Reagan vs. Clinton

Dear Dinesh,

       First, my apologies for taking a while to reply. The Thanksgiving holidays and some other work got in the way.
       But I must confess I was more dispirited than inspired by your last message. Your cheap shot at Clinton in your last line reflected, I fear, the difficulty you were having in making a substantive case. Your argument boils down to repeating, over and over, a syllogism: The Cold War ended under Reagan. Everything good that’s happened happened because the Cold War ended. Ergo, everything good that’s happened is Reagan’s doing. From your argument it follows automatically that anything good that happened in the Clinton administration could not possibly have anything to do with Clinton. At that level of generality, I could make an equally plausible case that the current good times have nothing to do with either Reagan or Clinton. Rather, we are in the 57th year of Franklin D. Roosevelt’s recovery. Come to think of it, that’s an easier case to make than the one you’re trying to put forward, since the social programs and economic stabilizers that FDR put in place are what prevented the recession in the early 1980s from getting completely out of hand. We haven’t had a Great Depression since FDR.
       But since there’s no box next to this exchange to vote for FDR, let’s go to some of your assertions. You say that the end of the Cold War is why the defense budget has dropped, which is why the deficit has dropped, which, in turn, you want to credit to Reagan. You simply don’t want to acknowledge that Reagan caused the big deficit in the first place. Reagan said in the 1980 campaign that he could cut taxes, raise military spending, and have no deficit. He was wrong, as his Republican primary opponents George Bush (“voodoo economics”) and John Anderson insisted at the time. It didn’t have to happen the way it did. Reagan could have kept the books in balance and still had his defense buildup if he hadn’t insisted on his huge tax cut. Or he could have had a modest tax cut and a less sweeping military buildup. As David Stockman asserted in his book, the size of the buildup was almost arbitrary, since the administration was more concerned with making sure it had a big percentage increase than with the particulars of what all the money thrown at the Pentagon would be spent on. Since Jimmy Carter had increased the defense budget already, the Reagan buildup had to be bigger than even Reagan himself originally intended.
       Now perhaps you want to argue that what led to the economic recovery was Reagan’s massive deficit. It was amusing in the Reagan years to hear conservatives who had spent lifetimes bemoaning deficits assert, of a sudden, that they really weren’t so bad. Keynes couldn’t make them believe in deficit spending, but the Gipper did. So go ahead and defend the deficits if you’d like, but don’t try to argue that the president who caused them should be credited with ending them.
       On economics generally: While total economic growth during the Reagan and Clinton years is about the same, private-sector economic growth is significantly faster under Clinton. (Private demand was up 3.6 percent a year under Clinton, compared with 3.0 percent under Reagan.) That’s because under Reagan, government–with the defense buildup and the big deficits–played a much bigger role in the economy than it does under Clinton. Imagine that.
       You should be wary of arguments about the “Reagan boom.” Economic growth in our country was higher in the 1950s, 1960s, and 1970s than it was in the 1980s–or, indeed, than it is now. I will not follow your line of argument in reverse by claiming that Reagan alone is responsible for slower growth. But be careful about exaggerating his achievements. And, by the way, both Reagan and Clinton have benefited, because there have been no oil-price shocks since the 1970s. I’m sure you’ll try to make an argument that Reagan deserves all the credit for that, too.
       You make a truly astonishing statement: “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.”
       First, congratulations: You are the first conservative I know to acknowledge that the Clinton tax increases were “modest,” and almost entirely on upper-income people. Please inform Speaker Gingrich of this. But the logic connecting your two sentences is missing. I know you didn’t do economics when you worked in the Reagan administration, but the fact that the Clinton administration failed to project that the deficit would drop as fast as it did is to its credit. There were no “rosy scenarios.” You can’t get by a simple fact: Without the provisions of Clinton’s 1993 budget, the deficit today would be at least $129 billion higher than it is, according to the Office of Management and Budget. All that was done before the 1994 elections. The post-1994 budgets made very modest further reductions in the deficit. The deficit would be higher still without the Bush cuts and tax increases.
       I would note in passing that you didn’t reply at all to what I said about tax reform, the Democratic role in passing it, and the fact that it reflected a popular revolt against tilting the tax code heavily toward the wealthy. Do you agree with me?
       Now, a couple of aspects of the Reagan years that you have chosen not to mention. First, Reagan campaigned hard on traditional values. “Family, work, neighborhood” was his powerful trinity. Problem is, the 1980s were a terrible time if you cared about such things as teen pregnancy, out-of-wedlock births, and the growth in single-parent families. Don’t believe me on this. Look at the very useful Index of Leading Cultural Indicators put together by your Reagan administration colleague Bill Bennett. A few of his findings for the 1980s: Teen-suicide rates, up; births to unmarried teen-agers, way up; child poverty, up; marriage rates, down; single-parent families (as a percentage of families with children), up; illegitimate births, up; percentage of children living with both biological parents, down.
       Bennett himself is probably closer to your argument on Reagan than he is to mine, but he has acknowledged that these findings pose a real problem for defenders of the 1980s. And he has also noted that during the 1990s, including the Clinton years, abortion rates declined, violent crime declined significantly, and teen sexual activity declined. AIDS deaths have also declined recently. (The one area where the numbers are going the wrong way now is drug use.) Now I will not claim that Clinton, all by himself, has ushered in a new period of social stability, or that Reagan is responsible for all those bad cultural indicators. But as Bennett says, it’s something with which Reaganites have to come to terms. When it comes to–please excuse the term–traditional values, we’re mostly better off today than we were 10 years ago.
       Finally, when you look at the areas of the budget that Reagan cut, the programs that got hit the hardest were those for the poor, and especially for the working poor. As the Center on Budget and Policy Priorities reported in 1984, “Low-income programs were reduced more than twice as deeply (in proportionate terms) as social programs not concentrated on the poor.” The study went on: “Overall, the low-income programs bore nearly one-third of all cuts made anywhere in the federal government even though they constitute less than one-tenth of the budget. No other part of the federal budget was cut so deeply.”
       Around the same time, the Urban Institute noted: “Because of the president’s emphasis on self-sufficiency and productivity, the administration might have been expected to give some emphasis to human resource programs (education and training, public service employment, nutrition programs, Medicaid and social services) as a means of addressing poverty and welfare dependency. Instead, these were the very programs in which the administration generally proposed the deepest cuts.”
       One last question: Was trading arms for hostages with Iran a good idea?