The Gipper's Economy

The Gipper had a certain goofiness about him that was impossible not to like. He told "war stories" borrowed from old movies with such sincerity you were sure he must have been there. He was a famous football hero ("win this one for the Gipper") and also a handsome cowboy depicted on horseback in his 1980 campaign posters (but without his six-shooters). He taught wacky science lessons (trees are a leading source of air pollution) and delivered many dewy-eyed tributes to American heroes, some plucked from yesterday's headlines, some recycled from his rheumy memories of World War I. Whether you came to canonize the man or ridicule him, he was always great material. Historians, I think, will someday rank him right up there with Warren Harding.

Reagan was a fabulist. He told stories--often charming, sometimes loony--in which sentimental images triumphed over facts, warmth over light. So it is entirely appropriate today that the major media, draped in mourning, are solemnly fictionalizing his presidency. Reagan spun them around brilliantly, used the White House reporters and cameras as hapless props in his melodrama, ignored the tough questions and stuck unyieldingly to his scripted version of reality. This was partly conviction, partly the discipline of an "old pro" movie actor. It appears to have worked with the press. Their memorials to the "Ronald Reagan story" sound more like his fables than the events I witnessed.

What's left out? For one thing, a chilling meanness lurked at the core of Reagan's political agenda (always effectively concealed by the affability), and he used this meanness like a razor blade to advance his main purpose--delegitimizing the federal government. Race was one cutting edge, poverty was another. His famous metaphor--the "welfare queen" who rode around in her Cadillac collecting food stamps--was perfectly pitched to the smoldering social resentments but also a clever fit with his broader economic objectives. Stop wasting our money on those lazy, shiftless (and, always unspoken, black) people. Get government off our backs, encourage the strong, forget the weak. In case any white guys missed the point, Reagan opened his 1980 campaign in Neshoba County, Mississippi, where three civil rights workers had been murdered in the 1960s. His speech extolled states' rights. The tone was sunny optimism.

The chemistry worked partly because it coincided with a historical shift already under way. Beyond movie scripts, Reagan was authentic in his convictions--he brought the flint-hearted libertarian doctrines of Hayek and Friedman to Washington and put a smiling face on the market orthodoxy of "every man for himself." Democrats had lost their energy and inventiveness, they were associated with twenty years of contentious reforms, turmoil and conflict (and sought relief, not by rebuilding their popular base with new ideas but by cozying up to the business lobbies). In the end, the only folks who got truly liberated by Reaganomics were the same people who had financed his rise in politics, the Daddy Warbucks moguls from California and corporate behemoths like General Electric.

Reagan's theory was really "trickle down" economics borrowed from the Republican 1920s (Harding-Coolidge-Hoover) and renamed "supply side." Cut tax rates for the wealthy; everyone else will benefit. As Reagan's budget director David Stockman confided to me at the time, the supply-side rhetoric "was always a Trojan horse to bring down the top rate." Many middle-class and poor citizens figured it out, even if reporters did not.

Reagan's great accomplishment was ideological--propelling the ascendancy of the right--but the actual governing results always looked more like hoary old interest-group politics. Wealthy individuals, corporate and financial interests got extraordinary benefits (tax reductions and deregulation) while the bottom half got whacked whenever an opportunity arose. His original proposition--cut taxes regressively, double military spending, shrink government and balance the federal budget--looked cockeyed from the start. Yet when the logic self-destructed in practice, conservatives were remarkably content, since they had delivered the boodle to the right clients. After my notorious account of Reagan's economic failure, based on my conversations with Stockman, was published in the December 1981 Atlantic Monthly, the Gipper likened me to John Hinckley, the would-be assassin who shot him. So much for Mr. Nice Guy.

Both parties would spend the next twenty years cleaning up after the Gipper's big mistake. They collaborated in an ongoing politics of bait and switch--raising taxes massively on working people through the Social Security payroll tax while continuing to cut taxes for the more affluent and to whittle down government aid for anyone else. The Gipper had taught Washington an important new technique for governing--how to fog regressive tax cuts past the general public without arousing voter retribution (the media can be counted on to assist). The trickery continues to succeed. Pre-Reagan politics used to address various economic inequities. The great injustice confronted by George W. Bush was the estate tax on millionaires.

Reagan's stubborn optimism did refresh the national spirit, no question, and it certainly powered his political successes. He gave us a television-era remake of Warren Harding's "return to normalcy." But in hindsight, I have come to think that the illusions fostered by his sunny messages perhaps did the gravest economic damage. Things were not normal, they were deteriorating and leading toward a chasm of growing inequalities. The rending of the American middle class, the stagnation of industrial wages, the relentless loss of US manufacturing--these great wounds to general prosperity were all visible during the Reagan era, but instead of addressing them honestly, his policies further aggravated the consequences. The Gipper insisted, no doubt sincerely, that it was "morning again in America." People wanted to believe this, and politicians of both parties learned from his cue--wave the flag and avoid bad news. Ronald Reagan launched the great era of false triumphalism that continues to this day among American leaders. The current generation lacks his charm and is therefore less successful at hiding the truth.

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