The Battle Over the Budget

In 1981 the United States government took a fateful turn away from fiscal responsibility and toward enormous federal deficits when the Congress enacted President Reagan’s economic program. The president campaigned in 1980 calling for enactment of across-the-board cuts in marginal tax rates of 10% each year for three years. He promoted a substantial increase in defense spending and proposed reductions in domestic discretionary spending. In winning a landslide election over President Carter, Reagan’s coattails brought into office the first Republican Senate majority since 1955.

The lone bastion of Democratic resistance to the Reagan program resided in the Democratically controlled House of Representatives. Even there, the Democrats’ majority was reduced to its lowest margin in a generation. While the Democrats’ party leadership was solidly liberal, led by iconic House Speaker Tip O’Neill, there remained over three dozen conservative southern Democrats who might be enticed to break from the party to support President Reagan’s program. The political battle in 1981 was for the votes of these “Boll Weevil” Democrats.

Ronald Reagan gives a televised address from the Oval Office, outlining his plan for Tax Reduction Legislation in July 1981. Photo courtesy of the Ronald Reagan Presidential Library.

At the center of this vortex was the House Budget Committee and its chairman, Oklahoma 1st District Congressman James R. Jones. Jones was a moderate Democrat who hoped to be able to compromise with the Reagan administration in order to fend off excessive cuts to Democratic program priorities. His election by the Democratic Caucus as Chairman of the House Budget Committee, was closely contested by David Obey, a liberal Democrat from Wisconsin. Jones found himself negotiating, not with the Reagan administration, but with his fellow Democrats as he sought to win House passage of a Democratic budget alternative.

The fight over the Reagan program came down to three major pieces of legislation: the First Budget Resolution for FY 1982; the Omnibus Reconciliation Act that implemented the Budget Resolutions reconciliation instructions; and the Economic Recovery Act that enacted major tax cuts. As Chairman of the Budget Committee, Jones was the key Democratic player on the budget resolution and reconciliation bills. As a member of the Ways and Means Committee and an established advocate for business-friendly tax reform, Jones was also involved in the development of the tax bill

This website draws upon materials in the James R. Jones collection to help explain the fight over the Reagan budget.  Each of the three major pieces of legislation is accompanied by a legislative history focusing on consideration by the House of Representative and by student narratives explaining aspects of the political struggle.  In the end, President Reagan won the battle; but the policy changes that resulted were only the beginning of a long budget war that is with us today.

1st Concur. Budget Res. (FY82)

  Omnibus Reconcil. Bill of 1981

Economic Recovery Act of 1981

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