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Did the Reagan Revolution Fail?

In October of 1964, Ronald Reagan presented himself to the country as a politician, giving the speech he’d been giving essentially for a decade without mention of Barry Goldwater. It’s easy for many of us to recall so many lines from The Speech. But we often forget the introduction: “I am going,” Reagan said, “to talk of controversial things. I make no apology for this.”

The Reagan Revolution began at that moment. It took twenty years, until the reelection of 1984, for his approach to governance and the world to be proven right by history. It took twenty-five for it to be memorialized by a wall that isn’t there.

Ask anyone on the right, and they’ll tell you Reagan’s Revolution ended in triumph. But now Steve Hayward tells us it ended in defeat.

Hayward is not just smart but a genuinely brilliant fellow, which is why, for the past several months, I’ve tried to put this post on the “conservative case for higher taxes” to the side and pretend it doesn’t exist, the way I do with the Star Wars prequels. (Never happened. Couldn’t happen.) But now he’s rewritten the same argument again, and I think it needs doing.

Hayward’s case is about taxes, and why he thinks conservatives should come around to the idea of raising them. But it’s about more than that, striking at the core of a disagreement about leadership and government within the right. An excerpt:

“Which brings us to the third major political fact of our age: the welfare state, or entitlement state, is here to stay. It is a central feature of modernity itself. We are simply not going back to a system of “rugged individualism” in a minimalist “night watchman” state; there is not even a plurality in favor of this position.”

“Why is it,” a Transom subscriber said, reacting to Hayward’s piece, “that anytime anyone talks about “modernizing conservatism,” they invariably mean making it more like liberalism?” I do not know, but here we are again.

Hayward is in favor of technocracy, of good government, of less but not small government. He is in favor of higher taxes to pay for this government. His argument makes perfect sense within some halcyon summer of yore where the left in America is full of reasonable people to be reasoned with face to face, like men – the days before reconciliation, before a government takeover of health care, before the left’s personal attack machine. He views this as a middle path.

What is so jarring about Hayward’s perspective is how little in common it has with leadership on the right at the grassroots level. Throughout the country at this very moment we see governors standing up for bold reforms and strongly conservative approaches which go after the bloat of government with an axe, not a scalpel – overhauling pensions, transforming education, cutting budgets in real terms not just the rate of growth. Rick Scott, Scott Walker, and John Kasich are wagering their political careers on these bold reforms having an impact and being proven right by the marketplace – following the lead of governors like Bobby Jindal who, not content to sit around, embarked on sweeping reform of government to dramatically cut the burden on the taxpayer.

Hayward’s approach runs against all of these currents. He wants a milder, gentler approach, a more sophisticated approach, not just in tone but in policy. The fight is lost. He wants to barter.

A rejection of politics as usual bartering, of course, is the reason people like Scott, Walker, Kasich and Jindal got elected in the first place. It is a rejection, in more subtle ways, of an approach to government that Republicans from Eisenhower to Nixon to Ford to H.W. to Dole to W. to McCain have all espoused (with Goldwater and Reagan as the interruptions). This dominant authority on the right dislikes bad government, and it seeks to replace it with good government, not realizing that either way ends up slowly but surely with big government – and if there’s one thing history has taught us, as the Eurozone is reminding us now, big government is always, always, bad government.

Hayward, for some odd reason, tries to make the current circumstance a failure of the Reagan Revolution. This is a head-scratching non sequitur. Since 2008 the American right has experienced an incredible reawakened revolution of limited government espoused by an engaged populist electorate which rejects the dominant establishment good government Republicans who have ruled from on high for a Coolidge-style return to the basics of what government ought to be and what it ought to cost.

On Thursday on Capitol Hill one of these new voices, Mike Lee – who trounced one of the old ones, Robert Bennett – hosted the Tea Party Debt Commission on Capitol Hill, gathering hundreds of people who paid their own way to travel from around the country and present an alternate path for the Super Committee which achieves a real balanced budget. (The Senate, for what it’s worth, kicked them out – so our friends at Hillsdale played host.) They came, as one of the citizen activists from Nevada said, because they believe it is “morally wrong to squander our children’s inheritance on the entitlements of today.” The clash with such movements within the right was inevitable – the establishment super-ego rejecting the Tea Party id – but it’s the establishment that is operating in a territory foreign to reality, where the vast gaps between what people are willing to pay and what they demand from government can still be made whole by things like Super Committees.   How does this work in reality? Well, as George Will puts it: 

“Born during what is mistakenly called the debt-ceiling “debacle” last summer, the supercommittee may die without sending Congress a 10-year $1.2 trillion (at least) deficit-reduction plan. This is not properly labeled a failure. Committee Democrats demanded more revenues; Republicans offered $500 billion; Democrats responded with the one-syllable distillation of liberalism: ‘More!’” 

Hayward is not entirely wrong in his article. He’s correct that the starve-the-beast strategy of the Reagan years has been a failure. But he fails to connect any of the dots on why this is the case, missing the reality that this failure is as much an indictment of the Republican establishment as any datapoint. And his endorsement of the late Bill Niskanen’s argument (“that raising taxes may be the most effective way to reduce government spending”) is an act of severe cherrypicking in my view and Greg Mankiw’s.    The growth of government is the key issue here; during the 1990s we saw the largest reduction in government spending-to-GDP since World War II (from 22.1% in 1992 to 18.4% in 2000), in part due to the tech bubble, but also due to passing on the opportunity to dramatically expand entitlements or the child tax credit even in a season of plenty. Check the steady line downward during the Clinton-Gingrich years, and check the massive explosion in spending per capita after 2000. Reach your own conclusions about who’s at fault. Annotated version here.   At their core, most technocrats are motivated by a naive belief in the inherent goodness of men. They believe people, including politicians, will see reason and the greater good if it is only shown to them. They believe in the healing power of the chart and the graph and the illustrated trajectory of society. They believe that because they play fair, the other side will too. And they are oh so very wrong. 

The irony here is that Hayward has lived through an argument like this before. He was a lonely voice against sweeping socialist climate change policy when the majority of Americans believed global warming was man-made, and that something had to be done to save the planet. The odds were stacked against him. Righty voice after righty voice became embarrassed at the “denial of science” within the conservative movement. I remember The Heartland Institute’s initial work to bring skeptical scientists together and the hue and cry it raised in Washington. The establishment, tired of being accosted for the views of their knotheaded base, called for peace and negotiation, modernization if you will, a deal to be struck. They bashed the “extreme right” for rejecting what must be done, what was self-evidently the only option for all rational, intelligent people. It was a moment of contrast. Joe Bast offered nothing. And Newt Gingrich sat on the couch.

Today, of course, we know what came next. The public is now at historic lows in nearly every way of assessing a belief that climate change matters. The majority, not just of Americans but of Britons, believe climate change is not man made. The skeptics won – they won with math and moral argument and a stubborn unwillingness to barter with those whose policies would’ve sentenced the third world to centuries of misery and reshaped the planet toward their anti-human ends.

This is how it was just a few short years ago. But this is how it always is now. There is no statesmanly compromise to be made on entitlement reform. The choice has to be made. We will take a path toward top-down bureaucratic rationing or we will empower the consumer to make decisions for themselves. Paul Ryan recognizes that those who see some middle path are crawling off a cliff after a mirage.

Hayward offers nothing here, ultimately, but capitulation, judgment from on high for those who stubbornly refuse to wave the white flag. How infuriating it is when people do not know they are beaten. It is time to cut our losses. It is time to make a deal. It is time to negotiate surrender. Be reasonable. But who is being reasonable here, and who is being delusional?

“They are Lucy VanPelt. We are Charlie Brown,” subscriber Laura writes. “Now imagine an honorable deal, in the form of a football.” No, they will not listen. And they should not.

You may not recall Reagan’s introduction speech in full. But these lines seem appropriate for the moment:

“They say the world has become too complex for simple answers. They are wrong. There are no easy answers, but there are simple answers. We must have the courage to do what we know is morally right.”

How simple these Tea Partiers are. How very simple. And: how right.

  1. Percival
    Ben Domenech, Guest Contributor: Hayward’s approach runs against all of these currents. He wants a milder, gentler approach, a more sophisticated approach, not just in tone but in policy. The fight is lost. He wants to barter.

    He wants…David Cameron.

    Buy him a ticket to Dear Ol’ Blighty and be done with it.

  2. Capt. Aubrey

    We are not going back to a system of “rugged individualism” because we never had one and the Reagan revolution is not a failure because it is not over. We have always had this tension between liberty and some perception of justice that violates liberty in some way. When were we better off? In the Roosevelt administration? Which one? Under Taft or Grant? We are in the middle of the developed world discovering that the entitlement state is fundamentally bankrupt and unsustainable. That is not going to change with one election unfortunately but it is changing gradually and I believe it will happen with less pain for the poor and those who depend on government if they are not deluded into thinking it will not change.

  3. liberal jim

    So called conservative pundits like Hayward might be brilliant fellows or simply parasites that are good with language.   The primary cost of the “entitlement state” are moral not financial.  Even if schemes can be designed to finance the arrangement it so undermines the human condition as to ensure eventual collapse.   Both Thatcher’s and Reagan’s arguments were primarily moral in nature.  This probably escapes the current batch of conservative word smiths because they are so busy trying to appear to be brilliant fellows.

  4. Daniel Perez

    “Both Thatcher’s and Reagan’s arguments were primarily moral in nature.  This probably escapes the current batch of conservative word smiths because they are so busy trying to appear to be brilliant fellows.” Very well written. I couldn´t have said it better myself.

  5. raycon and lindacon

    Change there will surely be, but we are delusional if we believe that the entrenched power structure, which has been riding the train to the left for over 100 years, is going to do the changing.  Here at the lower strata of the social order, where our individual activities are not cushioned by the buffer of wealth and influence, we daily note the impact of our decisions upon the only change we can make… in ourselves.

    The reality is that the only advantage we have is numbers.  Despite the power of the Roman statists, we have the barbarian power of mass.  The determinate is whether the statists, in their “we have the guns” reality of government will give in to the ballots of the barbarians, or so arrange the choices as to leave us with only one… the power of the barbarian mass.

    Taken to the extreme, Syria, although orders of magnitude larger, is but an image of what we will be left to if the statists prevail.

  6. Dave Carter
    C

    Ben, keen analysis indeed. I covered Dr. Hayward’s article a few posts below yours. It’s nice to be on the same page as you, both literally and figuratively.

  7. Ben Domenech
    C
    Dave Carter: Ben, keen analysis indeed. I covered Dr. Hayward’s article a few posts below yours. It’s nice to be on the same page as you, both literally and figuratively. · Nov 21 at 6:31am

    Yes, I read your excellent take with interest and decided to share mine as well.

  8. John Walker
    Ben Domenech, Guest Contributor:

    An excerpt:

    “Which brings us to the third major political fact of our age: the welfare state, or entitlement state, is here to stay. It is a central feature of modernity itself. …”

    This reminds me of all of the “defence intellectuals” and geopolitical strategists in the 1980s who assumed the Soviet Union would be in business for the foreseeable future.

    If something is unsustainable, it will end.  The only questions are when and how.

  9. Valiuth

    I think one of conservatism biggest weakness is the nearly dogmatic belief that at no point must taxes ever go up or even seem to go up. Taxation should not be a moral issue, sadly progressives have made it so, and foolishly conservatives have bought into this notion.

    We Tax to fund government. We must tax enough to fund all the things government does. If government is underfunded we must raise taxes to meet the deficit… Simple math…the real question is what should government be doing and how much should it be doing for. Once this is sorted out taxation should be a simple thing…

    The catch is people like the things government does for them. We like Social Security, and Medicare, we like a strong Military, we like funding the NIH and NSF… People like the out comes of these government programs, thus as conservatives we must ask how can we deliver the liked outcomes in a better way. Making the government smaller will not make things better if we don’t improve the way it runs. We need to focus on making it run better and this will allow us to either do more or spend less. 

  10. ctruppi
    John Walker

    Ben Domenech, Guest Contributor:

    An excerpt:

    “Which brings us to the third major political fact of our age: the welfare state, or entitlement state, is here to stay. It is a central feature of modernity itself. …”

    This reminds me of all of the “defence intellectuals” and geopolitical strategists in the 1980s who assumed the Soviet Union would be in business for the foreseeable future.

    If something is unsustainable, it will end.  The only questions are when and how. · Nov 21 at 8:00am

    This is exactly what I was thinking about as I read the article.  The great fallacy and, dare I say, naivete of folks like Hayward is the fact that they believe the opposite side will go on forever (and a prime reason that most in the west – both right and left were completely taken by surprise when the Soviets collapsed).  There are only 2 possible ways for the entitlement state to go – reform and reduce or collapse via insolvency.  Neither of these is an inviting end as a political philosophy to emulate.  Both will force “rugged individualism” to return whether we like it or not!

  11. ctruppi
    Valiuth: I think one of conservatism biggest weakness is the nearly dogmatic belief that at no point must taxes ever go up or even seem to go up. We Tax to fund government. We must tax enough to fund all the things government does. If government is underfunded we must raise taxes to meet the deficit…

    The catch is people like the things government does for them. We like Social Security, and Medicare, we like a strong Military, we like funding the NIH and NSF…   · Nov 21 at 8:48am

    The issue for conservatives (if I can humbly speak for them) is not increased taxation per se.  The issue is the never ending increase in the size of gov’t.  Why should I pay more, if the gov’t is simply going to take that money and increase what they spend by an even larger amount?

    I, for one, would have no problem having my taxes raised in exchange for an equal % decrease in the gov’t budget (repeat - DECREASE, not lower rate of increase). 

  12. Dan Hanson

     Here is the conservative argument for raising taxes:  The deficit IS a tax.  It’s a tax on your children.  Fiscal conservatives believe in paying for what you use.  To drop a trillion dollars per year in debt onto the backs of your children is unconscionable.  So ‘raising taxes’ really means, “Should we pay the tax ourselves?  Or should our descendents pay it?”

    In the past, the conservative counter-argument was ‘starve the beast’.  The argument was that all tax money winds up just being spent by larger government, and the only way to check the growth of government is to deny it revenue so it has to borrow until the borrowing becomes too painful, then it will stop growing.

    The counter argument to that is – a 1.6 trillion dollar deficit, and a Democrat party that thinks the answer to this is even more government.  They’ve countered “starve the beast” with, “beggar the population and make them dependent on government.”

    The only other conservative argument against raising taxes is that taxes kill growth and therefore actually lower revenue.  And this is true for some levels of tax and debt, but it’s not true right now.

  13. Dan Hanson

    Now, I do believe that raising taxes will just ease the pressure to cut spending and make it less likely that serious budget cuts will be made.  In the past, budget crises have led to ‘compromises’ where taxes are raised immediately in exchange for unspecified spending cuts in the future – which never happen.  We shouldn’t fall into that trap again.

    Therefore, my position is that taxes should probably be raised, and I like the idea of raising them Boehner’s way, by closing loopholes and making the tax system less distortionary and simpler, rather than just raising marginal rates. 

    However, the Republicans should apply some ju-jitsu to the Democrats and use their own strategy against them:  Spending cuts come FIRST, and taxes will be raised to match the spending cuts actually achieved at the end of each fiscal year.  Cut $100 billion from this year’s budget, and you get rewarded with $100 billion in tax increases next year.  Raise the budget in the next year by $100 billion, and an automatic $100 billion tax cut goes into place. 

    Set the system up to prevent the Democrats from gaming it, and tax increases are defensible on conservative grounds.

  14. The King Prawn

    Am I the only one who read this with an eye toward the primary? Is this not (again) the case against Romney that has been espoused by others like Delingpole and Rahe? I’ve tried really hard to get excited about someone other than Perry, but he is the only one willing to call social security a Ponzi scheme and threaten Washington with various implements of destruction like a wrecking ball and a sledge hammer. He won’t win, but he is the only one making the right case.

  15. Duane Oyen
    ctruppi

     …………….The great fallacy and, dare I say, naivete of folks like Hayward is the fact that they believe the opposite side will go on forever……….. There are only 2 possible ways for the entitlement state to go – reform and reduce or collapse via insolvency.  ……..

    1) “naivete of folks like Hayward”?   You may disagree with his thinking points, but he is in no way naive.

    2) I obviously did something evil to anger the Ricochet editorial gods, since my original post was ignored, and now this is the third re-run.

    3) Greg Mankiw did not disagree with Dr. Niskanen, rather, back in 2006 he pointed out a contrary study that ended too early to tell us much about today, and said that he’d like to see a harmonized re-look at both papers.  That is especially relevant 5 years later after three years of Obama’s “shovel cash at the beast” philosophy.  No one disagrees that we need to reform spending and entitlements.  The question is whether the level of entitlements demanded by the voting public can be reformed- actuarily or politically- without some cash infusion. 

  16. Joseph Eagar

    Oh yeek.  There is a conservative case for limited tax hikes, but the problem is that if you say that publicly, they won’t be limited at all.  Every time Republicans agree to tax hikes, Democrats find ways to enlarge them, while breaking their promise–every time!–on spending cuts.

    If this man had any sense at all, he’d see that as a practical political matter, conservatives cannot support higher taxes publicly until we’ve successfully (and significantly) cut federal spending, in ways the left cannot reverse.

  17. Joseph Eagar

    It all comes back to the “tax collectors for the welfare state” phenomenon.   Democrats love this dynamic; they spend, and they get Republicans to raise taxes (for all that Democrats love raising taxes on the wealthy, they know you can’t get much money from doing so.  If at all possible, they want Republicans to be the ones to raise middle-class taxes to pay for their programs).

  18. Joseph Eagar
    Dan Hanson:  Here is the conservative argument for raising taxes:  The deficit IS a tax.  It’s a tax on your children.  Fiscal conservatives believe in paying for what you use.  To drop a trillion dollars per year in debt onto the backs of your children is unconscionable.  So ‘raising taxes’ really means, “Should we pay the tax ourselves?  Or should our descendents pay it?”

    Deficits are a tax right now, too, since they appreciate the dollar–which shrinks the manufacturing sector.  Since the government is sucking up all the savings, the private sector has to borrow abroad to invest, which bids up the dollar (and creates bubbles).

    Deficit spending is thus an indirect tax on manufacturing.

  19. Larry Koler
    Duane Oyen

    1) “naivete of folks like Hayward”?   You may disagree with his thinking points, but he is in no way naive.

    You must have misunderstood, Duane. We all just read the article. So, it’s not a derogatory statement to say that Hayward is naive — it’s apparent right in the piece, Exhibit A.

    Any other questions or confusions here? 

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