Ronald Reagan had a sense of grace and a way with words that could charm friend and foe alike – something other conservatives might pay more attention to. Conservatives love to say Reagan stuck to his principles and focused on three objectives: (1) ending the Soviet empire; (2) cutting taxes; and (3) reducing the role of the government. The Soviet empire did end but doesn’t seem a stretch that Reagan caused this collapse? Won’t historians record that it collapsed because of its own internal problems?
As far as (3) – what are the conservatives even talking about? Government spending as a share of national income went unchanged under his tenure. And as such, taxes were not cut – only deferred for Bush41 and Clinton to address the massive Reagan deficits. As a pro-growth liberal, Reagan’s “work, save, and invest” were nice words but his fiscal policy lowered saving and investment and hence lowered long-term growth. Alas – Bush43 emulates Reagan and not Bush41.
But the role of government extends beyond its level of spending. For example, Paul Krugman as one of his economic advisors advocated that Reagan stick to free trade principles. Alas, the President did not just as Bush43 talks free trade but practices protectionism. Reagan did continue the liberalization of financial institutions that started in the 1970’s (conservatives often forget that Jimmy Carter was also for less government regulation in many respects) but failed to heed the warnings that the nature of deposit insurance would create a moral hazard problem if it was not addressed before deregulations. And yet Reagan ignored the mounting FSLIC problem leaving this too for Bush41 to clean up.
But Reagan did ask Alan Greenspan to chair a Social Security commission that had the foresight to raise payroll contributions to fund the retirement benefits promised to the Baby Boomers. This part of Reagan’s legacy is rarely mentioned by his conservative fans. But it should be – especially as some today wish to fund Bush43’s tax cuts for capital income by converting the payroll contributions for retirement into payroll taxes to pay down the General Fund deficit. Let’s hope this part of the Reagan legacy is not destroyed by the current President who otherwise emulates Ronald Reagan.