Thursday, March 09, 2006

Ronald Reagan Spent and Spent Big

In an op-ed posted on his blog and at WisOpinion today, Scott Walker claims he got his small government principles from former Republican president Ronald Reagan.

Walker says this of Reagan: "One of his great principles was that limited government is best. He said that government wasn't the solution to our problems, government was the problem. He fought against big government mandates."

What Walker is confusing here is Reagan's rhetoric and the fiscal reality of his presidency. Reagan was actually a big government spender--he just didn't spend in some of the social areas that the governments of the New Deal and Great Society eras traditionally spent.

Reagan did cut spending on social programs such as school lunches, which were most often used and needed by low income families.

But Reagan's huge expenditures on defense and also large social institutions--most notably Social Security--more than made up for it, causing the percentage of federal outlays to GDP to rise (see page 49) to its highest level since World War II at 23.5% by 1983. It wasn't until the 1990s that this percentage dropped back into the teens.

Any way you want to slice the numbers, Reagan comes out a big government president.

As Joshua Green of the Washington Monthly concluded in a 2003 article: "
A sober review of Reagan's presidency doesn't yield the seamlessly conservative record being peddled today. Federal government expanded on his watch."

But the interesting thing is Reagan shouldn't be chastised for increasing federal expenditures and subsequently the size of the federal government. It's a record that, in fact, should be embraced.

When he came into office the country was in the midst of an economic recession. What he did was spend money to help drive the economy, which is the same way World War II spending effectively dragged the US out of an economic depression forty years earlier (back when Reagan was just another Hollywood liberal).

The difference was, of course, income inequality was actually decreasing in this country in the 1940s and 1950s, whereas income disparities increased so significantly under Reagan's economic policies that by the end of the 1980s the richest 1% of Americans had accumulated more real wealth than the bottom 90% combined.

Nevertheless, it was Reagan's willingness to spend and expand the government that helped to keep the nation's economy solvent in the 1980s and continued to build on the strong defense industries on the east and west coasts that resulted in the creation of strong union jobs for the middle class.

While we can certainly disagree about the validity of where Reagan spent, there is no question that he spent and spent big.

Walker is right, however, that as county executive he--unlike Reagan--has decreased the size of the Milwaukee County government since taking over in 2002. I'm not sure how much pride Walker should take in that, however, considering that by virtually all accounts--including Walker's own assessment--the county government is most likely heading toward fiscal insolvency.

Perhaps if Walker had followed Reagan's actions rather than his rhetoric the county would be in a different fiscal position.

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