Editore"s Note
Tilting at Windmills

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January 25, 2008
By: Kevin Drum

THE REAGAN PRIMARY....James Joyner answers the insurgents on the right who think John McCain would spell the end of the Republican Party that Reagan built:

Ronald Reagan last ran for president 24 years ago. A lot has changed since then — partly thanks to his policies. We're not fighting the commies any more. We don't have marginal tax rates of 70 percent. It's now been 35 years since Roe v. Wade rather than 11.

And, frankly, Reagan's record — as opposed to his rhetoric — isn't exactly what those who pine for the Good Ole Days seem to think it was. Reagan did virtually nothing to advance the socially conservative agenda he talked about. He appointed Sandra Day O'Connor and Anthony Kennedy, two moderate swing votes, to the Supreme Court to go along with Antonin Scalia, his lone conservative appointee. And he signed the biggest illegal immigrant amnesty bill in the country's history. He allowed spending to skyrocket under his administration, leaving the country saddled with historic debt.

And he signed the INF treaty! And left the Department of Education intact! And raised taxes half a dozen times! And supported expansion of the EITC!

In fact, thanks to Tim Russert's obsession with Social Security, at last night's debate we got to see what fealty to Reagan's legacy really means to present-day Republicans. Here's the question:

Governor Romney, you are a big fan of Ronald Reagan. Will you do for Social Security what Ronald Reagan did in 1983?

And the answer is....no! Of course not. Because in addition to his half dozen other tax increases, Reagan raised the payroll tax to rescue Social Security. But no modern day Republican in his right mind would give that a moment's thought. So given a chance to emulate the master, Romney didn't just tap dance, he flat out repudiated him:

MR. RUSSERT: Well, Ronald Reagan raised the payroll tax, and he also raised the retirement age, and he saved Social Security with Alan Greenspan and Tip O'Neill and Bob Dole and Pat Moynihan....Would you do what Ronald Reagan did?

MR. ROMNEY: No, I don't want to raise taxes.

Well, neither does John McCain, I bet. But I gotta say: when it comes to truly emulating Ronald Reagan — hawkish; socially conservative but unwilling to spend much political capital on it; fiscally moderate; pragmatic when he needs to be — McCain is more in the mold of the real Reagan, as opposed to the currently popular cartoon version, than any of the other guys who were up on the stage in Boca Raton last night. Anyone who thinks otherwise just doesn't remember Reagan all that well.

Kevin Drum 1:00 PM Permalink | Trackbacks | Comments (23)

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kd: Anyone who thinks otherwise just doesn't remember Reagan all that well.

you make it sound like they have to be rational about reagan for all of them to get excited..

Posted by: mr. irony on January 25, 2008 at 1:08 PM | PERMALINK

These cartoon characters also do not remember the economy all that well. They think real GDP was spectular (average annual growth from 1981 to 1992 was only 3.0%) and they think tax revenues soared (real per capita income tax increases barely exceeded zero).

Posted by: pgl on January 25, 2008 at 1:09 PM | PERMALINK

Kevin -- have you read "Arsenals of Folly," by Richard Rhodes? If not, put it on the top of your list. Even better than "Making...," which won him the Pulitzer.

Posted by: Gore/Edwards 08 on January 25, 2008 at 1:10 PM | PERMALINK

I wish Frank Luntz had his focus group dials going when Russert said Reagan raised taxes to see what would happen. Reagan worshipers' heads were exploding all across the country.

Posted by: Th on January 25, 2008 at 1:13 PM | PERMALINK

Good post. This is exactly why, as a Democrat, I fear McCain in the general election.

Posted by: tom veil on January 25, 2008 at 1:15 PM | PERMALINK

Did I just read Kevin call Reagan "fiscally moderate"? I do not think these words mean what you think they mean, Kevin.

Posted by: Ron on January 25, 2008 at 1:15 PM | PERMALINK


Posted by: uri on January 25, 2008 at 1:17 PM | PERMALINK

Did I just read Kevin call Reagan "fiscally moderate"? I do not think these words mean what you think they mean, Kevin.

Compared to the Bush II program of massive tax cuts followed by massive borrowing from China, he was.

Posted by: Mnemosyne on January 25, 2008 at 1:25 PM | PERMALINK

Did I just read Kevin call Reagan "fiscally moderate"? I do not think these words mean what you think they mean, Kevin.
Posted by: Ron

I've given up on Kevin vis a vis economics. He just doesn't get what is happening. He persists in believing houses appreciate when what's really happening is the purchasing power of his money is evaporating. Asset bubbles don't create wealth. - they just move depreciating dollars around.

Fed helpless in its own crisis
By Henry C K Liu


'For example, the current credit crisis has evolved from the unregulated global growth of structured finance with the pricing of risk distorted by complex hedging which can fail under conditions of distress. The proliferation of new market participants such as hedge funds operating with high leverage on complex trading strategies has exacerbated volatility that changes market behavior and masked heightened risk levels in recent years. The hedging against risk for individual market participants has actually increased an accumulative effect on systemic risk.'


'While a predominant amount of global debt is denominated in dollars, on which the Fed has monopolistic authority, the notional value used in structured finance denominated in dollars, which reached a record $681 trillion in third quarter 2007, is totally outside the control of the Fed. Virtual money is largely unregulated, with the dollar acting merely as an accounting unit. When US homeowners default on their mortgages en mass, they destroy money faster than the Fed can replace it through normal channels. The result is a liquidity crisis which deflates asset prices and reduces monetized wealth. '


'The Fed can create money, not wealth

Money is not wealth. It is only a measurement of wealth. A given amount of money, qualified by the value of money as expressed in its purchasing power, represents an account of wealth at a given point in time in an operating market. Given a fixed amount of wealth, the value of money is inversely proportional to the amount of money the asset commands: the higher the asset price in money terms, the less valuable the money. When debt pushes asset prices up, it in effect pushes the value of money down in terms of purchasing power. In an inflationary environment, when prices are kept high by excess liquidity, monetized wealth stored in the underlying asset actually shrinks. This is the reason why hyperinflation destroys monetized wealth.'


'The last decade has been the most profligate global credit expansion in history, made possible by a new financial architecture that moved much of the activities out of regulated institutions and into financial instruments traded in unregulated markets by hedge funds that emphasized leverage over safety. By now there are undeniable signs that the subprime mortgage crisis is not an isolated problem, but the early signal of a systemic credit crisis that will engulf the entire financial world. '


'The role central banking plays in support of this systematic fleecing of the helpless poor everywhere around the world to support the indigent rich in both advanced and emerging economies has been to flood the financial market with easy money, euphemistically referred to as maintaining liquidity, and to continually enlarge the money supply by financial deregulation to lubricate and sustain a persistently expanding debt bubble.

The historical facts are that while the Fed kept short-term rates too low for too long, starting a downward trend from January 2001 and bottoming at 0.75% for the discount rate on November 6, 2002, and 1% for the Fed Funds rate target on June 25, 2003, long-term rates were kept low by structured finance, a.k.a. debt securitization and credit derivatives, with an expectation that inflation would be perpetually postponed by global slave labor.'


'Greenspan blames "the Third World, especially China" for the so-called global savings glut, with an obscene attitude of the free-spending rich who borrowed from the helpless poor scolding the poor for being too conservative with money. '


Lenders are simply afraid to lend and borrowers are afraid to take on more liabilities in an imminent economic slowdown. The Fed has a choice of accepting an economic depression to cut off stagflation, or ushering hyperinflation by flooding the market with unproductive liquidity. Insolvency cannot be solved by injecting liquidity without the penalty of hyperinflation.


Posted by: MsNThrope on January 25, 2008 at 1:38 PM | PERMALINK

Wait, did you just say that Ronald Reagan wasn't completely horrible? Get ready to be accused of being an Obama sympathizer.

Posted by: Anthony on January 25, 2008 at 1:46 PM | PERMALINK

Capitalism, Binge Lending and Spillage
As the big boys say in Alcoholics Anonymous, "I've spilled more booze than you've even thought of drinking." Likewise the shear waste and uneconomic spillage in US capitalistic practice is an unseen, mind boggling sum of money.
Having personally inked $$ billions of loan deals and met folks destined for both the White House and for jail the most important thing I would like each voter (and economist) to know is:
"The gross dollar value of the rank waste and economic inefficiencies in 'big boy' capitalism is more than sufficient to many times fund both Social Security and Medicare shortfalls."
When the corporate and financial types declaim that there isn't enough money to pay reasonable taxes and/or to provide a broad safety net for the disenfranchised folks in our society tell them to shut their greedy yaps. Offer them the following deal.
"You make sure the poor can eat and get medical necessities and we'll let you continue to take a small bite out of all the capital flows that wash around financial centers, including embezzlement like bonuses and commissions for your daily toil and for your latest bubble-like ponzi-smacking get-rich fiasco(s). But, be aware of our recognition that the Pound Sterling and the Euro, currency representatives for the full-out 'Socialism' of Europe, are hands down taking the Dollar to the cleaners. Significant change is needed and the broom is in your hands."
"For the moment!"

Posted by: Craig Johnson on January 25, 2008 at 1:47 PM | PERMALINK

Kevin wrote: "... McCain is more in the mold of the real Reagan, as opposed to the currently popular cartoon version ..."

The "insurgents on the right", as you put it, have been thoroughly brainwashed by the corporate right-wing extremist media machine (Limbaugh, Fox et al) to believe in the one-dimensional cartoon comic book version of Ronald Reagan, the Great Conservative Hero Who Crushed The Liberal Elites, Unleashed The Free Market, Restored America To Greatness, and Defeated the Soviet Union In Toe-To-Toe Nukular Combat.

And on the other hand they've been brainwashed to believe in the cartoon comic book version of the Powerful Evil Liberal Elites, who somehow, despite Reagan's Great Victory and the dominance of the Federal government by the Republican Party for most of the last generation, are still Running Everything and responsible for everything that's wrong in the lives of Poor Pitiful Conservative Victims (eg. Limbaugh's millions of Ditto Heads).

The "insurgents on the right" have been spoon-fed such brain-rotting drivel for the last generation, until they have been reduced to weak-minded, ignorant, gullible dupes who are incapable of dealing with anything other than one-dimensional cartoon comic book stereotypes.

Posted by: SecularAnimist on January 25, 2008 at 1:49 PM | PERMALINK

I think Kevin is exactly right here. The real Reagan from the 1980's is so much different from the cardboard version put out by the current Republicans it is not even funny. For example:
1) When the deficit got high, he raised taxes (or took back some of his previous tax cut if you prefer). Why, it is almost like he was reality-based.
2) When U.S. forces were attacked in the Middle-East (in Lebanon), he didn't go to war, instead he pulled back. How Victor Davis Hanson and Rudy Guiliani would have excoriated him. In fact, his foreign policy over all was a cautious one, as seen by the fact that his great military action was ... invading Greneda.

One can certainly criticize and dislike the Reagan presidency, and if one is liberal, one should dislike much of it. However, it did have at least some awareness that policy had to be adjusted to reality, a trait noticeably lacking the Bush presidency or the current Republican crop. I would describe what is going on by saying the modern Republican party has thrown overboard almost all Reagan's good points while sticking religiously to his bad ones.

BTW, speaking of Reagan, I know that Paul Krugman and others on the liberal side have been quite critical of the way he supposedly played to black/white racial divisions for his political advantage in the 1980 campaign. Noting that Joshua Marshal at Talkingpointsmemo.com is now highlighting a South Carolina poll showing that the Clintons' racial divide campaign has successfully driven Obama's white support in that state down to 10%, I eagerly await Krugman's (and other liberal commentators) equally vehement criticism of the Clintons.

Posted by: Counterfactual on January 25, 2008 at 2:04 PM | PERMALINK

I thought Romney's answer was pretty clever, "I don't want to raise taxes". Notice he said want, no politician wants to raise taxes -sometimes they do it because of a sense of fiscal responsibility. Just maybe he has left himself some wiggle room.

Posted by: bigTom on January 25, 2008 at 2:04 PM | PERMALINK

Kevin is right. But the reason McCain is a lot more like Reagan than any of the other candidates is geography. He is a Westerner. Reagan was from California, McCain from Arizona. There is a BIG difference between the Western "conservatives", the Northern "conservatives", and the Southern "conservatives". I think everybody has had more than enough of the Southern variety: Big government PORK spending for the faithful!, Deficits don't matter because the Rapture is near!, Ten Commandments in every office building!, What are you doing with your weewee!

Posted by: Doc at the Radar Station on January 25, 2008 at 2:49 PM | PERMALINK

McCain will also be more like Regan since he'll have to take naps everday. The guy is too old. Whoever he picks as his VP will make a difference in the race for at least a few percent.

Posted by: tomeck48 on January 25, 2008 at 2:52 PM | PERMALINK

"But I gotta say: when it comes to truly emulating Ronald Reagan — hawkish; socially conservative but unwilling to spend much political capital on it; fiscally moderate; pragmatic when he needs to be — McCain is more in the mold of the real Reagan"

You forgot old. Really, really old.

Posted by: Aaron on January 25, 2008 at 2:56 PM | PERMALINK

I'm really coming off as some paranoid nut lately, but there does seem to be a common thread here.

Hmmmm. Take a look at who is or was a member of the "trilateral commision." Let's call it the TC:

Carter - Yes, and 18 members of his cabinet.
Reagan - No, but
GHW Bush - Yes
Clinton (the male)- Yes
W Bush - No, but
Cheney - Yes

Add in Greenspan, Wolfowitz, Feinstein and one question comes up: Are these people representing us at the TC meetings or is it the other way around?

I'm not saying the TC controls the world, but it seems to me they have done a pretty good job of forwarding the interests of the ultra-rich and the corporations at the expense of the average world citizens since they were formed by Rockefeller in 1973.

Posted by: Tripp on January 25, 2008 at 3:51 PM | PERMALINK

The actual, real Reagan record could not possibly be any less relevant. The cartoon one is the only one who counts.

And b/t/w, Fallows is a good indicator of what will happen in the general. The vast majority of voters will not hear his crazy lurch-to-the-right nonsense. All they'll get is a good-looking guy who SEEMS Presidential, and sounds good too. Plus he isn't that horrible Democrat (whoever it may be).

How quickly they forget! (Actually, they forget in about two years or so...)

Posted by: Jim Pharo on January 25, 2008 at 5:04 PM | PERMALINK

All you clever liberals forget how Reagan invaded the Soviet Union and liberated them from Communism! And you guys say wars never solve anything.

Posted by: Conservatroll on January 25, 2008 at 8:08 PM | PERMALINK

Not only that, Reagan's inspired tax plan (well, Congress really votes on it) did not have a lower capital gains rate.

Posted by: Neil B. on January 25, 2008 at 9:27 PM | PERMALINK

also, if congress had passed reagan's budgets exactly as the president presented them, we still would have tripled the national debt. blaming spending on the congress is notably transparent bullshit.

Posted by: benjoya on January 25, 2008 at 11:00 PM | PERMALINK

I disagree. Reagan claimed to be balancing the budgets through his first term though he wasn't and through his second term claimed to be putting the budgets on a path to balance even though the deficits were growing. He lied. Candidate Romney lies too in the Reagan mold. "Read my lips no new taxes" eventually became the GOP version of this lie, but even Democrats have learned they have to choose their words carefully when it comes to taxes, which is one of the reasons Bill Clinton is a hero to me. He ended (albeit temporarily) 12 years of madness.

McCain is more like Bob Dole; a one time fiscal hawk forced to grovel to the anti-tax jihadists. Boy, is he looking feeble and pathetic trying to grin his way through the crap he's talking.

Posted by: dennisS on January 26, 2008 at 7:45 AM | PERMALINK



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