Revisionist Reaganomics

In the 1980 presidential campaign, independent candidate John Anderson was asked to assess Republican standard-bearer Ronald Reagan’s plan to cut taxes and balance the budget. Both could be done, Rep. Anderson wryly noted, “with mirrors.”

As it happens, President Reagan did cut taxes and, when he signed onto a law that capped federal spending, managed to bring down the deficit a bit. Today, academics trying to rewrite the Reagan years may have to borrow one of John Anderson’s mirrors.

The actual data don’t support the spin they would dearly love to put on the 80s. “With a rhetoric about freedom to choose, the conservatives have created the freedom to lose,” Harvard political scientist Jacob Hacker said at a press conference here in Washington, D. C. last week.

“The poor lost the war on poverty when Ronald Reagan became president,” Howard University economist William Spriggs said at the National Press Club last week. Actually, the poverty rate went down during the Reagan years.

Dr. Spriggs alleges that Jimmy Carter had a better record of job creation than Ronald Reagan. Voters didn’t feel that way in 1980 when Carter ran for reelection or 1984 when his second-in-command Walter Mondale challenged President Reagan’s reelection.

The voters’ animus may have had something to do with the 7.1% unemployment rate that the Georgian bequeathed to the Gipper. When President Reagan retired, the unemployment rate was 5.3%.

To be fair, Forbes clocks Carter in at 10 million new jobs created in his single term. Meanwhile, the Democratic Leadership Council credits President Reagan with the creation of 2.34 million new jobs a year on average.

Because women were entering the workforce, unemployment went up during the Carter years even as the number of new jobs rose, according to Forbes. But Reagan faced the same gender dynamic and still left his successor with a net gain in jobs and a plummeting unemployment rate.

It should be noted that midway through the Carter Years, Congress passed a capital gains tax cut. At a forum at the Small Business Administration a few years back, MIT’s James Poterba noted that “the capital gains tax cut in the late 1970s helped increase the supply of start-up capital through the mid-1980s.”

This tax rate cut, and its impact on economic growth, was never mentioned in the Spriggs’ presentation. Dr. Spriggs admits that he teaches “economics with a value-based tinge to it.” What he values are government programs.

“We all understand that there is a certain size government,” Dr. Spriggs told the crowd of appreciative activists at the Campaign for America’s Future “Failure of Conservatism” conference. “We are below what it takes to run our government.”

For the record, federal spending has jumped from $1.9 trillion a year to $2.4 trillion annually during the Bush years. “Unfortunately, one of the things that conservatives have sold us on is states’ rights,” Dr. Spriggs avers. “States generate the worst economic policies.”

Unless they went for Gore in 2000 and Kerrey in 2004. “The red states are dictating policy to the rest of us,” Dr. Spriggs laments.

Consequently, he compares blue New Jersey favorably with red Mississippi. He does not note that Mississippi has a history of grinding poverty and New Jersey only knows economic growth in the past tense.

“From 2000-2005, 194,901 New Jersey residents moved to other states,” according to Americans for Prosperity. “Since 1965, New Jersey’s state government debt has increased almost 500%.”

“From 2000-2004, New Jersey’s government spending grew 13% faster than its economy.”

Additionally:

• “From 2000-2005 state and local government jobs increased by 52,544 while 4,000 private jobs were lost,” and

• “Between the years 2000-2004 New Jersey had the 8th lowest growth in average wage per job.”

Is this Dr. Spriggs’ idea of economic growth? Apparently. “We need to get away from answering ‘tax and spend, tax and spend,’ and say, ‘we generate jobs, you don’t,’” he told the approving audience at the Press Club.

Correspondingly, he rates Richard Nixon as the best Republican president and Jimmy Carter as the worst Democrat. “I don’t care how you got me the job,” he explained. “We can debate that later.” Like when, after the next election?

Malcolm A. Kline is the executive director of Accuracy in Academia.