Vail Daily columnist Jack Van Ens: Voodoo economics put U.S. in a hole
President Ronald Reagan didn’t need to hitch his economic policy wagon to a star because he shined in Hollywood as a leading man. Naturally, then, Reagan’s fiscal views revolved around himself, guided by intuitional deep-seated convictions from which he never wavered.
He avoided financial analyses because Reagan’s mind didn’t work that way. Aides soon learned not to leave fiscal policy manuals with him to discuss. The president either let his mind wander or dozed during these discussions. That’s because he got bored.
The critics who dismissed
Reagan as an “amiable dunce” didn’t understand how the president dealt with financial information. He intuited rather than analyzed. His intuition didn’t thrive on fiscal strategies. Rather, he riveted it to what’s right and wrong financially.
Reagan’s undoing was that he seldom second-guessed his intuition. He rarely questioned the presuppositions upon which Reaganomics is based. He willed economic wishes into unalterable convictions.
Reagan brushed away the label “Reaganomics” even though he endorsed its fiscal theory. He scorned speech that sounded highbrow and stuffy.
Early in his presidency, when more than 80 percent of Americans judged the economy was tanking, Reagan voiced optimism to loyalists. During his Feb. 5, 1983, weekly radio speech, he saw the economic glass as half full.
With a joking demeanor that Reagan often used to undercut opposing views, he objected to the title “Reaganomics.” “It sounds like a fad diet or an aerobic exercise,” he wisecracked.
What are the essentials of Reaganomics? The late House Rep. Jack Kemp, once the quarterback of the Buffalo Bills, promoted massive tax cuts and government deregulation as the highway to unparalleled prosperity. Such reductions would unleash entrepreneurial forces guaranteeing an economic boom. Some suggested Kemp had his bell rung too many times on the football field. How could Reaganomics be true?
Kemp and Reagan naively believed that earnings generated from Reaganomics for the rich would trickle down to the middle and low classes. When the poor complained that the trickle rarely seeped toward them, Kemp and Reagan ditched trickle-down rhetoric. Instead, they spoke about supply-side economics, which sounded academically sophisticated and valid.
Supply-siders, besides predicting prosperity for most Americans, promised our government would become flush with cash, too. Reduced taxes, they argued, increased productivity and created more millionaires. This massive influx of dollars earners made would overflow the government’s coffers.
Because good times were right around the corner, Reagan assumed that increased military spending, getting government off everybody’s back, huge tax cuts and a balanced budget would magically happen simultaneously.
Proponents of Reaganomics didn’t listen to detractors. Instead, they repeated the supply-side jargon and predicted the economy would roar without deficits. Their faith was unshakable.
Reagan’s biographer Lou Cannon, in “President Reagan – the Role of a Lifetime,” described supply-side advocates as “expressing their convictions with an evangelical fervor more appropriate for a religious crusade than an economics discussion. Traditional economists and orthodox politicians soon learned that the supply-siders, with occasional exceptions, were impervious to argument. They believed in their economic gospel passionately, and matters of faith are not subject to empirical disproof.”
Supply-siders acted like the biblical fool.
“The way of the fool is right in his own eyes, but a wise person listens to advice” (Proverbs 12:15). When always right, why not stick to listening to your own voice, as Reagan did?
What fiscal havoc occurred when Reaganomics was implemented? Debt soared into the economic stratosphere. When Reagan left office, the federal debt in 1989 was $2.8 trillion, triple its size when the president took office in 1980.
This experiment to shrink the government, give massive tax breaks, and balance the budget was an immensely expensive failure.
George H.W. Bush’s gibe as presidential candidate during the 1980 Republican primary campaign about Reagan’s “voodoo economics” hit truth’s bulls-eye. It was all smoke and mirrors and still is.
William Keegan, in the British press’ Guardian, summed up how foolish Reaganomics is: “There was a fundamental flaw at the heart of Reaganomics, namely the idea-epitomized by the famous Laffer Curve-that tax cuts would pay for themselves via greater incentives. The truth was that the supply-side doctrine was a crude and intellectually shabby attempt to justify tax cuts for the rich.”
Reaganomics hiked the national debt, mortgaged our nation’s future and forced our children to pay the bills. Do you hear Reagan’s supply-side economics lingo tossed around by congressional conservatives today? Why hitch our economic policies to Reagan’s shooting star, which fizzled the first time around?
The Rev. Jack R. Van Ens is a Presbyterian minister who heads the nonprofit, tax-exempt Creative Growth (www.thelivinghistory.com), which enhances Christian worship through storytelling and dramatic presentations aimed to make God’s history come alive. Van Ens’ book, “How Jefferson Made the Best of Bad Messes,” is available in local bookstores for $7.95.