Saturday, February 5, 2011

Ronald Reagan-A Great American

When I talk to young people they have an appreciation of who Ronald Reagan was.  However, they truly do not understand how much of a transformative figure he was in American history.  There is no one who has influenced the body politic more in my lifetime.  On the 100th anniversary of his birth, let me provide a little perspective to those that did not have the privilege of seeing the greatness of Ronald Reagan first hand.

I saw Reagan host GE Theatre on television and I am sure I saw one or two of his movies growing up.  I recall him being elected Governor of California and I remember the jokes about an actor being in the Statehouse.  I did not really pay a lot of attention to him until he challenged President Gerald Ford for the Republican nomination in 1976.  Few people remember how close he came to taking the nomination from a sitting president.  The final delegate tally was Ford 1187, Reagan 1070.

At that time, the mainstream Republican would be considered pretty much what is considered a RINO (Republican In Name Only) now.  Senators such as Susan Collins (R-ME), Olympia Snowe (R-ME) and Scott Brown (R-MA) today.  In fact, most Democrats in 1976 were similar in ideology to a 2011 RINO.

The loss of Gerald Ford in the general election in 1976 to Jimmy Carter paved the way for Reagan to be the Republican nominee in 1980.  Many look back at the results of the 1980 Presidential election and assume that Reagan waltzed to victory.  The country was in terrible shape.  Low economic growth, high inflation and high interest rates.  Uncertain energy supplies.  The Iran hostage crisis and a declining respect for America all over the world.  The Soviets attempting to spread communism.

Reagan spoke about strengthening America's defense, lowering taxes to spur economic growth and scaling back government rather than expanding it.  It was very strong stuff in that day and age.  Despite the poor shape of the country, Carter led in the polls up to the last debate a week before the election.  In that debate Reagan seemed to close the sale.  However, I still remember turning on the tv to watch the election results on November 4, 1980 with most analysts stating it could go either way. By the end of the night, Reagan had won 489 electoral votes to Carter's 49.  The "Reagan Revolution" had begun.

President Reagan's first act as President was to issue an executive order ending price controls on domestic oil which had caused many of our energy problems.  Oil was $37/barrel ($100 in today's dollars) when Reagan took office.  It was $15 ($27 today) when he left office.  Reagan understood incentives and the free market.  He was able to pass a massive economic recovery bill based on a significant lowering of marginal tax rates.  He did this despite having a Democratic House (244-191) and a bare Republican Senate majority (53-47).   Interestingly, President Obama has almost the same political makeup in the Congress today to fashion legislation.  53 Democrats in the Senate and 242 Republicans in the House.

The defining moment of Reagan's Presidency for me came in August 1981 when the 13,000 professional air traffic controllers walked off the job in a union dispute in violation of federal law.  He gave them an order to return to work in 48 hours or he would fire them.  11,000 did not return to work.  He fired them.  He also banned them from federal service for life. This took enormous courage as it was at the peak of the summer vacation season.  His contingency plan worked and over time the air system got back to normal with the non-striking controllers, supervisors and military controllers carrying the load until new controllers could be hired and trained.  This was a man who said what he meant and meant what he said.  There was little question after this episode that friends and foes alike knew that this was a man to be reckoned with.

During his two terms, Ronald Reagan redefined what America was and reignited the American spirit.  He also redefined the political parties.  A Ronald Reagan Republican became the standard.  He transformed the Democrats as well. They lost their traditional Southern, rural and working class base.  Many became Reagan supporters and a good number became Republicans.  Democrats increasingly had to rely on public sector unions, urban voters and academics for support.  As a result, they veered sharply to the left.

Ronald Reagan took a country that had problems that were every bit as intractable and challenging as we have today.  He did not waver in his beliefs nor did he whine about what he had to bear.  He left the country in a far better place than what he inherited. GDP increased by over 25% in real terms in his two terms.   The prime interest rate was 20% when he took office and 11% when he left. (I know both of these numbers are hard to believe right now when the prime rate is 3.25%!) Inflation was 13.6% in 1980 and was 4.1% in 1988.  Despite the tax cuts, individual income tax revenues actually rose from $244 billion in 1980 to $446 billion in 1989.

President Obama was elected with shouts of "hope and change".  It was a great political slogan.  However, we have not seen much hope and the change he wants is not being embraced by the American people.  On the other hand, Ronald Reagan actually delivered on hope and change.  He restored the hope that had been lost in America. There is no doubt he changed it.  This was a man that was a Great American!

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