answer “Yes.”

Back in the 1980s the GOP developed its own approach to victory in this game of scissors-rock-paper. The original Reagan revolutionaries were small-government conservatives with a “starve the beast” strategy. They would cut taxes first, and then take advantage of the clamor over the resulting deficits to cut spending. Reagan, however, flinched when it came to the deep cuts in both military and domestic spending that would have been necessary to balance the budget. As a result, the deficit tripled during his two terms. But the American public did not seem to care. They reelected him and Reagan left office on a wave of popularity.

As Mark A. Smith points out in his book “The Right Talk: How Conservatives Transformed the Great Society Into the Economic Society” (2007), during the Reagan years the Democrats and Republicans traded places on the deficit issue. In the New Deal era, when Democrats dominated the White House and Congress, the penny-pinching deficit hawks were mostly to be found in the minority Republican Party. But as early as the 1984 election, Walter Mondale tried to discredit Reagan by accusing him of fiscal irresponsibility. In his convention acceptance speech, Mondale declared:

Here is the truth about the future: We are living on borrowed money and borrowed time. These deficits hike interest rates, clobber exports, stunt investment, kill jobs, undermine growth, cheat our kids and shrink our future.

Whoever is inaugurated in January, the American people will have to pay Mr. Reagan’s bills. The budget will be squeezed. Taxes will go up. And anyone who says they won’t is not telling the truth.

I mean business. By the end of my first term, I will cut the deficit by two-thirds.

Let’s tell the truth: Mr. Reagan will raise taxes, and so will I. He won’t tell you. I just did.

This was a campaign speech that only accountants with green eye shades could love. Reagan won 49 states. Mondale won only his home state of Minnesota.

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