To quote the 40th president’s own words: “There you go again!” And indeed we do, as we enter the 2012 presidential election year. Virtually every “certified” conservative candidate, at every opportunity, now kneels in front of his or her base, and reverently says the magic words…“Ronald Reagan”. The applause never fails.
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While Reagan may appear as an iconic figure to those Republicans who solemnly invoke his name, the reality of his presidency was far different than portrayed by his avid admirers. And because the deifying of Reagan will now confront us as voters for many months ahead, a reality check is badly needed. In fact, to be well informed, probably imperative.
Ronald Reagan was elected in 1980, and in his 1981 inaugural speech, he set the tone for what would be a lasting dedication to conservative principles. In fact, it was even given a name: Reaganomics. In that speech, he proclaimed: “government is not the solution to our problem(s)…it IS the problem”. And with that proclamation, every Republican candidate has taken that gospel — pledging to outdo the others in hewing to the Reagan line. Less government; less taxation; fiscal responsibility; privatization of every activity possible – all with the promise of a better, more vigorous economy, and less government involvement. The only problem is it did not work quite that way.
Well, Reagan did hit the ground running with his program, and he lowered tax rates almost immediately – for some! He cut the TOP personal tax brackets from a high of 70% to 28% over his 8 years in office. BUT, he increased payroll taxes, as well as the effective tax rate on the lower 2 quintiles! If that is a tax cut…thanks, but no thanks. This is just a rehash of “trickle-down” economics, which has a doubtful history of success. In fact, George H. W. Bush called it “voodoo economics” in the 1980 election. On balance, the tax cuts never stimulated sufficient new revenues to offset the severe loss of tax revenue in the Reagan years, as you shall see. Nor did the government significantly shrink, despite the lessened revenues, and his election promises. In 1985 Federal outlays were 22.9% of the GDP – the highest from 1962 to the George W. Bush era.
In 1983 we had a serious recession – but in fairness to Reagan, we did have a decent recovery. However, from that point on the GDP growth during his tenure averaged only 3.4% — slightly lower than the annual average 3.6% in the post-WWII period. Not bad, but certainly no panacea as current candidates now believe and proclaim.
But that was not the worst of it. Reaganomics caused significant trade deficits, and even worse, MASSIVE budget deficits, with excessive military spending, not covered by compensating revenues. The United States, under Reagan, moved from a national debt of $700 billion when he first took office, to $3 trillion (with a “T”) debt when he was done (remember, that was in 1980’s dollars). We had gone in a few short years from the world’s largest international creditor nation, to the world’s largest debtor nation. So much for the vaunted Reaganomic program. And even Reagan later in his memoirs, said this was the greatest disappointment of his presidency.
Additionally, Reagan was always true to his conservative principles, but also had a streak of “disinterest” about him regarding economic affairs. Donald Regan, his Secretary of the Treasury, and later Chief of Staff was quoted as saying: “In the four years that I served as Secretary of the Treasury, I never saw President Reagan alone and never discussed economic philosophy or fiscal or monetary policy one-on-one…The President never told me what he believed or what he wanted to accomplish in the field of economics.”
So, what is this all about? No, it is not a broad indictment of the Reagan presidency, which is for historians to analyze in depth. (As an aside, he is generally ranked about in the middle by a composite of presidential ranking systems). But it is a valid and general critique of Ronald Reagan, to which all the current GOP candidates quote with reverence. On balance, canonized or not, Reaganomics was not such a glorious success. At least not to the scale today’s candidates proclaim.
And, at any rate, despite this reverence and fidelity, based on the reality of his presidency, I do not think America is ready for 4 more years of Ronald Reagan.