Will the Real Reagan Legacy Please Step Forward…

By J.M. Hamilton (4-18-11)

The punishment which the wise suffer, who refuse to take part in government, is to live under the government of worse men.   – Plato

Was that Ronald Reagan I saw on the television screen broadcasting from George Washington University (GWU) last week (?)… double take… no, it’s President Obama.  Many people ascribe various things to President Reagan, and the extreme right and the Republican Party has literally built a cult around the man.  But a review of the former president’s record would seem to suggest that, despite espousing free market principles and free trade dogma, President Reagan was much more of a pragmatist, more akin to the man we saw at GWU, than anybody the Republican Party has to offer, presently.  For example, a writer for the CATO institute once called President Reagan the most protectionist president since Herbert Hoover, so much for free trade rhetoric.  For much of the Reagan Presidency the top tax rate was 50%, and yet, somehow the economy boomed for much of the 80’s (the top tax rate today, thanks to the Bush tax cuts, is 35% and both the economy and the federal budget are a mess – ersatz “economic recovery” aside).  And writing of budgets, Reagan - despite anti-government rhetoric - set off the biggest round of deficit spending known to man, and this same annual deficit trend is still with us some thirty years later, aligning the former president more closely to Lord Keynes than Ayn Rand.

What the hell…didn’t former Vice President Richard Cheney state that “Reagan proved deficits don’t matter?”

The President Obama America saw last week was a hardened pragmatist and a leader, who offended the extremist in both political parties, by advocating reductions in government spending and increased taxes.   The counter point to president Obama is Representative Ryan, whose budget proposals are more closely aligned with the caricature of the former president and the myth: cut taxes – cut spending.  They called Reagan the “smiley face of American conservatism” for a reason, but today’s Republican Party hasn’t a clue; and the Democrats, barring a complete economic meltdown, will return to the oval office in 2012, by default.  The Afghanistan debacle would seem to suggest that some of the sheen has worn off General Pertraeus' stars, and his surge, and correspondingly, off possible presidential aspirations.

But heh, if you want real help with the government, why not talk to the plutocracy that really calls the shots.   Need tax advice?  Contact Roger Immelt, CEO of General Electric; apparently G.E. pays no taxes, despite earning in excess of $14 billion last year, and in the interest of maximizing shareholder value, enlists the support of former Treasury members on its tax team, not to mention a brigade of lobbyist.  Apparently tax avoidance is a blood sport at G.E.  Nasty rules and regs getting in the way of your derivatives or swaps trade?   No worries.  See, more than likely, any CEO on Wall Street, who more than likely, are all proactively lobbying the Republican Party to do away with pending derivatives rules and regs, sanctioned by Dodd- Frank.  Derivatives and swaps played a singular role in the 2008 crisis, and will play an even larger role in the next financials crisis.  These are just some of the guys that thanks to a Republican stacked Supreme Court, armed with a Citizens United decision, can control the nation’s destiny.   There’s just one problem... these gentlemen are not elected or paid to govern, but rather, they are paid to make sure the next quarterly statement sings, and god save the congressman, regulator, judge or citizen who would get in the way of that endeavor, social contract be damned.  Hence, the modern day Republican Party, and a co-opted Tea Party, and the cold embrace of the Koch Brothers, the monopolies and the oligarchs…  President Reagan, like President Obama, knew when to shelve the ideology.

Take Rep. Ryan’s pitch to privatize Medicare.  “Privatization” was the big buzz word during the Reagan/Thatcher years, and then it might have made some sense; but when government hands off responsibility for providing the public with services to monopolies and oligopolies, what “free market principles” are going to step in to achieve market efficiencies and economies of scale for the public betterment?

Answer:  None.    That is because monopolies, as creatures of the state, are nothing more than socialism by private proxy.

However, the reverse is completely true, that is to say, monopolies, enriched by government largess, will only seek to create greater barriers to entry, via legislative fiat, and grow larger, more powerful, and inefficient.   Look no further than Big Pharma and the dearth of new medicines coming on line, so much for President Bush’s (W) socialistic policies in the last decade, namely - Entitlement D of Medicare, or as we like to call it, the Big Pharma Entitlement Act.

So much for the Reagan myth as this hardcore conservative player.  The reality is Reagan and his staff were a bunch of stone cold political operatives and pragmatist, who when compared to the likes of LBJ, Richard Nixon, and Jimmy Carter, appeared to be conservative.  Had President Reagan actually acted upon his rhetoric, the Reagan presidency would have lasted all of one term.   President Obama’s speech at GWU, and his proposed course of action on fiscal policy, was more Reaganesque than Rep Ryan’s proposed course of action, and for that we should all consider ourselves more fortunate.