What Reagan Did & What the Democratic Party Should Have Done

On January 11, I circulated my last commentary. I concluded with, “Next: What Reagan did and what the Democratic Party should have done.

In discussing what Reagan did, I could focus on the outrageous things he did such as creating a huge tax cut focused mostly on the rich, and creating a huge deficit which so shocked his budget director, David Stockman, that he resigned and wrote, “The Triumph of Politics” pointing out the irresponsibility of these policies. (Even at this late date the book is worth reading.) 

What Stockman, however, failed to understand was that there was method to this madness. For years, the right, which before Reagan was not the uniform face of the Republican Party (The Republican Party in days of yore contained such liberals as Fiorello LaGuardia, Jack Javits and John Lindsey in New York, Senator Case in New Jersey and Senator Morse of Oregon to mention a few.) was intend on destroying the gains made during the Administration of Teddy Roosevelt, Woodrow Wilson, Franklin Roosevelt, Harry Truman and Lyndon Johnson all of whom had put a check on the unbridled power of wealth, and created for 90% of the rest of the people a new empowerment through anti-trust laws, regulations of health, safety and the environment, working conditions, minimum wage, unemployment insurance, Social Security, Medicare and Medicaid to mention a few. 

For years, repeated attempts had been made to eviscerate these programs but the public would have none of it. Now for the first time a new strategy was unfolding. Until then the cry was if we cut or abolish these programs we will be able to cut taxes. Now the motto was cut taxes, which is always popular even if the bulk of the cuts benefit few, and then faced with a crisis of debt make the cutting of programs a matter of fiscal necessity. (Democrats opposed these initiatives but they had no positive program in response. They feared the label, “The tax and spend party.)

These irresponsible tax-cutting measures were a clever plan but the country had not yet been sold on either, that large deficits could be sustained, or that cutting taxes would generate more revenue for the government. The famous Laffer curve turned out to be laughable and Bush’s pére’s claim during the previous primary that supply side economics was voodoo economics, seemed well founded. Reagan succumbed to the pressure and in 1982 an increase in taxes which repealed 1/3 of the previous reduction was signed by Reagan resulting in a boom and his overwhelming re-election vis a vis McGovern.

As the deficits grew Republican spinmeisters supported by the popular press continued to foster the misconception that Democrats were an irresponsible spendthrift party and that the deficit was not caused by Reagan tax cutting. A check of the facts reveals that The Democratic Congress during Reagan years authorized spending very close to what was called for in the Reagan budgets but with different priorities. It is also to be noted that during the Carter years spending as authorized by Congress was substantially below the period of the Reagan years. But Democrats, neither then nor now, seem inept at getting the truth out. Whether this is because of a press that has no interest in the truth, or because of Democratic ineptness is hard to determine. When the 1982 recession hit, Reagan blamed Carter and the popular press fostered this myth. To this day the myth of a highly successful Reagan administration is maintained and rarely challenged.

But the cleverness of Reagan and the ineptness of Democrats can best be found in two items that Reagan initiated. One was indexing, of tax rates. Democrats had always been the champions of a graduated income tax but inflation was pushing more and more middle class people into ever higher tax brackets thus undermining the principle of a graduated tax. Democrats never focused on this problem. Reagan who had no attachment to this principle, pushed through a clause in the tax code indexing tax brackets to inflation, and thereby became, in the eyes of the middle class, the man who protected them against creeping tax increases. This should have been a Democratic initiative but this like many others was too much to expect from a party that was suffering from arterial sclerosis and had run out of ideas.

During the Reagan years it became apparent that Social Security would face a crisis within a matter of decades unless fresh income injected into the system but it was on Reagan’s initiative that the cap on SS payroll taxes was raised, and taxes were increased on a portion of Social Security payments to people in the higher brackets, which was to be plowed back into the Social Security Trust fund, thus postponing the crisis date by decades. It should have been Democrats who were pushing for this but as I have said, Democrats have run out of ideas and initiatives. UNTIL DEMOCRATS STOP BEING THE PARTY OF CONSERVATISM AND AGAIN BECOME THE PARTY WITH SOLUTIONS, THE ASCENDANCY OF THE RADICAL RIGHT WILL CONTINUE AND ACCELERATE.

At the same time the Right has fostered a propaganda campaign that has gone on for decades that nothing can save Social Security and that the young are paying into a system from which they will never see a penny. A survey some years ago found that more young people believe in UFOs than believe they will ever see a penny from Social Security. In this kind of atmosphere it is no wonder that Bush, Jr. can work toward the abolition of Social Security and anybody who thinks that the present plan for private accounts is anything less than the first step toward that end is naïve.

The ineptness of the Democrats on this issue can best be seen by putting their emphasis on there being no immediate crisis. Well, it may not be immediate but it is looming and the sooner it is addressed the less painful it will be. 

Kerry epitomized this paralysis when during the campaign he recognized a potential problem but then ruled out all possible solutions. He then suggested a commission to come up with a plan after he is elected. It is obvious that if an increase in taxes and a reduction in benefits are ruled out there is not much for a commission to do. But Kerry was busy pandering to his audience as he did when he opposed Yucca mountain in Nevada for which he had voted. 

Bush is very good at identifying problems and then proposing solutions which would only exacerbate them, or abolish programs that need minor surgery. But Democrats and the American people will lose, until and unless, Democrats offer real alternatives and real solutions rather than only angry denunciations.

Next time: Reagan and the Air traffic controllers strike, Clinton and “the end of welfare as we know it”, and Bush initiatives and Democratic ineffective responses.