Transcript The Reagan Revolution

The Reagan Revolution
•
•
“Conqueror of communism, sworn
enemy of statism, leader of unshakable
conviction and contagious optimism,
Ronald Reagan became one of history's
heroes long before his death.
At a time when patriotism was mocked,
he exposed the bankruptcy of modern
liberalism and proved that true liberty is
still a fighting faith….
In Ronald Reagan's two terms as
president, he gave America a
transfusion of his own optimism and
hope. He enkindled a sense of the
possible, rescuing America from
defeatism and much of the world from
tyranny. He restored our confidence in
the presidency itself, proving that
Jefferson's "splendid misery" could be
simply splendid. And -- not coincidentally
-- he helped create a safer, freer world.
For that, his nation will be eternally
grateful.”
– Heritage Foundation, 2004
•
“A sober review of Reagan's
presidency doesn't yield the
seamlessly conservative record
being peddled today. Federal
government expanded on his
watch. The conservative desire to
outlaw abortion was never
seriously pursued. Reagan broke
with the hardliners in his
administration and compromised
with the Soviets on arms control.
His assault on entitlements never
materialized; instead he saved
Social Security in 1983. And he
repeatedly ignored the
fundamental conservative dogma
that taxes should never be raised.”
– Washington Monthly, 2003
The Reagan Revolution
• 1) realignment of US to the Right (cultural
shift away from New Deal/Great Society) +
restructuring of Republican Party
• 2) Restored American patriotism +
confidence (Morning in America)
• 3) Reagonomics: supply-side economics,
free-market fundamentalism (Greenspan)
• 4) Washington Consensus: exporting free
market capitalism (IMF structural
adjustments)
• 5) End of containment consensus and
defeat of Evil Empire
I. Reagan Reordering
• “In this present crisis, government is not the solution to our problem;
government is the problem. From time to time we've been tempted to
believe that society has become too complex to be managed by self-rule,
that government by an elite group is superior to government for, by, and of
the people. Well, if no one among us is capable of governing himself, then
who among us has the capacity to govern someone else? All of us together,
in and out of government, must bear the burden.”
– 1st Inaugural
• “There is a threat posed to human freedom by the enormous power of the
modern state. History teaches the dangers of government that overreaches-political control taking precedence over free economic growth, secret police,
mindless bureaucracy all combining to stifle individual excellence and
personal freedom. Now, I'm aware that among us here and throughout
Europe there is legitimate disagreement over the extent to which the public
sector should play a role in a nation's economy and life. I know you're not all
as freedom-loving as me and Margaret Thatcher--but on one point all of us
are united: our abhorrence of dictatorship in all its forms.”
– Speech to British Parliament, 1982
HIGHLIGHTS OF REAGAN’S
PRESIDENTIAL APPROVAL
1981-1989
Start of Reagan Administration
4/81
Approve 67%
Disapprove 18%
Don't Know/NA 15%
Lowest approval 1/83
Approve 41%
Disapprove 47%
Don't Know/NA 12%
1984 Election 10/84
Approve 58%
Disapprove 35%
Don't Know/NA 7%
Start of second term 1/85
Approve 62%
Disapprove 29%
Don't Know/NA 9%
•
Highest mid-term approval 6/86
Approve 67%
Disapprove 23%
Don't Know/NA 10%
Highest mid-term approval 10/86
Approve 67%
Disapprove 25%
Don't Know/NA 8%
Initial Iran-Contra disclosures 11/86
Approve 46%
Disapprove 45%
Don't Know/NA 9%
1988 Election 10/88
Approve 61%
Disapprove 33%
Don't Know/NA 7%
End of Reagan Administration 1/89
Approve 68%
Disapprove 26%
Don't Know/NA 6%
Lee Atwater (strategist for Reagan
+ Bush I; mentor to Karl Rove)
• “Atwater: You start out in 1954 by saying, 'Nigger, nigger,
nigger.' By 1968 you can't say 'nigger' - that hurts you.
Backfires. So you say stuff like forced busing, states'
rights and all that stuff. You're getting so abstract now
[that] you're talking about cutting taxes, and all these
things you're talking about are totally economic things
and a byproduct of them is [that] blacks get hurt worse
than whites. And subconsciously maybe that is part of it.
I'm not saying that. But I'm saying that if it is getting that
abstract, and that coded, that we are doing away with
the racial problem one way or the other. You follow me because obviously sitting around saying, 'We want to cut
this,' is much more abstract than even the busing thing,
and a hell of a lot more abstract than 'Nigger, nigger.' “
Man vs. Message
• Majority disapproved of policies but supported the man
• Lost Senate (never held House)
• Unable change basic direction of government (at best
reduced rate of growth of gov't)
• Saved Social Security (1983) and left Medicare alone
• Republicans increasingly religious party and regional party
(South and Mountain West)
• Reagan ranked as mediocre president (mid-20s until
’99)Grover Norquist “Ronald Reagan Legacy Project”
let’s put him on Rushmore (right next to W!) and the $50!
– What did U.S. Grant ever do for Americans?
• Other than win the war, effectively emancipate the slaves during
Reconstruction, build up America’s industry, improve policy toward
Indians…
• II. Sunny Optimism
• Morning in America
Top Grossing Films 1980s
• Pre-Reagan
• Reagan
• Stripes (1981)
• An Officer and a
• Empire Strikes Back Gentleman (1982)
(1980)
• Rambo II (1985)
• 9 to 5 (1980)
• Top Gun (1986)
• Good Morning,
Vietnam (1987)
• BUT: Platoon
(1986), Wargames
(1983)
Fear of Japan
• Many saw decline US business acumen
and rise of Japan (see: Die Hard; Rising
Sun) and Germany
• Meager rise productivity
• “Masters of the Universe”: increasing
reliance financial sector for growth (S+L
scandal, mergers + acquisitions; see:
American Psycho)
III. Ending the Great Inflation
• 1981 Economic Recovery Tax
Act
• 25% cut across the board
• Benefited the wealthy most (top
marginal rates 70%50%)
• 1982: $200 B deficit
– One Flew Over the Cuckoo’s
Nest homeless (1/3)
• 1986 Tax Reform
– Top rates: 50%28%
Gross Domestic Product: Measure of national wealth
Post-WWII GDP Growth by
Administration
• #1: Kennedy-Johnson
(49 percent over eight
years)
• #2: Clinton (34 percent)
• #3: Reagan (32 percent)
• #4: Nixon-Ford (24
percent)
• #5: Eisenhower (21
percent)
P
Avg%
GDP
growth
by year
(3)
Truman
3.9
(9) Ford
2.55
(7) Ike
2.97
(6)
Carter
3.3
(2) JFK
4.65
(5)
Reagan
3.41
(1) LBJ 5.05
(11)GH
WB
2.125
(8) RMN 2.883
(4)
Clinton
3.725
(10)
GWB
2.51
Deficits: Keynesian Pumppriming
The Federal Reserve
• Paul Volcker (Carter
appointee)
• Fall 1979: raise interest
rates to fight inflation
recession 1982
• Summer 1982: lower
interest rates to speed up
economy recovery
(excess capacity)
• 1984: tighten up to prolong
slow growth
– Greenspan Bubbles (Reagan
appointee)
The Laffer Curve (Voodoo
Economics)
Real Income Growth, 1979-89
Reagan's Pragmatic Tax
Increases
• 1982: Oops! Deficits Undoes 1/3 1981 (one of
largest tax increases in US history)
• 1983: Social Security Reform Act: increase payroll
tax
• 1983 + 84: gasoline tax
• 1986: Tax reform—cut income but raised corporate
taxes
• Deregulation is always good S+L collapse
(1600+ banks failed 1980-1994; $160 B+ losses)
– Worse than the Teapot Dome (Harding) or Credit
Mobilier (Grant) scandals in terms of harm to the country
5. “No one wins. One side just
loses more slowly” --Prez