Reagan vs. Clinton

Dear E.J.,

       I appreciate your willingness to give Reagan credit for America’s victory in the Cold War. Reagan predicted it. He implemented policies to bring it about. And the wall came tumbling down. That may well turn out to be the most important political event of our lifetimes.
       Moreover, its economic effects have been profound. The proportion of the budget that the United States spends on defense has dropped sharply. That may be the single most important reason for the decline in the deficit. You didn’t contest this point when I made it the first time around, so I’ll take that to mean that you agree with me here.
       Another consequence of the collapse of the Soviet empire is that capitalism is spreading like wildfire around the world. American companies are raking in big profits at home and abroad. This juggernaut of economic growth–further stimulated by the Reaganite policies of lower taxes, deregulation, and privatization–has proved to be a windfall for the U.S. Treasury.
       When Reagan came to office in 1980, economic growth was at a standstill. Between 1983 and 1989 the U.S. economy grew at 3.5 percent. So it’s hard to deny the Reagan administration credit for the turnaround.
       Since 1989 the economy has continued to grow, although at a somewhat slower pace. The Bush recession was mild but rather long, and Bush’s tax increase almost certainly extended its duration. There is no contradiction in stating that Bush’s policies temporarily slowed, but did not fundamentally reverse, the “Reagan boom.”
       The Reagan-era turnaround was not achieved without pain. We seem to agree that Volcker’s inflation-fighting strategy was crucial. Yes, Carter appointed him. No, Carter didn’t pay a political price for his choice, because Volcker’s tight-money policies didn’t drive the country into a recession until 1982.
       It was Reagan who took the heat. But that wasn’t unjust, because Reagan publicly supported Volcker at a time when many supply-siders warned that Volcker’s policies were choking the prospects of economic recovery. Moreover, Reagan did appoint Volcker to a second term in 1983. By 1987 it was time to give a Republican appointee a chance. And of course Greenspan has continued in the Volcker tradition; his monetary policy seems designed, above all, to prevent the dragon of inflation from rearing its ugly head.
       I don’t see how you can credit the Bush tax increase of 1990 and the Clinton tax increase of 1993 with balancing the budget, especially when you consider that these tax hikes were more than compensated for by increases in domestic spending. If you look at the Clinton administration’s own projections, they show that Clinton anticipated a continuation of the $200-billion deficits of the Reagan era. So even the Clinton team recognized that their modest increases in taxes on upper incomes would not make much of a difference.
       Sure, some conservatives made dire predictions about Clinton’s fiscal policy that turned out to be exaggerated. But that’s because Clinton didn’t have the chance to continue down the path he started on. Clinton started out as a conventional tax-and-spend liberal, yet in 1994–smacked in the face by the Republican takeover of Congress–Clinton did a complete about-face and became something of a born-again Reaganite.
       History, Clare Booth Luce once said, will remember each president by a single line, such as “Lincoln freed the slaves.” I believe Reagan will be remembered as the man who led America to victory in the Cold War and helped revive the American economy and the American spirit after years of indefinable malaise.
       Any suggestions for what Clinton’s one-liner might be? It would be a real tragedy if Clinton was recalled by future generations only for his “distinguishing mark.”