The Gipper’s Principles for Governing Still Apply Today
This column by ACRU board member and founding member of the policy board of the Carleson Center for Public Policy Edwin Meese III was published February 6, 2012 in The Washington Times.
As the years pass, Ronald Reagan’s stature continues to grow, and it has reached the point where all sorts of people quote him to support their policies or candidacies.
Last year, during the contrived “crisis” over a possible national default, California Sen. Barbara Boxer evoked the Gipper to justify raising taxes: “I find myself these days quoting Ronald Reagan. ‘The full consequences of a default,’ he said, ‘or even the serious prospect of a default by the United States are impossible to predict and awesome to contemplate.’ ”
Never mind that President Reagan, whose 101st birthday is Feb. 6, said in 1982: “We don’t have a trillion-dollar debt because we haven’t taxed enough; we have a trillion-dollar debt because we spend too much.”
With our nation at a crossroads and in desperate need of the kind of leadership Reagan afforded us, it’s important to set the record straight about what he stood for.
The Carleson Center for Public Policy is a new think tank dedicated to doing just that. Named in honor of Robert B. Carleson, who helped Gov. Ronald Reagan reform the California welfare system in the early 1970s when the state was on the verge of bankruptcy, the center has a unique pedigree.
I and every other member of the center’s policy board worked for Reagan when he was either president or governor of California. The center has compiled a summary of Reagan’s quotes and actions. “The Reagan Resolve” concisely outlines his major principles and actions so today’s policymakers can take a page from it.
Let’s begin with a contrast. When President Obama was asked what he thought of American exceptionalism, he said, “I believe in American exceptionalism, as I believe the Greeks believe in Greek exceptionalism, and the Brits believe in British exceptionalism.”
In other words, America is not any more exceptional than any other nation. Reagan, on the other hand, envisioned America as “a shining city on a hill,” in his oft-used phrase. Reagan understood that American exceptionalism was not a matter of patriotic overreach, but historic fact:
“Ours was the first revolution in the history of mankind that truly reversed the course of government, and with three little words: ‘We the People.’ ‘We the People’ tell the government what to do; it doesn’t tell us. ‘We the People’ are the driver; the government is the car. … Our Constitution is a document in which ‘We the People’ tell the government what it is allowed to do.”
At the core of Reagan’s successful governance was a commitment to strong national security, traditional values, genuine federalism and domestic policies designed to restore America as an entrepreneurial powerhouse. The major pieces of his economic plan are these:
- Reducing tax rates — to instill incentives for economic growth. In 1981, the top income-tax rate was brought from 70 percent down to 50 percent, with a 25 percent across-the-board cut in income-tax rates for everyone in all the other tax brackets. The 1986 tax reform reduced rates even further, leaving just two rates, 15 percent and 28 percent.
- Reducing federal spending — to contain the size of government, including an almost 5 percent spending cut the first year, in fiscal 1981 (equivalent to a $175 billion cut in one year today). Even throwing in the Reagan defense buildup — which won the Cold War without our firing a shot — total federal spending declined from a high of 23.5 percent of gross domestic product in 1983 to 21.2 percent in 1989. This reduction constituted a 10 percent real decrease in the size of government relative to the size of the economy.
- Deregulation — to reduce government intrusion in people’s lives and the cost of red tape on the private sector. Reagan’s first executive order after taking office eliminated price controls on oil and natural gas. Production soared, and the price of oil declined by more than 50 percent.
- Stable monetary policy — to restrain money-supply growth compared to demand to control inflation and thus maintain a stable value for the dollar. This would cement the economic gains achieved by cutting tax rates and federal spending and deregulating the economy.
Reagan’s recovery plan was intended to counter government’s negative impact on the economy or, as he put it in 1986:
“Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
The four-point plan resulted in the most successful economic experiment in world history — setting a new record for the longest peacetime expansion ever.
After just three years in office, Reagan’s common-sense solutions reduced inflation from almost 13 percent when he took office to 3.2 percent in 1983. Over his two terms in office, Reagan’s policies added more than 17 million new jobs, reducing unemployment by more than half, from 10.8 percent in 1982 to 5.3 percent in 1989. The bottom 20 percent of income earners also benefited. Their average household income grew by 12.2 percent from 1983 to 1989. The poverty rate, which had been increasing under President Carter, declined every year under Reagan while the standard of living for all Americans rose by almost 20 percent.
Reagan’s opponents who had argued that tax cuts would increase interest rates were proved wrong. The prime rate was cut by two-thirds, down to 8.2 percent in 1987 and then to 6.25 percent by 1992. The stock market more than tripled in value from 1980 to 1990 — the largest decade-long increase in history.
Can we do this again? Absolutely, if we ourselves resolve to follow Mr. Reagan’s principles. The alternative is an unthinkable acceleration down The Road to Serfdom, a socialistic morass described very well in that book, by one of Mr. Reagan’s favorite economists, F.A. Hayek.
“The Reagan Resolve” is a reminder of America’s animating principles and a road map to steer us off that other road on which we’ve been speeding recklessly.