Reagan's Liberal Legacy

[one...two...tree 2,762]

By Joshua Green

(excerpt)

Roosevelt Republican

Reagan arrived in Washington with a full head of steam, vowing, as he put it in the major economic speech of his 1980 campaign, "to move boldly, decisively, and quickly to control the runaway growth of federal spending." To conservatives, and many others, he seemed destined to fulfill campaign pledges to abolish entire government agencies, rein in the excesses of the welfare state, and end Americans' overreliance on government. Sensing the historical moment, Reagan echoed John F. Kennedy in famously declaring, "If not us, who? If not now, when?"

At the outset of his first term, Reagan's revolution appeared to have unstoppable momentum. His administration passed an historic tax cut based on dramatic cuts in marginal tax rates and began a massive defense buildup. To help compensate for the tax cut, his first budget called for slashing $41.4 billion from 83 federal programs, only the first round in a planned series of cuts. And Reagan himself made known his desire to eliminate the departments of Energy and Education, and to scale back what his first budget director David Stockman called the "closet socialism" of Social Security and Medicaid.

But after his initial victories on tax cuts and defense, the revolution effectively stalled. Deficits started to balloon, the recession soon deepened, his party lost ground in the 1982 midterms, and thereafter Reagan never seriously tried to enact the radical domestic agenda he'd campaigned on. Rather than abolish the departments of Energy and Education, as he had promised to do if elected president, Reagan added a new cabinet-level department--one of the largest federal agencies--the Department of Veterans Affairs.

Though his budgets requested some cuts in some areas of discretionary spending, Reagan rapidly retreated and never seriously pushed them. As Lou Cannon, the Washington Post reporter who covered Reagan's political career for 25 years, put it in his masterful biography, President Reagan: The Role of a Lifetime, "For all the fervor they created, the first-term Reagan budgets were mild manifestos devoid of revolutionary purpose. They did not seek to 'rebuild the foundation of our society' (the task Reagan set for himself and Congress in a nationally televised speech of February 5, 1981) or even to accomplish the 'sharp reduction in the spending growth trend' called for in [his] Economic Recovery Plan." By Reagan's second term, the idea of seriously diminishing the budget was, to quote Stockman, "an institutionalized fantasy." Though in speeches Reagan continued to repeat his bold pledge to "get government out of the way of the people," government stayed pretty much where it was.

This hasn't stopped recent contemporary conservative biographers from claiming otherwise. "He said he would cut the budget, and he did," declares Peggy Noonan in When Character Was King. In fact, the budget grew significantly under Reagan. All he managed to do was moderately slow its rate of growth. What's more, the number of workers on the federal payroll rose by 61,000 under Reagan. (By comparison, under Clinton, the number fell by 373,000.)

Reagan also vastly expanded one of the largest federal domestic programs, Social Security. Before becoming president, he had often openly mused, much to the alarm of his politically sensitive staff, about restructuring Social Security to allow individuals to opt out of the system--an antecedent of today's privatization plans. At the start of his administration, with Social Security teetering on the brink of insolvency, Reagan attempted to push through immediate draconian cuts to the program. But the Senate unanimously rebuked his plan, and the GOP lost 26 House seats in the 1982 midterm elections, largely as a result of this overreach.

The following year, Reagan made one of the greatest ideological about-faces in the history of the presidency, agreeing to a $165 billion bailout of Social Security. In almost every way, the bailout flew in the face of conservative ideology. It dramatically increased payroll taxes on employees and employers, brought a whole new class of recipients--new federal workers--into the system, and, for the first time, taxed Social Security benefits, and did so in the most liberal way: only those of upper-income recipients. (As an added affront to conservatives, the tax wasn't indexed to inflation, meaning that more and more people have gradually had to pay it over time.)

By expanding rather than scaling back entitlements, Reagan--and Newt Gingrich after him--demonstrated that conservatives could not and would not launch a frontal assault on Social Security, effectively conceding that these cherished New Deal programs were central features of the American polity.

"Mondale Would Have Been Proud"

It's conservative lore that Reagan the icon cut taxes, while George H.W. Bush the renegade raised them. As Stockman recalls, "No one was authorized to talk about tax increases on Ronald Reagan's watch, no matter what kind of tax, no matter how justified it was." Yet raising taxes is exactly what Reagan did. He did not always instigate those hikes or agree to them willingly--but he signed off on them. One year after his massive tax cut, Reagan agreed to a tax increase to reduce the deficit that restored fully one-third of the previous year's reduction. (In a bizarre bit of self-deception, Reagan, who never came to terms with this episode of ideological apostasy, persuaded himself that the three-year, $100 billion tax hike--the largest since World War II--was actually "tax reform" that closed loopholes in his earlier cut and therefore didn't count as raising taxes.)

Faced with looming deficits, Reagan raised taxes again in 1983 with a gasoline tax and once more in 1984, this time by $50 billion over three years, mainly through closing tax loopholes for business. Despite the fact that such increases were anathema to conservatives--and probably cost Reagan's successor, George H.W. Bush, reelection--Reagan raised taxes a grand total of four times just between 1982-84.

This record flummoxes the best efforts of today's Reagan hagiographers to explain away. Peter Wallison, for instance, after proclaiming that Reagan "stayed the course against changes in his economic plan," later dismisses the president's tax increases as "a modest rollback" that "seems to have been the result" of his accepting a Democratic promise to cut spending by twice that amount. (Whatever happened to "Trust, but verify"?)

Reagan continued these "modest rollbacks" in his second term. The historic Tax Reform Act of 1986, though it achieved the supply side goal of lowering individual income tax rates, was a startlingly progressive reform. The plan imposed the largest corporate tax increase in history--an act utterly unimaginable for any conservative to support today. Just two years after declaring, "there is no justification" for taxing corporate income, Reagan raised corporate taxes by $120 billion over five years and closed corporate tax loopholes worth about $300 billion over that same period. In addition to broadening the tax base, the plan increased standard deductions and personal exemptions to the point that no family with an income below the poverty line would have to pay federal income tax. Even at the time, conservatives within Reagan's administration were aghast. According to Wall Street Journal reporters Jeffrey Birnbaum and Alan Murray, whose book Showdown at Gucci Gulch chronicles the 1986 measure, "the conservative president's support for an effort once considered the bastion of liberals carried tremendous symbolic significance." When Reagan's conservative acting chief economic adviser, William Niskanen, was apprised of the plan he replied, "Walter Mondale would have been proud."

So would Russell Long. In 1975, the Democratic senator from Louisiana had passed into law the earned income tax credit (EITC), essentially a wage subsidy for the working poor. Long's measure was tiny to begin with and had dwindled to insignificance by the time Reagan agreed to expand it in 1986 as part of the tax reform act. Despite years of opposing social insurance programs, Reagan's support of the EITC gave rise to what has become one of the most effective antipoverty measures the federal government has ever devised--by the late 1990s, the EITC was lifting 4.3 million people out of poverty every year. Reagan's decision to expand it was "the most important anti-poverty measure enacted over the past decade," wrote The Wall Street Journal's Al Hunt. The exemption of millions of low-wage earners from income taxes through the EITC and other reforms in 1986 added a significant measure of progressivity to the tax code. As evidence of its popularity with liberals, Clinton dramatically expanded the EITC in 1993.

At the time, many Republicans touted Reagan's support as proof that he wasn't the coldhearted tyrant liberals made him out to be. Other conservatives, like Niskanen, however, saw it as troubling evidence of their leader's weakness. Today, there is a growing movement within the Bush administration to roll back these changes by making the working poor pay their "fair share" of taxes.

These evident lapses in conservative ideology are a fact that some liberals have a much less difficult time coming to terms with than conservatives. "There were two Reagans," says Robert J. McIntyre, director of the left-leaning Citizens for Tax Justice, who was instrumental in the 1986 act, "the good one and the bad one. Liberals and conservatives wouldn't agree on which is which, but they would have to agree that Reagan completely flipped after 1981. If you like one, you can't like the other."

......

Mourning in America

Many of Reagan's actions that wound up furthering liberal ends were to some extent the result of the normal compromises of political office. The fact that his conservative biographers don't see fit to acknowledge these deviations is a clue that their aim is something besides an accurate depiction of the life and achievements of the 40th president. When conservatives mythologize the Reagan presidency as the golden era of conservatism, it's not Reagan that they're mythologizing, but conservatism.

The great success of Reagan's 1980 campaign was that it united the disparate strands of the conservative movement: supply-siders, libertarians, religious conservatives, foreign policy hawks, and big business. The fact that Reagan's presidency didn't accomplish anything approaching its seismic promise--the size of government grew, abortion remained legal, and entitlements still abounded--is one that his partisan biographers elide by focusing on what Reagan believed and said rather than on what he actually did. The imaginary Reagan who inhabits these books embodies the ideas on which all these groups can agree. His shining example helps maintain the coalition while putting pressure on current GOP politicians to hew to the hard-right ideal.

The real Reagan, on the other hand, would bring discord to the current conservative agenda. If you believe, as conservatives now do, that raising taxes is always wrong, then it's hard to admit that Reagan himself did so repeatedly. If you argue that the relative tax burden on low-income workers is too light, as the Bush administration does, then it does not pay to dwell on the fact that Reagan himself helped lighten that burden. If you insist, as many hardliners now do, that America is dangerously soft on communist China, then it is best to ignore Reagan's own softening toward the Soviet Union. As with other conservative media efforts--Rush Limbaugh, Fox News Channel, The Washington Times--the purpose of the Reagan legacy project is not to deliver accuracy, but enhance political leverage.

But, as Reagan himself liked to cite from John Adams, facts are stubborn things. And the fact is that Reagan, whether out of wisdom or because he was forced, made significant compromises with the left. Had he not saved Social Security, relented on his tax cut, and negotiated with the Soviets, he'd have been a less popular, and lesser, president. An honest portrait of Reagan's presidency would not diminish his memory, but enlarge it.

http://www.washingtonmonthly.com/features/...0301.green.html