Krugman Smashes the Reagan Legend

Finally. FINALLY. My most indelible recollection of the glorious Reagan years was a mortgage at 13.375% and no tax cut, being in the middle class. Paul Krugman goes after Obama's startling praise of this dark economic era for most of America.

Maybe Mr. Obama was, as his supporters insist, simply praising Reagan’s political skills. (I think he was trying to curry favor with a conservative editorial board, which did in fact endorse him.) But where in his remarks was the clear declaration that Reaganomics failed?

For it did fail. The Reagan economy was a one-hit wonder. Yes, there was a boom in the mid-1980s, as the economy recovered from a severe recession. But while the rich got much richer, there was little sustained economic improvement for most Americans. By the late 1980s, middle-class incomes were barely higher than they had been a decade before — and the poverty rate had actually risen.

When the inevitable recession arrived, people felt betrayed — a sense of betrayal that Mr. Clinton was able to ride into the White House.

Given that reality, what was Mr. Obama talking about? Some good things did eventually happen to the U.S. economy — but not on Reagan’s watch.

For example, I’m not sure what “dynamism” means, but if it means productivity growth, there wasn’t any resurgence in the Reagan years. Eventually productivity did take off — but even the Bush administration’s own Council of Economic Advisers dates the beginning of that takeoff to 1995.

Similarly, if a sense of entrepreneurship means having confidence in the talents of American business leaders, that didn’t happen in the 1980s, when all the business books seemed to have samurai warriors on their covers. Like productivity, American business prestige didn’t stage a comeback until the mid-1990s, when the U.S. began to reassert its technological and economic leadership.

I understand why conservatives want to rewrite history and pretend that these good things happened while a Republican was in office — or claim, implausibly, that the 1981 Reagan tax cut somehow deserves credit for positive economic developments that didn’t happen until 14 or more years had passed. (Does Richard Nixon get credit for “Morning in America”?)

But why would a self-proclaimed progressive say anything that lends credibility to this rewriting of history — particularly right now, when Reaganomics has just failed all over again?

Like Ronald Reagan, President Bush began his term in office with big tax cuts for the rich and promises that the benefits would trickle down to the middle class. Like Reagan, he also began his term with an economic slump, then claimed that the recovery from that slump proved the success of his policies.

And like Reaganomics — but more quickly — Bushonomics has ended in grief. The public mood today is as grim as it was in 1992. Wages are lagging behind inflation. Employment growth in the Bush years has been pathetic compared with job creation in the Clinton era. Even if we don’t have a formal recession — and the odds now are that we will — the optimism of the 1990s has evaporated.

Comments

[athyrio]

We need to take the check book away from Republicans cause they can't handle money...Look how much money Mr. 9/11 spent on his campaign that went no where...Rumors have it that he is now broke and he used to have a ton of money. My memories of Reagan are also bad as both my hubby and I lost our jobs during that era....but he is considered the "father" of the modern day conservatism which is steal from the middle class and greed, greed, greed......

[Happenstance]

So much for "change."

http://tinyurl.com/27ofw3

Hey, kudos to cartoonist Steve Benson for suggesting that any honky who votes for Hillary is a bigot...while in the real world, blacks line up in front of the cameras to announce that they'll vote for Obama based on the color of his skin. That takes chutzpah, Steve-o.

[Neville Longbottom]

He's got some good graphs on the Raygun years on his blog

http://krugman.blogs.nytimes.com/2008/01/20/reaganomics/