21st Century Conservatives, Ronald Reagan, and the Problem of Political Amnesia
This is not about the current political climate or the Obama Administration and its endeavors. I’m not arguing for or against the Obama Administration or its policies because that is not the point of interest. Let me repeat: the point is not who is promoting good or bad policies (Democrats or Republicans), the effects of those policies, or any thing of the sort.
On the contrary, the interest here is fundamentally a point of history. In George Orwell’s 1984, the “Ministry of Truth” rewrote history to match whatever “the Party” declared, no matter its objective truth. In a recent article, Peter Beinart notes that a number of conservatives refuse to be outdone by Orwell’s fictional group and this is manifest in the party’s historical revisionism of the presidency of Ronald Reagan.
Beinart writing over at The Daily Beast describes what he calls “The Republicans’ Reagan Amnesia.”
Republicans love hallowing Ronald Reagan’s name. Too bad they know so little about the guy.
Last week in Hawaii, the Republican National Committee almost passed a resolution named after the Gipper. “Whereas President Ronald Reagan believed that the Republican Party should support and espouse conservative principles and public policies,” it declared, only candidates who complied with eight of 10 “Reaganite” principles would be eligible for party funds.
The GOP isn’t as close to a political rebirth as its boosters believe.
And what were those principles, exactly? No. 1—according to the resolution—was “smaller government, smaller national debt, lower deficits and lower taxes.” Let’s take those from the top. Smaller government: Federal employment grew by 61,000 during Reagan’s presidency—in part because Reagan created a whole new cabinet department, the department of veterans affairs. (Under Bill Clinton, by contrast, federal employment dropped by 373,000). Smaller deficits and debt: Both nearly tripled on Reagan’s watch. Lower taxes: Although Reagan muscled through a major tax cut in 1981, he followed up by raising taxes in 1982, 1983, 1984 and 1986. In 1983, in fact, he not only raised payroll taxes; he raised them to pay for Social Security and Medicare. Let’s put this in language today’s tea-baggers can understand: Reagan raised taxes to pay for government-run health care.
Then there’s plank number five: Reaganite candidates must “oppos[e] amnesty for illegal immigrants.” Really? Because if you look up the word “amnesty” in Black’s Law Dictionary, you’ll find a reference to the 1986 bill that Reagan signed, which ended up granting amnesty to 2.7 million illegal immigrants.
Then there’s foreign policy. Plank number six demands that candidates back the surges in Iraq and Afghanistan. But what did Reagan do in his biggest confrontation with jihadist terror? When Hezbollah murdered 241 U.S. servicemen in Beirut in 1983, the Gipper didn’t surge; he withdrew the remaining American troops, and fast. Plank number 7 calls for “effective [read military] action to eliminate” Iran and North Korea’s nuclear programs. But Reagan condemned Israel’s 1981 preventive strike against an Iraqi nuclear reactor. And plank number nine requires steadfast opposition to abortion. Yet two of Reagan’s three Supreme Court nominees voted to uphold Roe v. Wade. Turns out this Reagan guy wasn’t really that Reaganite after all.
Why does this Republican amnesia about Reagan matter? Because it shows that the GOP isn’t as close to a political rebirth as its boosters believe. Reagan succeeded because he married a reputation for principle with an instinct for pragmatism. When Republicans lost big in the 1982 midterm elections because Democrats accused them of wanting to privatize Social Security, Reagan abandoned the idea and instead made a deal with Democrats that raised taxes and saved the program. In 1984, when his advisers told him that Americans considered him too warlike, he responded with a series of breathtakingly dovish speeches about his desire to eliminate nuclear weapons that helped ensure his landslide re-election. In 1981, he nominated the socially moderate Sandra Day O’Connor to the Supreme Court, even though Jerry Falwell and other evangelical leaders cried betrayal.
That was the real Reagan, the one Republicans need to embrace if they’re to genuinely threaten Barack Obama’s chances of re-election. Instead, they’ve reinvented the Gipper as a Sarah Palin-style zealot. Party activists always want to believe they can win elections without compromising their ideological purity, and the GOP’s recent string of off-year victories has convinced the conservative base that most Americans are tea-baggers at heart. But the tea-bag movement is dominated by graying white Anglos, at a time when the American electorate is growing less white, less Anglo and less gray. Demographically, American politics is being transformed by the dramatic growth of Hispanics, and by the emergence of a vast (and heavily non-white) “millennial” generation, larger in number than the baby boomers. Both groups went heavily for the Democrats in 2004 and 2008. And in their economic and cultural views, both are light years away from the tea-bag GOP.
These realities will be easy to overlook this year, because minorities and the young turn out in lower numbers in midterm elections, and because when unemployment is at 10 percent, the party in power suffers no matter what. But ultimately, the GOP’s fortunes will rest on its capacity to make inroads in these two groups. The angry white geezer vote alone won’t do it.
That’s why many of the smartest conservative intellectuals—from David Brooks to David Frum to Ross Douthat and Reihan Salam—believe the GOP must become less ideologically doctrinaire. In this effort, the real Ronald Reagan could be a useful model. Of course, were he around today, he’d have a tough time getting funding from the RNC.
Michael Kinsley says much of the same in his take on “Reagan’s Record”:
The economic crisis of the late 1970s and early 1980s was double-digit inflation. Double-digit interest rates and a double-dip recession were the medicine we took to cure it. The doctor who administered the medicine was Federal Reserve Chairman Paul Volcker. Volcker was appointed by President Jimmy Carter, who fecklessly allowed inflation to develop and then (nobly? naively?) sacrificed his presidency to stop it. Reagan deserves a couple of points for not complaining too much as Volcker twisted the tourniquet. But Reagan’s ultimate thanks was to deny Volcker the third term he wanted.
Reagan hagiographers don’t even have a theory, beyond raw assertion, to explain how their man is supposed to have stopped inflation. They are happy enough to blame the pain of the actual cure on his predecessor while claiming credit for the prosperity that followed. That triumph and that prosperity—a record of economic growth over eight years second only to Clinton’s!—helped to renew the country’s spirit (as did the force of Reagan’s sunny personality and our great victory over the island superpower of Grenada). But what caused the prosperity?
Two things that clearly did not cause it are smaller government and lower taxes, because this legendary Reagan revolution barely happened. Federal government spending was a quarter higher in real terms when Reagan left office than when he entered. As a share of GDP, the federal government shrank from 22.2 percent to 21.2 percent—a whopping one percentage point. The federal civilian work force increased from 2.8 million to 3 million. (Yes, it increased even if you exclude Defense Department civilians. And, no, assuming a year or two of lag time for a president’s policies to take effect doesn’t materially change any of these results.)
Under eight years of Big Government Bill Clinton, to choose another president at random, the federal civilian work force went down from 2.9 million to 2.68 million. Federal spending grew by 11 percent in real terms—less than half as much as under Reagan. As a share of GDP, federal spending shrank from 21.5 percent to 18.3 percent—more than double Reagan’s reduction, ending up with a federal government share of the economy about a tenth smaller than Reagan left behind.
And taxes? Federal tax collections rose about a fifth in real terms under Reagan. As a share of GDP, they declined from 19.6 percent to 18.3 percent. After Clinton, they are up to 20 percent. It’s hard to think of variations in this narrow range as revolutionary one way or the other. For most working Americans, the share of income going to taxes (including FICA) went up even under Reagan.
Reagan enthusiasts say that what matters is marginal rates, which did decline significantly during his tenure. Of course, rates rose significantly under Clinton, which doesn’t seem to have done the economy any harm. Critics say that if Reagan’s tax cuts fed the 1980s prosperity, it was as an old-fashioned Keynesian stimulus, caused by the huge deficits the cuts produced. It’s easy to throw a party if you’re willing to triple the national debt.
But even if Reagan’s defenders are right that lower marginal rates were key, they’re misstating history a bit to give Reagan credit. The most dramatic rate reductions came in the tax reform of 1986. This bipartisan effort—led by Democratic Sen. Bill Bradley—was a response to public outrage at revelations that Reagan’s earlier tax cuts had left many wealthy individuals and profitable corporations paying no taxes at all.
In 1980, Jimmy Caner’s last year as president, the federal government spent a whopping 27.9% of “national income” (an obnoxious term for the private wealth produced by the American people). Reagan assaulted the free-spending Carter administration throughout his campaign in 1980. So how did the Reagan administration do? At the end of the first quarter of 1988, federal spending accounted for 28.7% of “national income.”
Even Ford and Carter did a better job at cutting government. Their combined presidential terms account for an increase of 1.4%—compared with Reagan’s 3%—in the government’s take of “national income.” And in nominal terms, there has been a 60% increase in government spending, thanks mainly to Reagan’s requested budgets, which were only marginally smaller than the spending Congress voted.
The budget for the Department of Education, which candidate Reagan promised to abolish along with the Department of Energy, has more than doubled to $22.7 billion, Social Security spending has risen from $179 billion in 1981 to $269 billion in 1986. The price of farm programs went from $21.4 billion in 1981 to $51.4 billion in 1987, a 140% increase. And this doesn’t count the recently signed $4 billion “drought-relief” measure. Medicare spending in 1981 was $43.5 billion; in 1987 it hit $80 billion. Federal entitlements cost $197.1 billion in 1981—and $477 billion in 1987.
Foreign aid has also risen, from $10 billion to $22 billion. Every year, Reagan asked for more foreign-aid money than the Congress was willing to spend. He also pushed through Congress an $8.4 billion increase in the U.S. “contribution” to the International Monetary Fund.
His budget cuts were actually cuts in projected spending, not absolute cuts in current spending levels. As Reagan put it, “We’re not attempting to cut either spending or taxing levels below that which we presently have.”
The result has been unprecedented government debt. Reagan has tripled the Gross Federal Debt, from $900 billion to $2.7 trillion. Ford and Carter in their combined terms could only double it. It took 31 years to accomplish the first postwar debt tripling, yet Reagan did it in eight.
If we look at government revenues as a percentage of “national income,” we find little change from the Carter days, despite heralded “tax cuts.” In 1980, revenues were 25.1% of “national income.” In the first quarter of 1988 they were 24.7%.
Reagan came into office proposing to cut personal income and business taxes. The Economic Recovery Act was supposed to reduce revenues by $749 billion over five years. But this was quickly reversed with the Tax Equity and Fiscal Responsibility Act of 1982. TEFRA—the largest tax increase in American history—was designed to raise $214.1 billion over five years, and took back many of the business tax savings enacted the year before. It also imposed withholding on interest and dividends, a provision later repealed over the president’s objection.
But this was just the beginning. In 1982 Reagan supported a five-cent-per-gallon gasoline tax and higher taxes on the trucking industry. Total increase: $5.5 billion a year. In 1983, on the recommendation of his Spcial Security Commission— chaired by the man he later made Fed chairman, Alan Green-span—Reagan called for, and received, Social Security tax increases of $165 billion over seven years. A year later came Reagan’s Deficit Reduction Act to raise $50 billion.
Even the heralded Tax Reform Act of 1986 is more deception than substance. It shifted $120 billion over five years from visible personal income taxes to hidden business taxes. It lowered the rates, but it also repealed or reduced many deductions.
According to the Treasury Department, the 1981 tax cut will have reduced revenues by $1.48 trillion by the end of fiscal 1989. But tax increases since 1982 will equal $1.5 trillion by 1989. The increases include not only the formal legislation mentioned above but also bracket creep (which ended in 1985 when tax indexing took effect—a provision of the 1981 act despite Reagan’s objection), $30 billion in various tax changes, and other increases. Taxes by the end of the Reagan era will be as large a chunk of GNP as when he took office, if not larger: 19.4%, by ultra-conservative estimate of the Reagan Office of Management and Budget. The so-called historic average is 18.3%.
By now it should not be surprising that the size of the bureaucracy has also grown. Today, there are 230,000 more civilian government workers than in 1980, bringing the total to almost three million. Reagan even promoted the creation of a new federal Department of Veterans’ Affairs to join the Departments of Education and Energy, which his administration was supposed to eliminate.
The Reagan administration has been the most protectionist since Herbert Hoover’s. The portion of imports under restriction has doubled since 1980. Quotas and so-called voluntary restraints have been imposed on a host of products, from computer chips to automobiles. Ominously, Reagan has adopted the bogus fair-trade/free-trade dichotomy, and he was eager to sign the big trade bill, which tilts the trade laws even further toward protectionism.
Reagan’s fans argue that he has changed the terms of public-policy debate, that no one today dares propose big spending programs. I contend that the alleged spending-shyness of politicians is not the result of an ideological sea-change, but rather of their constituents’ fiscal fright brought about by $250 billion Reagan budget deficits. If the deficit ever shrinks, the demand for spending will resume.
This is the Reagan legacy…
In Making Economic Sense, Murray Rothbard argued the same point in his article “Keynesianism Redux.”
One of the ironic but unfortunately enduring legacies of eight years of Reaganism has been the resurrection of Keynesianism…
Amidst the intellectual confusion, however, a few dominant tendencies, legacies from their glory days, remain among Keynesians: (1) a penchant for continuing deficits, (2) a devotion to fiat paper money and at least moderate inflation, (3) adherence to increased government spending, and (4) an eternal fondness for higher taxes, to lower deficits a wee bit, but more importantly, to inflict some bracing pain on the greedy, selfish, and short-sighted American public.
The Reagan Administration managed to institutionalize these goodies, seemingly permanently on the American scene. Deficits are far greater and apparently forever; the difference now is that formerly free-market Reaganomists are out-Keynesianing their liberal forebears in coming up with ever more ingenious apologetics for huge deficits [The Bush Administration maybe?]. The only dispute now is within the Keynesian camp, with the allegedly “conservative” supply-siders enthusiastically joining Keynesians in devotion to inflation and cheap money, and differing only on their call for moderate tax cuts as against tax increases.
Perhaps “Reagonomics” really was not that great and conservatives are (intentionally or not) misreading history and the figure of Ronald Reagan. If the libertarian criticisms are legit, we quite possibly would not have “Obamanomics” if it were not his Republican forerunner of the conservative no-no’s: big government and spending deficits. Herein lies another point of GOP commitment to Orwellian vice of doublethink, principally in the form of political amnesia...once again.