Mises Wire

Romanticizing Reagan

Mises Wire Chris Calton

Among conservatives, Ronald Reagan is held in deific esteem. Find any Republican debate Bingo or drinking game, and his name is certain to be one of the triggers to take a drink. Even among many libertarians, Reagan is still viewed as one of our greatest presidents, if not the greatest outright.

The reasons for the romanticization of Reagan are difficult to understand. But Ronald Reagan did have some of the best rhetoric when it came to conservative and libertarian issues, and perhaps this is a good explanation for his appeal. But when you look at his policies as president, it seems like he stands for everything conservatives, and especially libertarians, are against. So let’s compare rhetoric to policy.

Spending and Taxation

In one State of the Union address, Reagan offered a rousing condemnation of the problem with the federal deficit. He gave the pithy insight that “we can’t spend ourselves rich,” which is one of the more popularly quoted phrases among conservatives and libertarians.

In their own hypocrisy, Democrats love to point out the massive increases in spending that took place under Reagan. But even if it is for the wrong reasons, they are correct in this observation. Reagan may not have been trying to spend Americans rich, but he was certainly spending.

Between Fiscal Years 1982 and 1989 (the years for which Reagan would have signed the budget), federal expenditures grew by more than 60%, increasing from 1.179 trillion to 1.904 trillion dollars.

The common excuse for this, of course, is the arms race of the Cold War. Even if you accept this as a reasonable reason to massively increase the federal deficit (while hypocritically condemning such actions in your predecessors), the increase in military spending only accounts for a portion of the total growth.

Spending on education grew by 68%, despite Reagan’s unfulfilled campaign promise to shut down the Department of Education. Healthcare spending grew by 71%. Reagan also increased government subsidies, such as the one mentioned in my sugar article, as well as myriad other domestic spending categories.

The common excuse here is that once we accept the “need” for the massive increases to military spending (which set the destructive precedent that any suggestion of budget cuts to the financial black hole that is the Department of Defense will cost a Republican an election), then it was a Democratic Congress that forced the compromise of domestic spending in exchange for the increase in military spending.

Even if there is some truth to that — and I’m sure there is — we are now accepting a great deal of compromise on conservative principles and making excuses for Reagan’s hypocritical proselytizing about federal deficits. This doesn’t even mention the common praise by Reaganites that his military spending was a strategy to help collapse the Soviet Union by essentially duplicating socialist spending logic (pumping money into government agencies — in this case, the military). It almost seems to be a harbinger of George W. Bush’s eyebrow-raiser: “I’ve abandoned free market principles to save the free market system.”

But whatever shortcomings Reagan may have had when it came to government spending, he made up for in tax cuts, right?

This claim seems to be even more mythologized by conservatives. Where conservatives will make excuses for Reagan-era spending, they tend to be outright misinformed regarding Reagan’s tax policies.

In August of his first year in office, Reagan did sign into law the Economic Recovery Tax Act. This is something in the Reagan legacy that I can actually get behind. Although I agree with Ron Paul that the proper rate of income tax is 0%, I’m going to support, to paraphrase Milton Friedman, any cuts in taxes at any time for any reason. This piece of legislation did that.

What conservatives tend to forget (or omit) are Reagan’s other pieces of tax legislation. The very next year, Reagan signed the Tax Equity and Fiscal Responsibility Act (TEFRA). This increased numerous taxes as well as eliminating certain deductions. It is important to keep in mind here that conservatives don’t have the excuse of a Democratic congress. The tax increases in this bill were added in Senate revisions when the Senate was still controlled by Republicans. This flies directly in the face of another popular piece of Reagan rhetoric, made ten years later when speaking to the National Association of Realtors, that “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.”

Still in the Republican-dominated year of 1982, Reagan also increased taxes on the trucking industry and gasoline, which he actually cited as being an economic stimulant to create 320,000 jobs. This type of tax-and-spend policy is straight out of Keynes’s playbook, but conservatives prefer to remember Reagan’s quote about reading the great Austrian economists: “I’ve always been a voracious reader — I have read the economic views of von Mises and Hayek, and Bastiat.” He may have read them; Mises Institute is even home to President Reagan’s thank-you letter to Margit von Mises for sending him a copy of Human Action — but if he did read them, it seems he ignored them.

Likewise, the payroll tax increase of the following year was also not forced on Reagan. In fact, he requested it. He also passed the Deficit Reduction Act of 1984, which was another contradictory attempt to reduce deficits by raising taxes.

Along with the tax cuts of 1981, Conservatives are inclined to tout Reagan’s Tax Reform Act of 1986. This is the oft-hailed piece of legislation that lowered the top marginal tax rate on personal income from 50% to 28%. But this bill wasn’t as much of a tax cut as it was a reorganization of tax obligations. In addition to cutting personal income tax rates, it also closed a great deal of significant tax deductions (which is effectively a tax hike in itself), increased restrictions on retirement accounts, and expanded the criteria for the Alternative Minimum Tax which extended the umbrella of this tax burden to affect many middle-class taxpayers.

As long as conservatism and especially libertarianism claim to be the ideologies opposed to high levels of spending and taxation, Reagan seems like an unlikely hero. The excuses that so-called “Reagan Republicans” make for him on these issues seem flimsy and misinformed. In comparing his words to his deeds, Reagan seems no different than any other politician: outright hypocritical.

Regulations and Free Trade

During Ronald Reagan’s presidential campaign, the third of his four pillars of Reaganomics was regulatory reform. Namely, he was on a mission to reduce federal regulations (an applaudable goal). This is, in fact, one of the chief reasons why democrats criticize his presidency; he supposedly spent his tenure recklessly deregulating.

In a speech given by Art Laffer, Reagan’s economic advisor, Dr. Laffer mentions a story of Reagan dropping the Code of Federal Regulations on a table to demonstrate its massive size. “Do you remember that?” Laffer asked the audience, “Do you remember when he dropped it, the thump that went on the table? I mean, it was a phenomenally impressive thing, not only for him to have lifted it, but also for him to have reduced it” (emphasis mine).

The problem here is that Reagan didn’t reduce the code. It is true that Reagan oversaw a few years of very minor deregulation (in the first half of his first term, the Code of Federal Regulations decreased by about 1% of its total length). One of his first acts in office was to sign Executive Order 12291 which required an additional degree of bureaucratic oversight before a federal department could pass a regulation. This did allow for the delay and revision of certain regulations (if a regulation was rejected — and many were — the department was able to modify and resubmit it for approval). But the decade of the 1980s saw a roughly 20% increase (this brought the Code of Federal Regulations from a total of just over 100,000 to just over 120,000 pages, if we focus on only the regulatory pages).

In fairness, some level of deregulation did occur under the Reagan administration. But in fact, the same could be said of Jimmy Carter. As William A. Niskanen, who served on the Council of Economic Advisors to Reagan and is the namesake of the Niskanen Center that was formed after his death, writes: “The reduction in economic regulation that started in the Carter administration continues, but at a slower rate.” Both Presidents contributed to some degree of deregulation. But as a counter to these positive policies, he also contributed a “substantial increase in import barriers.” Niskanen concludes that “deregulation was clearly the lowest priority among the major elements of the Reagan economic program.”

Like his tax policies, Reagan’s approach to regulation was a mixed bag. There is some good in there, and I believe in giving credit where due, but it is important to keep in mind that Reagan’s deregulatory policies are grossly overstated by both parties. Even if we are to applaud his positive contributions here, intellectual and philosophical consistency would demand that we offer similar deference to Jimmy Carter’s regulatory record. Nonetheless, what deregulation did occur arguably accounts for some of Reagan’s most positive policies (such as the elimination of certain price controls and anti-trust law reduction).

It is still difficult to refer to Reagan as a “pro-capitalism” president, though. His rhetoric, of course, makes Reagan sound like the most capitalistic president since Calvin Coolidge (this, actually, could still be true, but only because all of the interim presidents demonstrate such a poor performance in this category as well). But Reagan was a protectionist, and a hypocritical one.

In his 1988 State of the Union address , Ronald Reagan said, “We should always remember: Protectionism is destructionism. America's jobs, America's growth, America's future depend on trade — trade that is free, open, and fair.” The hypocrisy is apparent when Reagan’s policies on trade in the preceding years are examined.

Not only did Reagan expand the New Deal-style agricultural subsidies that have persisted for nearly a century now, but he reinstated import quotas on certain crops. The purpose of import quotas, of course, are to artificially limit the supply of goods to protect domestic producers. Naturally, this comes at the expense not only of foreign producers but also of domestic manufacturers who have to now purchase more expensive supplies.

Additionally, Reagan pressured various other countries to accept reductions in American imports of the commodities they produce, such as steel. Such tactics were used to convince countries to restrict their own production and export of goods imported by the United States, including textiles, lumber, machine tools, and computer chips while simultaneously requiring Japanese automobile manufacturers to order more American-made parts. This doesn’t touch on the tariffs imposed on other goods as well as strengthening the unquestionably cronyist Export-Import Bank.

Even Milton Friedman, who often spoke very highly of Ronald Reagan, wrote a condemnation of Reagan’s protectionist policies entitled “Outdoing Smoot-Hawley” (a reference to a massive tariff bill signed into law under the Hoover administration that is generally considered to have contributed to the severity of the Great Depression). In it, Friedman takes the Reagan administration to task for the so-called “voluntary” restraints imposed on other countries and calls Reagan out for not using his veto power to prevent these bills (which, again, removes the “Democrat controlled Congress” excuse that Republicans love to fall back on when defending Reagan’s shortcomings). Friedman accuses William Brock and Clayton Yeutter, Reagan’s trade negotiators, of “making Smoot-Hawley look positively benign.”

In an effort not to misrepresent Dr. Friedman’s position, I'll note he calls Reagan “a strong supporter of the principle of free trade” (though he cites his “admirable rhetoric” as being a part of this perspective), but condemns his protectionism as “offsetting some of the good effects of President Reagan’s domestic policies.”

It is, of course, common for many conservatives to praise protectionist economic policies. In this, it is plausible that between Reagan’s exaggerated, albeit mixed, performance on regulations and his anti-free trade protectionism, these are categories that may only reinforce the Republican love of Reagan.

But one thing remains clear: Reagan was not the free-enterprise supporting capitalist he claimed to be.

Civil Liberties and Foreign Affairs

Perhaps Reagan’s most egregious hypocrisies were his actions in the name of the “War on Drugs” while espousing the common bromides about liberty. “Government’s first duty,” a common Reagan quote from a 1981 speech begins, “is to protect the people, not run their lives.” But when it came to what people put into their bodies — even for medicinal purposes — Reagan was energetically devoted to running the lives of United States citizens.

In 1982, the National Academy of Sciences published a six-year study that concluded with a recommendation for the decriminalizing of marijuana which, the study said, had “as yet no clear evidence on the possible long-term effects” on potential health consequence. Reagan chose to ignore this study and, in the same year, picked up the Nixon mantle and raised “the battle flag . . . to win the war on drugs.” California marijuana was one of his primary targets.

Under this small-government, liberty-loving president, government spending on law enforcement, prisons, and the Drug War skyrocketed, along with incarceration rates. By 1989, the number of prisoners had doubled, and the majority of those added under Reagan’s tenure were non-violent marijuana offenders.

On top of his expansion of government for the purpose of curtailing civil liberties, Reagan convinced Congress to suspend the Posse Comitatus Act of 1878, which was passed to prevent the government from deploying the military against US citizens. The president then used the military and law enforcement (which itself was now becoming militarized) to move through California to destroy marijuana plants.

His offenses didn’t stop there, either. In 1984, Reagan signed the Comprehensive Crime Control Act into law. Among other things, this is the law that reinstated the legality of “civil asset forfeiture” by law enforcement officials. According to this policy, police can seize property from somebody regardless of the owner’s innocence in the eyes of the law; it is effectively charging the property with the crime, and regaining your seized assets is nearly impossible. When James Burton was arrested in 1987 for growing marijuana to treat his glaucoma, his entire 90-acre farm was seized, and both he and his wife were given ten days to leave the property. Burton was not allowed to give any testimony in defense of this property seizure because, in the words of the District Judge Ronald Meredith who ordered the confiscation, “there is no defense against forfeiture.” This created a major avenue for corruption and police revenue that is still abused today. By 1987, police were sizing more than $1 billion a year from US citizens, 80% of whom were never charged with a crime.

In 1986, Reagan signed into law The Anti-Drug Abuse Act. In this bill, mandatory minimum sentences for drug related arrests were not only reinstated, but they were made more severe. This removes a judge’s right to use his or her own discretion when applying a sentence to a drug offender. Under this law, people have spent decades in prison for peacefully smoking marijuana, something that Reagan’s own daughter admitted to doing in her autobiography. This, of course, begs the question if he would have put his own daughter through the same severe punishments that he made hundreds of thousands of other people go through.

And if conservatives believe Reagan’s pro-Constitution rhetoric, his actions in the Drug War only serve to disappoint. While enforcing the Reagan drug laws, the military and law enforcement agents regularly violated the 4th Amendment to the Constitution, which was intended to protect citizens against “unreasonable searches and seizers.” In a dissenting opinion, Justice Thurgood Marshall argued that “ There is no drug exception to the Constitution.” Reagan, of course, thought otherwise.

And while Conservatives will continue to praise Reagan for his Cold War policies, they should at least acknowledge his hypocrisies in his Drug War/Cold War contradictions. After Congress passed the Boland Amendment, the US military was explicitly prohibited from providing military aid to Manuel Noriega’s “contras” who were fighting against Communists in Nicaragua. To continue secretly funding the contras, the Reagan Administration — headed by Lieutenant Colonel Oliver North — illegally sold weapons to Iran (a country whose potential dangers conservatives continue to bluster about) to funnel money under the table to Noriega. While this was taking place, Noriega was directly aiding the smuggling of cocaine into the US from Colombia. This was not a secret to the administration . While the Reagan administration had no issues with jailing medical marijuana patients domestically, they turned a blind eye to Cold War allies who were smuggling drugs into the US.

If these affronts to civil liberties aren’t enough, Reagan was also terrible on the issue of the conservative sacred cow: gun rights. Not only did Reagan ban open-carry handguns in California in 1967 , he also signed a Federal automatic weapons ban in 1986 . This bill, the Firearms Owner Protection Act, is praised as a pro-gun act for its repeals of previous regulations, but one can’t ignore the restrictions that were added. Reagan’s support of gun control continued after his presidency, when he supported both the Brady Handgun Violence Prevention Act and the 1994 Assault Weapons Ban (conservatives like to criticize Clinton for this law, but it likely could never have passed without Reagan’s support, passing the House of Representatives by only two votes).

Conclusion: Why Is Reagan so popular?

Just as Democrats laud Bill Clinton for the 1990’s economy, conservatives revere Reagan for the boom of the 1980s. A President usually receives credit for the good things and the blame for the bad things that occur under his presidency, regardless of causality.

But if we are going to claim principles in our political views, causality matters. If we are going to say, “I support limited government, low taxes, and liberty” then we have to acknowledge that Ronald Reagan stood steadfastly against all those things — not in words, of course, but in practice. Given these facts and the 1980’s economic growth, either our political philosophy is wrong and we should praise not only Ronald Reagan but also the many Progressives he resembled in office, or our philosophy is correct and other elements should be credited with the Reagan economy.

In this case, the most likely explanation is the tightening of monetary policy that took place in the Reagan years. From a free market standpoint, this was an unquestionably good policy. Paul Volcker, the Federal Reserve Chairman during the Reagan years, allowed interest rates to float back up toward their natural levels, allowing for economic correction following the so-called “stagflation” period of the 1970s.

The only problem with this explanation: Paul Volcker was a Carter appointee; Reagan merely inherited him. Some people, like Milton Friedman, claim that without Reagan, Volcker never would have allowed interest rates to rise. This doesn’t hold water, either, considering that Volcker had already allowed interest rates to begin rising in 1979. Perhaps, though, Reagan did understand the benefits of Volcker’s policies and supported them. If so, it serves as a minor positive — considering the president merely has influence, but not control, over monetary policy — in the middle of countless negative policies.

Another reason conservatives, and even some libertarians, continue to idolize Reagan is because he was a fantastic public speaker who provided some wonderful quotes. This is something I have no intention of contesting. When I read quotes by Ronald Reagan, I can’t help but appreciate their wit and veracity (quips like “Socialism only works in two places: Heaven where they don't need it and hell where they already have it” are absolutely cheer-worthy). But rhetoric is an insufficient basis for judging a president, and if we accept the adage that “actions speak louder than words,” then Ronald Reagan was yelling progressivism during his entire presidency.

This article was previously published at The Liberty Conservative.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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