Jewish World Review June 11, 2004 / 22 Sivan, 5764
It wasn't always easy for the Gipper
By Michael Barone
Take the economy. Reagan got his tax cut bill through Congress in July 1981. But it postponed the first tax cut until Jan. 1, 1983. Reagan had had to accept that date as a compromise to get the votes to pass the bill.
In the meantime Federal Reserve Chairman Paul Volcker persisted in his stringent interest-rate policy and the prime rate stayed up around the 11.5 percent to 20.5 percent level. Those interest rates squeezed the inflation out of the economy. But they also squeezed out a lot of jobs. Unemployment was above 10 percent from September 1982 to June 1983 the highest rates since World War II and far above the recent peak of 6.3 percent in June 2002. Hundreds of thousands of jobs vanished in the Rust Belt. The gross domestic product in real dollars fell in 1982 and in 1983 was up only 5.5 percent from five years before.
Democrats attacked "Reaganomics" for creating the deepest recession since the Great Depression. Reagan's job approval sank to 40 percent and below, bottoming in the Gallup poll to 35 percent positive and 56 percent negative in January 1983. In the November 1982 elections Republicans lost 26 seats in the House, leaving Democrats with the working majority they had not had in Reagan's first two years.
So there was heavy pressure on Reagan to change course. But he refused to put any pressure on Volcker to lower interest rates. He waited for his tax cuts to take effect, and they did. In March 1983 the economic expansion began, which lasted for the rest of Reagan's two terms. By the 1984 campaign season the Democrats no longer were attacking "Reaganomics," as Reagan gleefully noted. It was "morning in America," as the Reagan ads proclaimed, and Reagan was re-elected with 59 percent of the vote.
On foreign policy, too, Reagan stayed his course despite heavy pressure from orthodox liberals and the media. He was ridiculed for saying that communism would end up on "the ash heap of history" in June 1982 and for attacking the Soviet Union as an "evil empire" in March 1983. He insisted on deploying Pershing missiles in Western Europe, as his predecessor Jimmy Carter had promised, and was attacked in huge demonstrations in Europe from 1981 to 1983. Democratic presidential candidates vied to prove they were the most fervent supporters of a nuclear freeze.
Again Reagan persisted. The Pershings were deployed in November 1983 and the Soviet Union, when it finally got a healthy leader, sat down to the negotiating table with the United States. Two arms reduction not arms control agreements were reached during Reagan's second term. The Berlin Wall came down less than a year after he left office, and the Soviet Union ceased to exist two years later.
There are lessons here for us. Democrats and the media for months attacked Bush for a "jobless recovery." But the Bush tax cuts of 2003, putting into immediate effect tax cuts promised for 2005 and later, have stimulated a recovery that has created 1.2 million new jobs in the first five months of this year. Voters have not yet appreciated this, but it will be hard to ignore by November.
In Iraq, the interim government that will assume sovereignty June 30 is already in place, and its prime minister has thanked the American people for their sacrifices and says he wants American troops to stay on. A favorable United Nations resolution has followed.
George W. Bush has just gone through a bad two months in the news media and in the polls, and he has stayed the course. John Kerry argues that he has been unwisely stubborn in the face of facts. As new facts emerge, voters may conclude that Bush, like Reagan, was wise to stay the course as he did.
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© 2004, Michael Barone
© 2004, Michael Barone