Ronald Reagan's Presidency




From "The Reagan Revelation" by Richard Norton Smith in 7 Feb 2011 issue of Time Magazine:
Before he became an icon, Ronald Reagan was a paradox: a complex man who appeared simple, at once a genial fundamentalist and a conservative innovator. As America's oldest President, he found his most fervent supporters among the young. The only divorced man to occupy the Oval Office, Reagan as President rarely attended church. He enjoyed a relationship with his own children best described as intermittent. Yet his name was synonymous with traditional values, and he inspired millions of the faithful to become politcally active for the first time. During eight years in the White House, Reagan never submitted a balanced budget or ceased to blame Congress for excessive spending. He presided over the highest unemployment rate since World War II and one of the longest peacetime booms ever.

[In foreign policy] ... Even among his White House staff, admiration for the President's achievements was mingled with a faint whiff of condescension. "He knows so little and accomplishes so much", marveled Robert McFarlane, the third of Reagan's six National Security Advisers.



Real successes of the Reagan presidency:
  • Fall of the Soviet Union (but was it accidental ?).

    Was the whole thing a result of mistaken beliefs ? A belief that the Soviets were ahead of us, or wanted to attack, so we need huge increases in our military.

    This resulted in the Soviets going bankrupt before the USA could; the USA turned out to have much better credit, maybe inexhaustible credit, in the eyes of the rest of the world. They are willing to buy more US Treasury bonds no matter how much we borrow and spend.

    But, did Reagan or any of his people ever say: "That was a deliberate strategy; we spent more so they would have to spend more and go bankrupt" ? I don't think so. Reagan and his people spent more on the military because they thought there would be war eventually.

    From "The Reagan Revelation" by Richard Norton Smith in 7 Feb 2011 issue of Time Magazine: "... his scorn for the prevailing doctrine of mutually assured destruction". So the military buildup wasn't to maintain a balance.

    And the fall of the Berlin Wall wasn't a deliberate policy decision of the USSR, in reaction to pressure from USA. It was a result of miscommunications and confusion among the East German politburo spokesman, media, and local guard, who reacted to crowds of East Germans building up by saying "heck, open the gates" (see Wikipedia's "Berlin Wall"). It happened about 2.5 years after Reagan's "tear down this wall" speech (a great line, no doubt about it).

    Also aiding in the fall of the Soviet Union: their terrible political and economic system (falling to ground of its own weight), and declining world commodity prices (food, oil) in the 80's (they were a net exporter).

  • Made Americans feel better and more confident and optimistic (a real achievement).

  • Got dictators out of Phillipines and Haiti.

  • Changes to make Social Security more solvent.


Claimed successes that really are failures:
  • Smaller government (but actually made it bigger; national debt more than doubled, added 258K workers to federal workforce).
    Alex Park's "These Charts Show How Ronald Reagan Actually Expanded the Federal Government"

  • Started the "tax-cuts" supply-side mantra.

    Taxes are fine if we get benefits that outweigh the costs.
    A mindless "every tax is evil" attitude is crazy.
    And cutting taxes without cutting govt spending is a recipe for huge debt and an eventual crash.

    People claim that Reagan cut taxes and that made the economy soar.

    But David Stockman says in John Meroney's "'We're Going to Have a Crisis': David Stockman's Stark Warning for America":
    ... Republicans claim that we had this great Golden Age in the 1980s, that there was a boom in the 1990s, and that everything was going well during the George W. Bush era until some mysterious comet came in from deep space and caused a meltdown in 2008. My argument is that this was mostly a phony prosperity built on massive additions to public and private debt. That so-called prosperity came from the printing press in the Eccles Building run by Alan Greenspan and Ben Bernanke. The "prosperity" didn't come from tax cuts made by Republican policy makers.

    ...

    [Reagan's] defense build-up was unnecessary -- most of it went into a vast conventional armada of ships, planes, and tanks that could be used to invade places such as Iraq and Afghanistan and had nothing to do with the so-called Soviet threat. I would give him terrible marks for being so stubborn and insistent in that defense build-up.

    ...

    He had a vision of trying to shrink government, but every time some real tough choices came along, he walked away from them because the political heat was so great.
    And Stockman in NPR interview 2010:
    The military budget got out of control, and the tax cuts went to special interests as much as they did to the broad public.
    And Stockman in a 2013 interview said something like "the Reagan prosperity was due to hugely increased military spending, not tax cuts".

    From John Cassidy's "Reagan and Keynes: The Love That Dare Not Speak Its Name":
    On being elected in November, 1980, Reagan inherited an economy that was gingerly emerging from a slump: taking the year as a whole, the economy contracted by 0.2 per cent. Like any good Keynesian, the new President's response was to promise a substantial stimulus package. This was duly delivered in the form of a substantial military buildup and broad tax cuts, the latter constituting the central feature of the Economic Recovery Tax Act of 1981.

    Of course, Reagan and his backers portrayed the tax cuts not as a traditional Keynesian remedy but as part of a supply-side revolution. Many of them, doubtless, believed this description. But the economically literate members of the Administration, such as Murray Weidenbaum and David Stockman, were well aware that the most immediate impact of the tax cuts would be to boost the level of demand in the economy and to raise the budget deficit. To be sure, some Keynesians would argue that boosting government spending is a more effective way of raising demand than cutting taxes, but that is nitpicking. From John F. Kennedy to Barack Obama, Democratic Keynesian Presidents have also used tax cuts to revive the economy.

    In the Reagan Administration, some true believers were convinced that the rise in the budget deficit would be short-lived: lower tax rates would stimulate so much growth that tax revenues would eventually rise well above their pre-tax-cut levels: this was the "Laffer curve" theory. The realists, such as Stockman, hoped that the deficits would force Congress to cut spending: this was the "starve the beast" theory.

    Unfortunately, for the Reaganites, neither theory panned out. To begin with, they hadn't reckoned with Paul Volcker, the imperious chairman of the Fed, whose crusade to eliminate inflation involved raising interest rates to twenty per cent. This monetary shock overwhelmed Reagan's fiscal stimulus and plunged the economy into another recession, which began in July, 1981, and lasted until the end of 1982. As the budget deficit soared, the orthodox (and anti-Keynesian) move would have been to embrace austerity policies and slash spending. But Reagan's heart wasn't in it. Under pressure from Republicans in Congress who were worried about the midterms, he agreed, in 1982, to let over-all spending (not just spending on the military) rise considerably.

    This trimming enraged some of his conservative supporters. A few of the early enthusiasts of Reaganomics, including Weidenbaum, left the Administration. Others, such as Stockman, stayed on to fight a losing fight. Government outlays continued to rise. In 1979, the year before Reagan was elected, over-all government spending came to 19.6 per cent of G.D.P. In 1989, the year after Reagan left office, spending was 20.5 per cent of G.D.P.

    From Kimberly Amadeo's "President Ronald Reagan's Economic Policies":
    Reagan and Deregulation

    Reagan was applauded for continuing to eliminate the Nixon-era price controls. These were blamed for constraining the free-market equilibrium that would have prevented inflation. Reagan further removed controls on oil and gas, cable television and long-distance phone service, as well as interstate bus service and ocean shipping.

    Bank regulations were eased. In 1982, the Garn-St. Germain Depository Institutions Act was passed, which removed restrictions on loan-to-value ratios for Savings and Loan banks. Reagan's budget cut also reduced regulatory staff at the Federal Home Loan Bank Board. As a result, banks invested in risky real estate ventures (sound familiar ?). Reagan's deregulation and budget cutting contributed to the Savings and Loan Crisis of 1989.

    Import barriers were actually increased, as Reagan doubled the number of items that were subject to trade restraint from 12% in 1980 to 23% in 1988. Little was done in other regulations affecting health, safety, and the environment. In fact, although Reagan reduced regulations, it was at a slower pace than under Carter. (Source: William A. Niskanen, Reaganomics, The Concise Encyclopedia of Economics)

    Did Reagan Reduce Government Spending ?

    Despite campaigning on a reduced role for government, Reagan wasn't as successful as he was at tax cuts. During his first year, he cut domestic programs by $39 billion. However, he increased defense spending to achieve "peace through strength" in his opposition to Communism and the Soviet Union. He was successful in ending the Cold War, with the famous quote "Mr. Gorbachev, tear down this wall." However, to accomplish these goals, Reagan wound up increasing the defense budget by 35%.

    Reagan did not reduce other government programs. He expanded Medicare, and increased the payroll tax to insure the solvency of Social Security. Under Reagan, government spending increased 2.5% annually. By the end of Reagan's two terms, the national debt had more than doubled.



Failures:
  • Supported apartheid regime in South Africa by refusing to sign up for sanctions.

  • Started the "government is the problem" mindset that still poisons our country.
    Sure, there are lots of bad things about government. So fix it. But don't pretend that killing it is some kind of solution.
    And Reagan was hypocritical about it anyway: he was happy to expand the part of government that he liked (the military). He borrowed to finance his military expansion and tax cuts, guaranteeing that government would be taking more money from future taxpayers to pay the interest or pay off the debt.

  • Started the hypocritical "starve the beast" mantra.
    But Reagan, and the people who say it today, really mean "increase the parts of govt that I like, and starve the parts that my opponents like".

  • Put money into "missile defense", a goal that he was told wouldn't work, that didn't work, and still doesn't work 30 years later.

  • Anti-union policies.

  • Anti-environment and anti-science policies.


Not sure if it is success or failure:
  • On nuclear weapons, apparently Reagan changed from a cold-warrior attitude to a sincere desire to reduce the numbers of nuclear weapons. I'm not sure he did anything to work on that issue. His missile-defense fantasy probably set the wrong direction.


Not his fault:
  • ???




John Fugelsang celebrates Reagan's birthday by remembering what 'Fox News wants you to forget'
Joshua Green's "Reagan's Liberal Legacy"
Kurt Eichenwald's "30 Years of Conservative Nonsense, An Explainer"
William Leuchtenburg's "Behind the Ronald Reagan myth: 'No one had ever entered the White House so grossly ill informed'"
"Hello, America"



From discussion on reddit:
> ELI5: Why is Ronald Reagan held to be one of the
> best US presidents, even with scandals such as
> Iran-Contra that would have destroyed the reputation
> of other presidents?

...

He was really, really, likable. He filled the stereotype of a friendly old grandpa very well, so many people are willing to overlook his scandals.

The modern conservative movement holds him up as an example of all that a US president should be. His actual actions aren't even that consistent with modern conservatism, but again, he's likable so people are willing to overlook that.

...

Reagan is perceived as winning the cold war and restoring american prestige on the world stage. He is also perceived as leading the US economy out of its "stagflation" period. Both of these fixed issues encountered Jimmy Carter's completely lackluster presidency.

However, if we really look at the data, we see that Reagan didn't actually cause any of these things to happen: he was just lucky and hired the right people. The Soviet Union collapse was pretty much inevitable. Reagan's increased defense spending didn't change much in the total political calculus. Furthermore, the end of Stagflation has more to due with the actions of Volker and his successor Greenspan at the Fed. Both of them decided to focus on inflation, eventually raising the prime rate to 21% (in contrast today it pays about 3.25%). In the meantime, their actions caused a pretty serious recession, although they did eventually bring inflation down below 2%. The economy eventually recovered after inflation was defeated.

...

Reagan's reputation in some circles was largely the consequence of three fortuitous events: the onset of Alzheimer's disease, which removed him from public appearances and at the same time made it impolite and impractical for critics to harp too much on the flaws of his administration; a follow-on GOP President who was tarred with the blame for the Reagan administration's failed policies; and, the dedicated efforts of men like Grover Norquist, who rebranded him with a "Great American President" narrative that bears little resemblance to history.

...

Ronald Reagan is widely believed to have won the cold war with his excessive spending leading to a bankrupt USSR. He is also responsible for starting the US' massive debt starting with 8 trillion dollar debt at the end of his term. Whether or not he was actually a good president is widely debated, but because he 'won' the cold war, many citizens like him.

...

Because the only other [Republican] choices in the last 100 years are Bush (just no x2), Eisenhower (too old/cranky), Hoover (Great Depression), or Coolidge (who remembers ?). [Also, Nixon (Watergate).]

Conservatives have to rally somewhere ... Reagan is definitely it.



Someone else's take on it:



My response to someone, comparing Reagan and Obama, 12/2013:
As I see it, the situations of Reagan and Obama were quite different. Reagan came into office with a "bad" economic situation: high inflation and high interest rates and high unemployment, a "malaise". Obama came into office just after a HUGE crash, the biggest crisis since the Great Depression, many economists predicting it could be worse than the Great Depression, some predicting domino-style collapse of the whole international capitalist system. Obama was handed a policy already half-implemented: massive bailouts of corporations and big banks, enormous deficit spending. And first 9 months of his term (as with all presidents) was operating under budget enacted under previous president.

During Reagan's terms, did a lot of big, bad economic events happen around the world ? I don't remember any, maybe I'm wrong. During Obama's terms, the Eurozone melted down, Japan got hit by Fukushima disaster, Thailand's factories got hit with major floods (more serious than it sounds, turns out most hard drives are made there).

At beginning of Reagan's terms, were we in any wars ? I don't think so. Obama was handed TWO major, decade-long fiascos.

Obama also was handed locked-in tax cuts, grid-locked Congress, Tea Party fighting to destroy the government. I don't think things were so bitter in Reagan's time.

Both presidents ran deficits, added greatly to the national debt. But Reagan was really the START of deficit spending; Cheney said "Reagan proved deficits don't matter". Reagan started us down the path to the massive wealth inequality we have today. Reagan increased federal workforce by 258K workers; Obama increased it by 2K.

All of this spells to me: Reagan took a mediocre economic situation, good foreign situation, and got the economy going through deficit spending but set us on some bad paths. Obama took a catastrophic economic situation and very bad foreign situation, and has been fixing things.









Reagan on religion



Seth Rosenfeld's "Ronald Reagan: Informant"



Please send any reasoned disagreements to me.





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