Reagan vs. Clinton

Dear Dinesh,

       Your affection for Ronald Reagan is admirable. There’s so little gratitude in American politics these days. It’s good to see anybody on any side suggest that a politician deserves some credit for what he or she tried to do.
       And, yes, Ronald Reagan deserves some of the credit for the end of the Cold War and the collapse of the Soviet Union. But he is owed this credit not so much because of the military buildup (which started, in any event, under Jimmy Carter) as for his handling of the Euromissile crisis in the early 1980s, and his willingness to accept–long before many others, including me–that Mikhail Gorbachev was a genuine reformer.
       Still, I am shocked, shocked that a good conservative would claim that the substantial changes in the American economy over the last 15 years result not from the hard work and innovation of millions of individuals and companies but from the doings of one man in the White House. You seem prepared to assert that everything good that has happened since 1980 happened because of Ronald Reagan. Like so many claims about some lost Golden Age, this requires a heroic argument. It’s also an argument that’s hard to support.
       Rather than engage at the level of sweeping generality, let’s get down to particulars.
       1. You give great credit to Paul Volcker, the chairman of the Federal Reserve at the beginning of Reagan’s term, for ending inflation. For the sake of argument, let’s accept that’s true. It was Jimmy Carter, not Ronald Reagan, who appointed Volcker and suffered most of the political cost of doing so. When Reagan ran against “stagflation” in 1980, he was running not only against inflation but also against the rising unemployment that Volcker’s policies helped bring about. Many blue-collar Democrats defected to Reagan in 1980 because the Gipper’s buoyant talk of growth without pain sounded a lot better to them than Carter’s talk about “limits”–the very limits you praise Volcker for imposing on the economy to cure inflation. And by the way, Reagan was so grateful to Volcker that he failed to reappoint him to the Fed in 1987.
       2. You knock David Stockman’s claim that Reagan’s policies would lead to “$200 billion deficits as far as the eye could see.” Because the deficit is now almost closed, you say Stockman was wrong.
       There’s a small problem: You leave out everything that happened to undo the Reagan policies that caused the large deficits. Stockman, in fact, was right. The deficit is finally disappearing because Congress, over time, heeded his warnings. In 1982, Congress passed the Tax Equity and Fiscal Responsibility Act that repealed some of the excesses of the original Reagan tax bill. Then along came poor George Bush who broke his campaign pledge and, to the great fury of so many conservatives, signed a big tax increase in 1990. Then came the further tax increases of the 1993 Clinton budget, which so many supply-siders insisted would wreck the economy.
       Far from doing that, those tax increases brought the deficit down and helped get interest rates down, too. The misery index (inflation plus unemployment) is much lower now than it was in the best years of the 1980s. Dinesh, as an honest person, will you at least admit that a) the tax increases helped close the deficit, and b) the supply-siders were dead wrong in all their dire predictions about what the Clinton tax increases would do?
       3. An irresistible aside: When Bush raised taxes, supply-siders blamed the 1990-1991 recession, which they described in chilling terms, on the tax hike. Now, in seeking to give Reagan all the credit for the last 15 years (and to write Clinton out of the story entirely), these same supply-siders say that recession wasn’t serious–barely a blip in the era of “Reagan prosperity.” Which is it? Will you acknowledge that your argument requires your side to keep changing its story line in order to accommodate inconvenient facts?
       4. You credit Reagan with the tax reform of 1986. He and his Treasury Department do deserve some credit for that. But Democrats (former Sen. Bill Bradley and Rep. Dick Gephardt) largely shaped the bill itself. More to the point: Many Reaganites spent years trying to undo its essential element–that taxes on capital gains should be no lower (and no higher) than taxes on every other kind of income. Unfortunately, the capital-gains cutters finally got their wish in the 1997 budget, repealing one of the true achievements of the Reagan era. By the way, support for the tax reform was fueled by popular outrage over revelations that the original 1981 Reagan tax cuts had disproportionately benefited wealthy individuals and corporations. (And please don’t repeat the tired conservative claim that the share of the total tax take paid by the well-off went up in the 1980s. That’s so only because so much of the growth in wealth and income went to the best-off. Their real tax burdens went down.) Republicans like to accuse their opponents of “class warfare.” By endorsing tax reform, Reagan, at least, seemed to admit there was a problem.
       There’s more to say, but let’s start here. I look forward to your response, though please don’t toss in a lot of rhetoric about how “liberals” and “intellectuals” underestimated and hated Ronald Reagan. As you know, I neither underestimated him nor hate him. I rather appreciated his reminding Democrats that they give up the rhetoric of Rooseveltian optimism at their own peril. But as a great conservative president, John Adams, once said (and as Reagan repeated in his 1988 convention speech), facts are stubborn things.