George H. W. Bush was serious about reducing the deficit and worked with congress to get this done. Unfortunately, to do so, he had to go back on his main campaign promise of no new taxes. In 1988, when candidate George Bush hit the campaign trail, there was great economic growth and he believed it would continue throughout his time in office. But instead, a recession began and by 1990, rising budget deficits, fueled by a growth in mandatory spending and a declining economy, began to greatly increase the federal deficit. Bush refused many times to raise taxes as a way to reduce the budget deficit, but was making no progress with a senate and house controlled by democrats. Eventually the Bush administration agreed on the 1990 omnibus reconciliation act. This act included a policy of 'PAYGO'. PAYGO required all increases in direct spending or revenue decreases to be offset by other spending decreases or revenue increases. The budget act, resulted in increased income tax rates. The act was signed into law by President George H. W. Bush on November 5, 1990. It was a huge blow to his supporters who were swayed to vote by his campaign slogan, "Read My Lips: No new Taxes". The New York Post responded with this headline: "Read My Lips: I lied".
In his first state of the Union Address, President George H. W. Bush, stressed his goal of reducing the deficit, and repeated his promise of no new taxes, just 10 months before he would increase them.
"In the new budget I sent up 2 days ago, the deficit is down to 1 percent of gross national product. That budget brings Federal spending under control. It meets the Gramm-Rudman target. It brings that deficit down further and balances the budget by 1993 with no new taxes. And let me tell you, there's still more than enough Federal spending. For most of us, $1.2 trillion is still a lot of money.
And once the budget is balanced, we can operate the way every family must when it has bills to pay. We won't leave it to our children and our grandchildren. Once it's balanced, we will start paying off the national debt."
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