Reagan’s Record

Sorry to spoil the birthday party, but …

This Sunday commemorates the 100th birthday of Ronald Reagan, America’s (post-Kennedy) Presidential Sweetheart. Though forever embedded in our historical fabric as a swashbuckling Cold War hero, Reagan’s contributions may have been only mediocre, to say the least. In 2001, Michael Kinsley argued that Reagan’s social integrity may have created an idealized leader. 

Ronald Reagan in 1997

Ronald Reagan’s 90th birthday has set off a national debate about the Reagan presidency. Was it as wonderful as we thought at the time? Or, on the other hand, was it even more wonderful? Happy birthday to Mr. Reagan, a genial, well-meaning, patriotic man, who never (we presume) had oral sex near the Oval Office. A great leader, too, in the general view—and on the question of leadership, the general view is, by definition, hard to dispute. On most other subjects, though, objective fact may be worth consulting as well. On that basis, Reagan’s achievements as president appear in hindsight to be just about exactly as wonderful as I thought at the time. Not very.

The nutshell case for Reagan’s greatness is: 1) He ended the crisis of stagflation and malaise, restoring our country to prosperity and self-confidence. 2) He cut taxes and reduced the size of government. 3) He rebuilt America’s military strength and won the Cold War. 4) He lent dignity to the office, unlike a more recent ex-president one could name.

The case against the case takes a slightly larger nutshell.

Start with the economy. 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.

Hey, this is going to take a bigger nutshell than I thought. We’ll wrap it up next week. Or maybe we’ll wait for the great man’s 100th.