June 13, 2004

Personal Memory Suggests Return to Reaganomics

This has been a Reagan Week -- as the nation mourned his death and honored him with a state funeral.

Those of us having had personal contact with him must be forgiven for reminiscing.

As a newspaper publisher and columnist years ago, I enjoyed professional relationships with my congressmen – starting with Rep. John Ashbrook of Jamestown, Ohio.

Ashbrook was the original "conservative."  He was nearly alone in promoting less government and less spending.

He once invited me and wife Cona to a barbeque at his farm to meet a true conservative somewhat known as host for General Electric TV Theater.  

There were 50 or so guests milling around under the trees. We met and exchanged pleasantries with "Ron," the guest of honor.

However, I tagged after William Buckley whose syndicated column was famous for its polysyllabic prose.  

The event’s sanitary facility was a single bathroom in the old farmhouse. My wife, upon trying the door, found it locked. Presently Ronald Reagan emerged with a big smile, small bow and cheery, "Be my guest."

He went on to become twice-governor of California and president of the United States.

Upon Reagan’s first inauguration, our new congressman, Ralph Regula, arranged front row seats for us and an invitation to the inaugural ball.

A couple of years later, the President sent me a personal note -- signed "Ron" on White House stationery – in recognition of  a small service.

That framed note hangs on a wall of my study. I charge 25 cents admission to view it.

 * * *

Of all the calumnies dumped on Mr. Reagan, the most absurd is that he was responsible for great budget deficits by cutting taxes.

The fact is that he inherited a $79 billion deficit from Carter Democrats. This plus an economic slump commonly called "stagflation" -- stagnate growth plus inflation.

Reagan had to deal with Democrat-controlled Congresses in his crucial first term and in the first half of his second term. Successes did earn him a Republican Senate in the last two years.

Reagan also inherited the highest income tax rates in U.S. history, growth barely a half-percent, inflation 13.3 percent unemployment 10.8 percent, a prime interest rate of 19 percent, and a Dow industrial stock average of 971.

The Reagan tax cuts boosted economic growth to 4.7 percent and brought unemployment down to 5.5 percent.

Most economists say growth of 3 percent is about all that can be absorbed without inflation. Unemployment of 6.2 percent is the average since that index was established in the Truman presidency.

Liberals persist in accusing Reagan of creating budget deficits by tax cuts that "deprived" the government of revenue.

In fact, revenue began to climb as freed-up money moved into the market.

 Congress, however, accelerated spending until the national budget in Regan’s last year hit $l.1 trillion, and the deficit $153 billion.

Regan regularly sent balanced budgets to Congress, which promptly declared them "DOD" – dead on arrival.

A favorite gambit was to pass a bloated budget on the last day of its operating cycle – daring Reagan to veto it and delay Social Security checks.

The president was bold, but not stupid. He signed the blackmail.

Economists credit "Reaganomics" – originally a derisive term coined by liberals -- with rescuing the economy. Yet, it provided fuel for the greatest economic boom in American history.

President Reagan remarked at the close of his term: "I knew Reganomics was working when the Democrats stopped calling it Reaganomics."

After Regan, Presidents George H. Bush and Bill Clinton came into office. Spending, budgets, taxes and interest rates drifted back up. The economy started to sag.

Enter President George W. Bush with modest, temporary, tax cuts again. Thus he was able to scrape past Clinton’s near-recession.

Past experience suggests that permanent tax cuts would be more effective.

Economic growth and jobs are on the rise. However, the war on terrorism is an unexpected burden.

The ship of state needs a steady hand on the helm – Reagan-wise that is.

Lindsey Williams is a Sun columnist who can be reached at linwms@lindseywilliams.org