Reagan achieved a sort of sainthood among classical liberals for vanquishing the stagflation of the 1970s and ringing in a new era of free markets and liberty. Never venerate a politician, however. Politicians always lie.
‘Government exists to protect us from each other. Where government has gone beyond its limits is in deciding to protect us from ourselves.’
‘I’d like to suggest there is no such thing as a left or right. There’s only an up or down: up, man’s age-old dream, the ultimate in individual freedom consistent with law and order, or down, to the ant heap of totalitarianism.’
‘I hope we once again have reminded people that man is not free unless government is limited. There’s a clear cause and effect here that is as neat and predictable as a law of physics: As government expands, liberty contracts.’
‘The most terrifying words in the English language are: I’m from the government and I’m here to help.’
‘How do you tell a Communist? Well, it’s someone who reads Marx and Lenin. And how do you tell an anti-Communist? It’s someone who understands Marx and Lenin.’
‘It isn’t so much that [US left-wing] liberals are ignorant. It’s just that they know so many things that aren’t so.’
‘We don’t have a trillion-dollar debt because we haven’t taxed enough; we have a trillion-dollar debt because we spend too much.’
‘Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.’
I’ll stop with the quotations, now. There’s only so much t-shirt-worthy delight one can stand before lunch.
Cult hero
It’s easy to see why Ronald Reagan, the Republican US president from 1981 to 1988, became such a cult hero among libertarians and classical liberals who believe in free market capitalism and small government. (I’ll use “Libertarian” in this column, to avoid confusion with America’s illiberal left-wing social “liberals”)
After the dismal stagflation of the 1970s, caused first by Richard Nixon’s price and wage controls, and later by the oil crisis, Reagan inherited double-digit consumer price inflation and central bank interest rates, both at all-time record highs, from his Democratic Party predecessor, Jimmy Carter.
When Reagan took office, he ordered massive tax cuts and began to deregulate the economy. His chairman of the Federal Reserve, Paul Volcker, started to slash interest rates. Within two years, inflation was down from 12% to 3%, the Federal funds rate had halved from 18% to 9.25%, tax rates were down 23% on aggregate, and GDP growth – after a nasty recession during which unemployment rose painfully – began a sustained boom that would last until the early 1990s.
By the end of his presidency, seventeen brackets of income tax, topping out at 70%, had been reduced to two brackets, of 15% and 28%, respectively. The Reagan tax cuts were the largest in US history, and set the stage for three decades of almost-uninterrupted economic expansion.
Oh, and while he was doing all this, the power of his shout across the Berlin Wall – ‘Mr. Gorbachev, tear down this wall!’ – brought down the wall, the mighty Soviet Union, and the entire edifice of international communism.
How awesome can one guy get?
‘But wait,’ I hear a well-trained libertarian geek heckle from the back row, ‘he was a politician, so by definition he couldn’t have been awesome.’
Well spotted, my libertarian friend. The account above is roughly correct, but it is far from complete. It omits enough to fill a book. And what it omits does not reflect well on Reagan’s libertarian credentials.
Spendthrift
Having attacked Carter during the 1980 election campaign over his free spending, and having campaigned since the 1960s against the broad social spending embodied in Lyndon B. Johnson’s “Great Society” programmes, one would think that Reagan might give effect to his stated belief that government had ‘spent too much’.
Instead, all his supposed budget cuts were vapourware. They were political lies. They were cuts in projected future spending, rather than cuts in actual current spending. This is how all politicians “cut spending” without actually cutting spending.
By the end of his two terms, US government spending made up 28.7% of national income, up from 27.9% when he took office. The increase in spending, at 3%, was more than twice the increase of 1.4% under presidents Gerald Ford and Jimmy Carter combined.
And it wasn’t just that Reagan virtuously cut social spending, but blew the savings on the arms and space races which would bring about the collapse of the Soviet Union.
Instead of abolishing the Department of Education, as he had promised, its budget had doubled during his terms of office. The cost of farm subsidies increased by 140%. Foreign aid more than doubled. Social Security spending rose by 50%. Medicare spending almost doubled. Overall, federal entitlements, which amounted to $197.1 billion in 1981, rose to $477 billion by 1987.
Whereas Ford and Carter had doubled the federal debt, Reagan tripled it, from $900 billion to $2.7 trillion. His economic policy can be (and has been) described in many ways, but ”austerity” is not one of them.
Taxman
Although it is true that personal income tax was slashed dramatically under Reagan, the overall tax take hardly decreased at all, from 25.1% of national income in 1981 to 24.7% in 1988. Where did he get that money?
While ordinary voting Americans were no doubt delighted with their well-publicised tax cuts, Reagan largely replaced these taxes with hidden taxes on business, fuel, interest, dividends, and, to quote the supposedly libertarian president himself, anything that moves.
On regulation, Reagan’s record is also mixed. Many of the deregulation achievements he trumpeted actually began under Carter, and Reagan made up for them by significantly increasing health, safety and environmental regulation. This dedication to ‘freedom from risk’ doesn’t exactly chime well with his stated opposition to government protecting people from themselves.
For good or ill, on balance, the economic costs of regulation grew under Reagan.
So did the civil service bureaucracy, by almost a quarter of a million people, to bring the total to nearly three million government employees. And instead of dismantling the Departments of Energy and Education, as he had promised voters, he constructed the entirely new Department of Veterans’ Affairs.
On trade, too, Reagan’s record is disappointing. In public, he said: ‘Our trade policy rests firmly on the foundation of free and open markets. I recognize … the inescapable conclusion that all of history has taught: the freer the flow of world trade, the stronger the tides of human progress and peace among nations.’
Let’s hear it for the Great Communicator. In reality, however, he bemoaned Japan’s success at manufacturing efficient and cost-effective automobiles, and promised the floundering US motor industry that he would slow the flow of foreign imports. He slapped a 100% import duty on Japanese electronics, ‘to enforce the principles of free and fair trade.’
He doubled the proportion of imports under some sort of restriction, whether they were tariffs, quotas or so-called “voluntary restraints”. One of his last acts in office was to let perhaps the biggest omnibus trade protection bill since Herbert Hoover pass without challenge.
All of this is entirely consistent with his record as governor of California, from 1967 to 1975. Under Reagan, the state’s budget increased by 122%, compared to an increase of 130% under his ‘free-spending’ predecessor. The state bureaucracy grew by 22%, from 158 000 to 192 000 people. When Reagan took office he enacted the largest state tax increase in California’s history, leaving no tax stone – income, sales, corporate, bank, liquor, and cigarettes – unturned. Before vacating the office, he raised taxes again, twice.
Moral Majority
Murray N. Rothbard, during Reagan’s presidential campaign, warned of his two faces.
‘The government, [conservative politicians] contend, must be used as an instrument of moral enforcement which in practice means cracking down on illicit sex, upholding the family, and bringing back prayer to the public schools. Pornography and prostitution are to be outlawed, gays forced back into the closet, and, in general, we are to return to the concept of this country as a Christian America, suitably scrubbed, of course, to make room for Judeo-Christians.’
Reagan was not shy about his religious faith and its relationship to government. ‘Freedom prospers when religion is vibrant and the rule of law under God is acknowledged,’ he claimed, bewilderingly.
‘Sometimes when I’m faced with an atheist, I am tempted to invite him to the greatest gourmet dinner that one could ever serve, and when we have finished eating that magnificent dinner, to ask him if he believes there’s a cook,’ he quipped, demonstrating all the philosophical depth of a teenager.
‘Within the covers of the Bible are the answers for all the problems men face,’ he intoned. (For an example, see 1 Timothy 2:12.)
Reagan was closely aligned with the Moral Majority, a fundamentalist Christian movement led by the televangelist Jerry Falwell, which had campaigned hard for Reagan in 1980. It – and he – believed the country’s traditional moral values were being undermined by the civil rights movement, the women’s movement, the gay movement, sexual liberation and the teaching of evolution.
As might be expected of a religious conservative, Reagan didn’t even mention the AIDS epidemic until 1985, four years after it started. His press secretary, when asked about AIDS in 1982, laughed to hear it described as ‘the gay plague’, and responded with, ‘I don’t have it’, eliciting more laughter.
Reagan, for his part, cut budgets to the Centers for Disease Control and the National Institutes of Health.
It wasn’t until after Reagan’s close personal friend, Rock Hudson, died of AIDS late in 1985, that he was forced to take it more seriously. Even so, the first ‘America Responds to AIDS’ awareness campaign was only launched at the end of 1987, by which time almost 50 000 people had been infected.
After all, his reasoning likely went, why bother to save sinners from the consequences of their own actions?
Don’t venerate politicians
This column is getting rather long, so I’ll skip Reagan’s apparent appetite for war and foreign confrontation. To his credit, he did win the Cold War. On the other hand, he spent a fortune doing so, and his warmongering got him neck-deep in the Iran-Contra scandal, as well as various proxy wars of dubious importance.
If there is a moral to this story, it’s that no politician is to be trusted. For all Reagan’s great communication and performative actions, he was duplicitous and inconsistent, and achieved far less than he might otherwise have done.
He was a great conservative, but conservatives in office always prove to be reluctant or unable to deliver on the economic liberalism they profess on the hustings, and are openly hostile to personal and social liberalism.
Libertarians and classical liberals who view both economic and social liberty as fundamental moral principles should be wary of hitching their wagon to a conservative, however silver-tongued he might be.
The views of the writer are not necessarily the views of the Daily Friend or the IRR
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