The Real Reagan Economy
Since the start of the presidential primary campaign, Republican candidates have missed few opportunities to laud the achievements of conservative hero and former president Ronald Reagan, or to portray themselves as his worthy successor. As Michele Bachmann declared after the Iowa caucuses, “What we need is a candidate in the likeness and image of a Ronald Reagan…What we need is a fearless conservative, one with no compromises on their record, on spending, on health care, on crony capitalism, on defending America, on standing with our ally Israel.”
Mitt Romney and Newt Gingrich have also invoked Reagan as an example of a model president. They have contrasted what they see as his superior handling of the economy with the woes suffered during President Obama’s tenure. In an op-ed published by the Wall Street Journal in December, Gingrich, who proudly touts himself as a “Reagan conservative”, wrote of an economic “nightmare” in America, which “will not end until Reagan-era economic policies are restored.” One such policy is “spending controls”. Frontrunner Mitt Romney has likewise expressed his admiration for the “smaller government policies of the Reagan era [which] helped turn around a struggling economy and create millions of jobs.”
It seems to me that these Republicans are suffering from some form of amnesia, whose effects appear to have been amplified by the onset of the election season. For, regardless of the “smaller government” claim made by Romney, the reality is that President Reagan went on a spending blitz during his two terms in office, running up colossal budget deficits worthy of a European tax-and-spend socialist, while repeatedly promising to balance the budget.
The staggering debts accrued by Reagan’s administration were due in large part to an explosion in military spending, which shot up by a whopping forty percent between 1980 and 1984. By the time he left office the man who, in Bachmann’s words, had made “no compromises” on spending had somehow succeeded in adding well over a trillion dollars to the national debt, and had turned the United States from the world’s largest creditor to its largest debtor. Not once did Reagan come close to balancing the budget.
Even Reagan’s own officials acknowledged that the national debt had ballooned to nightmarish proportions. David Stockman, who served as Director of the Office of Management and Budget until 1985, stated privately that “We are violating badly, even wantonly, the cardinal rule of sound public finance: governments must extract from the people in taxes what they dispense in benefits, services and protections.” He added that “If the Securities and Exchange Commission had jurisdiction over the executive and legislative branches, many of us would be in jail.”
There is a chasm separating the Republican presidential candidates’ own remarks on the urgency of reducing the present government debt from what occurred on Reagan’s watch. For instance, on Mitt Romney’s campaign website, it states that “Washington is spending money in an out-of-control fashion” and “we must live within our means, spend only what we take in, and pay down our debt.” Had these words been spoken in the 1980s, when Reagan was in charge, they would not have been at all out of place.
The same goes for Newt Gingrich’s comment that, were he to become president, he would “cut federal spending in half over the long run.” This is diametrically opposed to what President Reagan accomplished.
There is of course one way to reconcile the apparent contradiction between the Republicans’ enthusiasm for Reagan-era economics and their own remarks on the need to bring down the current, very high US debt. As the late president himself once said, “If it comes down to balancing the budget or defense, the balanced budget will have to give way.” I suspect this maxim would ultimately be followed by a President Romney or Gingrich, notwithstanding their declared determination to rein in spending. Romney is indeed committed to significantly increasing the defense budget, and plans to pour billions of dollars into modernizing the air force, building more ships, improving services for veterans and adding “at least 100,000 active duty personnel to our military payroll.”
To sum up, when the name of Ronald Reagan is brought up by a Republican presidential candidate, it is wise to take what they say with a grain of salt. The Reagan they invoke is not the spendthrift budget-buster who plunged the US into unprecedented levels of indebtedness, but a mythical figure who made “no compromises” on his conservative principles. One thing is for sure, however: if a Republican defeats Obama in November, he’ll have as much trouble balancing the budget as the Gipper.
Michael Walker has a PhD in International Relations. He has written articles for Foreign Policy in Focus, openDemocracy and Colombia Journal.