JONATHAN CHAIT MARCH 22, 2011
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Steve Forbes expounds upon the glorious Reagan supply-side revolution:
Critics howled that Reagan was being financially irresponsible, but the president pressed on. Once his cuts were fully phased-in and the hard fight against inflation was won, the economy took off like a rocket. Reagan's achievements set up a great, long boom in the U.S. and the world that didn't end until the economic crash in 2007.
This credits Reagan for the 1990s boom, which was by far the most prosperous part of the period in question. But of course when Bill Clinton raised taxes on the rich in 1993, conservatives like Forbes decried it as the end of Reaganism. Forbes magazine was running articles urging rich people to flee the country to escape the economic ruin Clinton's Bolshevism would bring. The supply-siders have responded by simply air-brushing the whole episode out of history, while still continuing to maintain that restoring Clinton-era tax rates on the rich would bring economic ruin.
Forbes concludes:
President Reagan understood, and fervently believed in, the American spirit of free enterprise. So far, President Obama hasn't shown that he does.
Mr. Obama still has time to learn the real lessons of Reagan's success. Will he?
That question is easy to answer. If the economy struggles, then Obama will have failed to learn The Lessons Of Reagan. If it prospers, it will be because Obama Moved To the Center. We will see whether we're in a long economic downturn that signals a retreat from Reaganism, or the beginning of a recovery that signals its continuation.
10 comments
Wait a minute, Jonathan. If the economy prospers under Barack Obama, won't it be because we will still be riding the Reagan crest? The atrocious Lawrence Kudlow has a case of amnesia that resembles that of Steve Forbes.
- liberalref
March 22, 2011 at 12:02pm
Also glossed over is the fact that unemployment took off like a rocket during Reagan's hard fight against inflation, despite all the wonderful stimulus his tax cuts provided. Perhaps at some point we'll see further historical revisionism where there wasn't so much a Great Recession as George W Bush courageously acting to lower mortgage rates.
- Tristan
March 22, 2011 at 12:05pm
Recall, though Tristan (if you know of it), that it was Jimmy Carter who appointed Paul Volcker as Fed chairman, and Ronald Reagan who kept him on. The Fed deliberately courted a recession in order to fight high inflation.
- liberalref
March 22, 2011 at 12:10pm
Whether Reagan's (and Forbes') tax policies have been good or bad for the country will, as long as there are wide disparaties in income, always be subject to debate. But what isn't subject to debate is the politics: Reagan (and Forbes) won. As an example, the deficit commission (the "deficit" commission) proposed lowering the top income tax bracket to between 23% and 28% as part of its roadmap to a balanced budget. And nobody laughed them off the stage! When Forbes proposed a 17% flat income tax in his 1996 Presidential campaign, he was treated like he was a crank. Now, crank proposals are mainstream!
- rayward
March 22, 2011 at 1:20pm
If Steve Forbes is white-washing the "real lessons" of Reagan's success, sounds to me like there's no true lesson to be learned. The "real lessons" of Reagan's success SHOULD be that he repented of his tax-cuts, and raised taxes 6 times to try to cope, that his VP became President saying "read my lips, no new taxes" and had to repent of that, that Clinton came in and raised taxes SO MUCH that the Democrats were kicked out of Congress, and ONLY THEN did we have a long sustained period of economic growth and prosperity. Now THAT is a "real lesson" I wish Obama would pursue.
- AllanL5
March 22, 2011 at 1:43pm
Lib - those policies did indeed curb inflation, though (as you stated) more credit belongs to the Fed under Carter than is ever allotted. But even if you were to discount that, even if you were to pretend Volker and the Fed enacted these policies only after Reagan took office and forced their hand, you still see a significant rise in unemployment AFTER the reagan tax cuts, which... and please correct me if I'm wrong... was not at all part of Reagan's plan. No, what we see instead is, as Chait points out again, is the gift for fiction repubs have when lauding their economic achievements, especially those that were delivered by St Ron. And I predict at some point we'll start to see a concerted effort to revise a bit of economic history from Bush Jr's administration as well. Hell, we're already reading little signs here and there (call these bullshit economic revisionists "brown shoots", if you so desire) of setting aside the screed "Obama is awful for the economy and here's the proof, the economy (at least unemployment) still sucks" in favor of "Obama is bad for the economy but things have begun to turn around now that the GOP controlls at least one chamber of Congress."
- Tristan
March 22, 2011 at 1:59pm
Republicans who think you can stimulate the economy by cutting spending remind me of Republicans who think that intelligent design is just an alternative theory of evolution.
- Nusholtz
March 22, 2011 at 4:24pm
Maybe Steve Forbes was in a coma between 1983 and 2008, but I seem to recall that there were a couple interruptions to the boom times launched by Reaganomics, somewhere between 1990 and 1992 and again between 2001 and 2003. That's my recollection, at least -- maybe Steve Forbes remembers it differently?
- wildboy
March 22, 2011 at 5:36pm
I have said before there is nothing to compare the Reagan myth used by the Right than the way the Democratic People's Republic of Korea has its Kim-il-Sung cult of personality. The leader is a semi-divine leader who was always right. All that is good that has ever happened since he lived can be attributed to him.
- MikeB.
March 22, 2011 at 6:26pm
BTW, I think as George H.W. Bush warned in the Republican primaries in 1980, that Reagan's policies actually worsened inflation. His initial tax cut for the rich in 1980 was a huge deficit maker and thus contributed to inflation. I think Volcker wanted to work with Reagan, but when he saw it wasn't possible, the only thing to do was to tank the economy with huge interest rate hikes.
- MikeB.
March 22, 2011 at 6:28pm