TBV wrote:
The reluctance in some quarters to recognize Reagan's leadership is instructive. Perhaps if he had allowed the Carter recession to drag on for ten more years, he would at least have matched FDR's performance during the Depression and thus gained true immortality.
I recognize Reagan's leadership.
He just had the benefit of some favorable tailwinds along the way that I think made him look a bit better than he might have looked in the 2000-2008 period, for example.
As far as the steps the Fed took under Volcker to bring inflation under control, I don't think Reagan gets any credit for that. If anything, the Reagan administration pressured the Volcker Fed to be less restrictive in its monetary policy.
I think to be fair one must also point out that in fiscal matters there was a bit of a disconnect between the Reagan myth and the Reagan reality.
When it comes to spending, although Reagan spoke of reducing the size of government, the size of the federal government increased during his presidency as a percentage of GDP (see statistic in article below).
When it comes to taxes, although Reagan talked about reducing tax burdens, he signed off on many tax increases during his presidency.
Here is an article with an overview of tax and spending policy during the Reagan years:
http://money.cnn.com/2010/09/08/news/ec ... /index.htm
On Taxes:
After Reagan's first year in office, the annual deficit was 2.6% of gross domestic product. But it hit a high of 6% in 1983, stayed in the 5% range for the next three years, and fell to 3.1% by 1988. (By comparison, this year it's projected to be 9% but is expected to drop considerably thereafter.)
So, despite his public opposition to higher taxes, Reagan ended up signing off on several measures intended to raise more revenue.
"Reagan was certainly a tax cutter legislatively, emotionally and ideologically. But for a variety of political reasons, it was hard for him to ignore the cost of his tax cuts," said tax historian Joseph Thorndike.
Two bills passed in 1982 and 1984 together "constituted the biggest tax increase ever enacted during peacetime," Thorndike said.
There were other notable tax increases under Reagan.
In 1983, for example, he signed off on Social Security reform legislation that, among other things, accelerated an increase in the payroll tax rate, required that higher-income beneficiaries pay income tax on part of their benefits, and required the self-employed to pay the full payroll tax rate, rather than just the portion normally paid by employees.
The tax reform of 1986, meanwhile, wasn't designed to increase federal tax revenue. But that didn't mean that no one's taxes went up. Because the reform bill eliminated or reduced many tax breaks and shelters, high-income tax filers who previously paid little ended up with bigger tax bills.
"Some of these taxpayers were substantial contributors to the Republican Party and to the president's re-election campaign, and had direct access to the White House. Reagan rebuffed their pleas," wrote J. Roger Mentz, the Treasury assistant secretary for tax policy in 1986, in a Tax Notes commentary last year.
All told, the tax increases Reagan approved ended up canceling out much of the reduction in tax revenue that resulted from his 1981 legislation.
On Spending:
Thanks in part to the increases in defense spending during his administration, Reagan also didn't really reduce the size of government. Annual spending averaged 22.4% of GDP on his watch, which is above today's 40-year average of 20.7%, and above the 20.8% average under Carter.
Indeed, in one very symbolic respect he enlarged it. While in the early years of his presidency Reagan tried to shrink the IRS, by the end, the number of IRS employees hit an all-time high, according to Steuerle in his book Contemporary U.S. Tax Policy.
Ronald Reagan was a feel good presence (compared to Jimmy Carter's feel-bad presence) and I think he did some good things while in office. My point was that favorable demographics and lower oil prices in the 1980s helped a lot.
The oil story also has an added dimension that is not often discussed, and it involves the collapse in revenue from oil exports that the USSR experienced as a result of the dramatic declines in oil prices in the 1980s (oil prices were falling during almost all of Reagan's presidency). This dramatic decline in revenue made it much harder for the Soviets to keep up with U.S. levels of defense spending, which probably hastened its demise.
In my view, Reagan was an extremely skilled politician, but ultimately he did what all modern politicians do: he increased the size of the government and ran up debt that would be left to later generations to deal with.