Second Term Blues
Like all Presidents rising in the historical charts, Reagan’s successes are thought to overshadow his failures. But let’s be honest. His last term was marked by drift, dementia, and scandal.
Reagan came into office in 1981 with three items on his agenda. By 1986 two of them had been accomplished with great success, but on the second item of his agenda he had made no progress at all. His goals were 1> to cut taxes, 2> to reduce the size of the Federal government, and 3> to build up U.S. military power in order to negotiate with the Soviets from a position of strength.
Taxes were cut in 1981 and again in 1986 by Democrat-controlled Congresses. Top income tax rates plunged from 70 down to 31% -- a larger cut than many had believed possible in 1981.
The military buildup was also a by-partisan project that produced the strongest – and most expensive – military in the world by 1986. It was during this period that the United States Air Force perfected stealth technology, an innovation so profound and fundamental that it altered the balance of power on the globe, allowing the U.S. to threaten and successfully attack any nation in the world at no cost to itself in lives or material. In fairness it must be noted that the secret development project for stealth technology began during Carter’s Administration and only came to fruition during Reagan’s. Because Reagan’s military never fought a significant war, the astonishing superiority stealth gave the U.S. Air Force would not become clear until Operation Desert Storm in 1991.
But what about that second item – reduce the size of the Federal Government? This goal had long been an article of faith for the free-market Republicans. They yearned to reverse the New Deal. But nothing like that happened. Reagan’s most spectacular failure was his inability to actually “put the Federal government on a diet,” as he had vowed in Detroit. He quickly learned what so many Presidents have learned before and since – it was much easier to cut taxes than to reduce expenditures. Most of the Federal programs he assailed as “wasteful” were actually benefiting people. Most Congressmen of both parties refused to abolish programs that helped people or employed people in their districts – and that was all of them. Except for abolishing the CETA program – a huge Federal program to subsidize the employment of people who might otherwise have not been able to find jobs at all – Reagan left the entire Federal bureaucracy almost untouched. The Federal government spent about the same proportion of GDP when he left office in 1989 as it had when he entered in 1981, though Federal taxes were significantly less as a percentage of GDP. In absolute terms, both spending and taxes had grown substantially.
Reagan therefore left structural budget deficits which persisted for ten years after he stepped down, to be remedied by a notorious “free-spending Democrat,” Bill Clinton, who in 1998 and 1999 produced the only budget surpluses since Lyndon Johnson, the last liberal Democrat. No “tight-fisted” Republican has produced a budget surplus since Calvin Coolidge. American politics is filled with juicy contradictions, but this particular contradiction would badly undermine Republican credibility in the 21st Century.
Reagan’s inability to reign in Federal spending meant that he managed to triple the national debt during his eight years, a feat previously accomplished only by Wilson and Roosevelt during world wars. Still, two out of three is not a bad batting average. You can stay in the Majors with an average like that, maybe even make the all-star team.
For those “free-market Republicans” capable of doing elementary school mathematics – all of them, most likely – reducing the size of the Federal government was by 1988 understood to be nearly impossible. The military consumed about 20% of the Federal budget, and social security another 20%, Medicare 12-14% and interest on previous borrowing about 6-7%, so more than 60% of the Federal budget was off-limits to budget cuts for political or financial reasons. It was simply not possible to reduce Federal spending by very much if you could only cut a small portion of the remaining 37%. If Reagan couldn’t get this done, with all his charm and his 49-state mandate in 1984, the chances were that no one could ever get this done.
At some point some Republicans woke up to the fact that most Americans actually wanted the government to spend this money, that this money actually benefited people and created jobs, much like entrepreneurs created jobs. But the free-market Republicans, blinded by their ideology, refused to believe that jobs created by Federal spending were in fact real jobs. Only entrepreneurs could create real jobs. Federal jobs were make-believe.
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