Tag Archives: Ronald Reagan

Reagan and Rand

It is easy to forget that Ronald Reagan was a radical. He was guided by conviction rather than consensus. Reagan is remembered for revitalizing the economy and for his bold determination against the Soviet Union, while less is said of his intellectual and philosophical foundations. Free markets, the moral supremacy of capitalism to socialism and an insistence that the citizen is above the state; these ancient principles had been steadily traduced over time by those who believed them anathema to egalitarianism. They were radical principles for their time because in order to reverse the postwar drift towards democratic socialism, radical change was needed.

In many respects, the modern conservative revolution was a visceral backlash to the systematic undermining of the American ideal. The “postwar consensus” that reigned in the western world until 1979 centered around managed economies and massive state subsidization. Democratic capitalism had only served to unleash dangerous elements of nationalism and profit-seeking which inevitably culminated in disastrous war. This idea was so prevalent among elites that the thought of a different way never really emerged. In Britain and the Unites States, this consensus led to stagnation, inflation, and loss of confidence. A neutral observer would have been hard pressed to conclude during the seventies that the Soviet Union was destined for defeat.

The left reacted to the Reagan agenda with horror because they understood that it was different from prior Republican agendas. Unlike his predecessors, Reagan sought to weaken progressive government creations such as the punitive income tax rate and activist regulation. His proposal to freeze domestic discretionary spending went against the very fiber of bureaucratic being. “Government is not the solution to our problems; government is the problem” was an indictment of the administrative state, and as a result the left were painfully aware that the Reagan agenda was an assault on decades of progressive achievement.

Time has dampened the decibels of Reagan outrage and we are now far enough removed from the eighties that defiance has been replaced by begrudging acceptance. Outside of Bernie Sanders, no one in the Democratic Party is clamoring for a return to the seventies and its high inflation, gas shortages, price controls and general malaise. No one on the left openly complains about the west’s triumph in the cold war or makes nuclear weapons a cri de coeur. “Reagan Democrats” has no modern corollary with the right, much as our media would like to rewrite history to include a corollary in the form of Clinton or Obama Republicans. But they don’t exist. Naysayers like Paul Krugman continue to distort the legacy, but for the most part the left has abandoned its Reagan defamation project and settles now for another narrative besides Reagan the Failure. Now it is Reagan the Moderate.

It is an irresistible trolling device for partisans out to make conservatives squirm. Saying “Reagan couldn’t get elected in today’s Republican Party” because of the extremism of the Tea Party is guaranteed to gall the right, not because it is an uncomfortable truth difficult to square with Reagan mythology but because it is a lie. When Reagan challenged incumbent Gerald Ford in the 1976 GOP primary, the establishment freak-out was immense. Reagan was the standard-bearer for the Goldwater remnant, that leftover segment of stubborn holdouts to mid-century collectivism that balked at every bipartisan expansion of government. Needless to say, Goldwater conservatism did not enjoy establishment cache. It did not play well in 1964 – this ad might have had something to do with it – but neither did defeat signal its doom. Reagan’s bold ruffling of establishment feathers in ’76 likewise did not achieve overnight success, but it planted an ideological flag in the ground. By the time he reached the Oval Office Reagan’s conservative agenda finally proved accessible thanks to the tumult of the seventies amounting to one long primal scream for a different course. The electorate’s embrace of Reagan’s message was not a product of the candidate moderating his positions or of “moving to the center” but an explicit endorsement of the radical experiment on offer.

Rand Paul’s agenda for 2016 is as radical as Reagan’s in 1980. It commits to eliminating elements of the Washington Leviathan; not curbing, not managing more efficiently, not making leaner at the margins, but eliminating. The mission is to make parts of the administrative state go the way of the parrot. Among those agencies that will cease to be in a Rand Paul administration are the Departments of Education, Commerce and Energy. Expect the IRS, EPA and Departments of Labor, Agriculture and Interior to do with smaller budgets and fewer workers. Beyond the paring of departments and bureaucracy, Paul proposes a 14.5% flat tax with only a couple deductions as well as elimination of the payroll tax. He aims to “turbocharge the economy” by lowering the tax burdens for all while ending crony privilege and special interest prominence. Paul is not a perfect embodiment of the free market ideal, but neither was Reagan. However, each represents the vanguard of conservative rebellion at their respective times and speaks on behalf of intellectual and grass roots conservatives. Ultimately, what makes Rand the modern version of Reagan is the moral imperative threaded through his government critique.

Nowhere is this moral clarity more on display than in Paul’s focused drive to rehabilitate the Bill of Rights in popular Americana. Libertarians hold the founding principles particularly dear for their discrete, almost obsessive concern over the separation of powers. Far from the greedy landed gentry of progressive fever dreams, the founders were consumed by questions of unchecked authority. The point of the constitutional project was to limit the powers of the state. It was not to proscribe what freedoms Americans could enjoy at the mercy of the state. The ninth amendment to the Bill of Rights is an explicit reminder that American freedoms extend beyond that list of prohibitions on government action and intrusion. From this philosophical tradition do libertarian-minded conservatives like Paul derive their convictions and through this lens should Paul’s efforts at unconventional outreach be judged. Despite being a target for attack from both sides, there can be no doubt that on matters from criminal justice to the regulatory state to surveillance to education, Rand Paul is sincere. No candidate in recent memory has shined such a focused spotlight on the Bill of Rights, and even in this cynical age the reception he gets when addressing fundamental nonpartisan American freedoms shows the sustainability of constitutionalism. Liberal Joe Klein is impressed enough by Paul to note admiringly that “by the time his 15-minute stump speech is over, he has delivered a tutorial about the First, Second, Fourth, Fifth, Sixth, Ninth and 10th amendments to the Constitution.”

True convictions are not welcome in Washington, where elites hew to the dubious wisdom of Lord Keynes: in the long run we’re all dead. While Keynes’ pithy comment was in regard to his economic theory, it applies just as well to an establishment ethos which elevates short term considerations of lobbyists and interest groups while ignoring real exigencies such as debt and slow growth. Call it the normalcy bias; the tendency to shrug off systemic long run concerns afflicts establishments on both sides and perpetuates a status quo beneficial only to the connected.

Reagan is beloved by conservatives because he fought against this bias and won. But it was no cakewalk and, as Jeffrey Lord wrote in 2010, he faced as much opposition from his own party as from the left. “They didn’t like him. To be more precise, they thought him an extremist, un-electable, an ultra-right wing nut, dumb, ignorant and, more to the point, not one of their crowd. One out of six was absolutely correct. Ronald Reagan was not one of their crowd. Ever.” Reagan biographer Craig Shirley decided to work for the RNC in 1982 at the behest of Reagan allies concerned that the organization was dominated by George H.W. Bush loyalists, the same cohort that looks askance at Rand Paul today. Reagan’s agenda was so unsettling to the guardians of the status quo that Beltway Republican reaction to Reagan popularity was similar to Paulene Kael’s vexation that Reagan could win when she “did not know a single person who voted for him.” By going full speed ahead with his agenda and in the process convincing large swaths of the public on the merits, Reagan led a revolution. By the ’84 election there was little doubt his agenda had been a smashing success.

In times of economic uncertainty restless citizens tend to forego tribal passions and seek brave, articulate “political athletes” to rouse the country from its doldrums. In his failed bid for the White House Goldwater paved the way for radical conservative solutions the country was not yet ready to embrace. Reagan’s triumph built on the Goldwater gambit and thus upended the existing order for close to thirty years. The conservative rabble had finally heisted the keys to the kingdom from the establishment squishes, who remained in the shadows of the Reagan Revolution quietly dismayed by the sudden loss of power and prestige. Given the longevity of cabinet officials like Donald Rumsfeld and Dick Cheney, Reaganites who became establishment, it is understandable that conservatives and libertarians would accuse the Bush presidencies of squandering the Reagan era. Today’s Tea Party-establishment contretemps is not a new phenomenon, but what is remarkable is the degree to which the Bush family has stood at the vanguard of establishment Republicanism since the seventies, usually in mild to open defiance of the Reagan ethos. No one understands this better than Rand Paul.

Paul attended the GOP convention as a thirteen year old in ’76 when the rancor over Reagan challenging an incumbent was at its peak. Sitting with his father in the Texas Reagan delegation, Paul witnessed first hand how passionately party bigwigs worked against the principled conservative in the race. It showed him that the powers that be on his own side were not exactly keen on returning to a focused free market constitutionalism. Is it any wonder then that Paul seems to relish taking on the same forces today that bedeviled the likes of Goldwater and Reagan in the past?

Rand Paul will not be alone in claiming Reagan lineage during the primary, but there is no candidate who better wears the label of principled rebel outsider. Like Reagan, Rand has establishment and partisan forces arrayed against him, left and right. Like Reagan, Rand has a passionate and growing following inspired by classical liberal principles and an appreciation for market supremacy over the distorting whims of the state. Like Reagan, Rand understands that not every fight is our fight, but you better believe we will retain the world’s strongest defense in perpetuity. Above all, Rand most resembles Reagan because he approaches the problems of the day with the most clear-eyed and radical prescriptions for our afflicted republic. Cronies and bureaucrats who are comfortable with the system the way it is will screech and bawl over Rand’s proposals just as they did Reagan’s. Like Reagan, Rand is best equipped to make an impassioned, articulate, inspiring case that persuades the electorate.

If conservatives wish to do more than just talk about the perils of the administrative state, the runaway executive under both parties and the costs of big government to human ingenuity and dignity, they need to move beyond reminiscing about Reagan and go ahead and nominate the guy who is the closest incarnation. If Republicans wish to emulate Reagan boldness in order to meaningfully win again, they should look to Rand Paul.

 

 

The Laffer Era

I won’t presume to speak for “Ready for Hillary,” but it’s a fair guess that they hope to face Jeb Bush because Democrats believe they hold the ultimate trump card which has nothing to do with his name. It is “the 90’s.” The Clinton campaign is convinced that in a matchup with Bush, all they need do is trumpet the “Clinton economy” while decrying the “Bush economy.”

To borrow from Lee Corso, “not so fast.”

Let’s acknowledge that Jeb Bush is not George W. Bush and Hillary Clinton is not Bill Clinton. The odds of President Hillary pronouncing “the era of big government over” or signing a signature welfare reform are as remote as President Jeb Bush championing a new extension of Medicare or proclaiming “deficits don’t matter.” Still, it is inevitable that in a Clinton-Bush race the comparison between Bill Clinton and George W. Bush will be broadly accepted as fair. Team Clinton believes they hold an unassailable advantage because they act like Bill Clinton was the sole progenitor of the 90’s economy.

Now comes their bete noir Rand Paul poking holes in the myth. Speaking at a Lincoln Labs conference in Washington last week, Paul said “when we dramatically lowered tax rates in the ’80s, we got an enormous boom in our country, probably for two decades. Many of us believe that the ’80s and the ’90s, once the boom began, had a lot to do with lowering the tax rates.” With that explicit challenge to conventional liberal wisdom, Paul turned the comparison between the 90’s and the 00’s into a debate on whether the 90’s were really just a continuation of the 80’s.

Cue the long knives.

Jonathan Chait waded into the breach to rebut this claim, arguing in New York that “tax rates on the rich, at least at current levels, have little impact on economic growth.” Note the qualifier at least at current levels. Liberal discussion of the 90’s focuses on Clinton raising the top rate to 39.6% from 31% to the economy’s great benefit. This casually omits how Reagan reduced the top rate from to 50% from 70% and ultimately to 28% with the 1986 tax reform.

Another tactic used against Reagan is that he was a serial tax raiser who saw the light after the 1982 recession proved his initial rate reductions had failed. “For example, when Reagan cut taxes, economic conditions deteriorated thanks to high interest rates. When Reagan realized he’d cut taxes too much and reversed course, raising taxes seven of the eight years he was in office, the economy improved,” says Steve Benen of MSNBC, who can be forgiven for his ignorance due to being Rachel Maddow’s petulant blogger. The left never seem to grasp that not all taxes are created equal. For every minor increase in a payroll tax or specific targeted tax, Reagan’s legacy is indisputably as an historic tax cutter, as the tax rate that matters most for economic growth and capital investment is the top marginal rate. Investors invest in enterprises when they believe the return on their investments will bear returns sufficient to justify the risk. More capital is risked when greater returns are in the offing. When top marginal rates are high there is less incentive to invest.

The adage “capital goes where it is welcome” is a fundamental truth akin to the laws of physics. Reagan’s success in bringing down top marginal rates are, more than any other external or mitigating factor, the primary reason for the 25 year secular growth trend between 1982-2007. The dramatic rate reduction heralded a new era of entrepreneurial optimism and capital investment as individuals responded to incentives brought about by a more welcoming capital landscape. Yes, one consequence of this was that the rich got richer, but the boom in middle class standards of living as well as upward mobility (an entire new class, the “upper middle” owes its existence to this period) in the 80’s and 90’s was a straight line continuum, putting the lie to the myth that things were sour under Reagan and H.W. Bush until Clinton arrived to save the day with moderate increases in top rates. Any honest appraisal of this era must account for the steady gains in GDP, employment and overall consumer confidence which contributed to multiple quarters of 6% and 7% growth during both the 80’s and 90’s.

Because Bill Clinton did very little to reverse the Reagan revolution on taxes, and in fact bolstered it by lowering investment rates while increasing the top marginal rate nowhere near in proportion to the level that Reagan lowered it, any comparison of the 80’s and 90’s is ultimately moot. We might as well call it “the Laffer era.”