Saturday, February 5, 2011

David Stockman on the 'Reagan Revolution': It Never Happened, the Mythology Only Gets Amplified

David Stockman served during the Reagan Administration, from 1981 until 1985, as Director of the Office of Management and Budget,

Stockman's star with the Reagan Administration began to decline after the Atlantic Monthly magazine published a William Greider article, The Education of David Stockman" in the  December 1981 issue, based on  interviews Stockman gave to  Greider.

Stockman even in those days understood the power of the corporate elite. Greider reported on Stockman's battle for tax cuts:
The counter-offensive against the cut was led by Commerce Secretary Malcolm Baldrige and U.S. Trade Representative William Brock, who argued eloquently before the budget working group for a partial restoration of Ex-Im funds. By Stockman's account, the two "fought, argued, pounded the table," and the meeting seemed headed for deadlock. "I sort of innocently asked, well, isn't there a terrible political spin on this? It's my impression that most of the money goes to a handful of big corporations, and if we are ever caught not cutting this while we're biting deeply into the social programs, we're going to have big problems." Stockman asked if anyone at the table had any relevant data. Deputy Secretary of the Treasury Tim McNamar thereupon produced a list of Ex-Im's major beneficiaries (a list that Stockman had given him before the meeting). "So then I went into this demagogic tirade about how in the world can I cut food stamps and social services and CETA jobs and EDA jobs and you're going to tell me you can't give up one penny for Boeing?"

With Greider, he was open about the compromises he made in his budget proposal:

ON Capitol Hill, ideological consistency is not a highly ranked virtue but its absence is useful grounds for scolding the opposition. David Stockman endured considerable needling when his budget appeared, revealing that many programs that he had opposed as a congressman had survived. The most glaring was the fast-breeder nuclear reactor at Clinch River, Tennessee. Why hadn't Stockman cut the nuclear subsidy that he had so long criticized? The answer was Senator Howard Baker, of Tennessee, majority leader. "I didn't have to get rolled," Stockman said, "I just got out of the way. It just wasn't worth fighting. This package will go nowhere without Baker, and Clinch River is just life or death to Baker. A very poor reason, I know."

And, then, he laid the bombshell:
"None of us really understands what's going on with all these numbers," Stockman confessed at one point. "parts of the budget between policy action and the economic environment and all the internal mysteries of the budget, and there are a lot of them.You've got so many different budgets out and so many different baselines and such complexity now in the interactive. People are getting from A to B and it's not clear how they are getting there. It's not clear how we got there..."
He went on, as it became clear to him that what he saw as necessary budget cuts were not going to be made:

Stockman was changing, in a manner that perhaps he himself did not recognize. His conversations began to reflect a new sense of fatalism, a brittle edge of uncertainty.

"There was a certain dimension of our theory that was unrealistic..."

"The system has an enormous amount of inertia..."

"I don't believe too much in the momentum theory any more..."

"I have a new theory—there are no real conservatives in Congress..."
It was candor such as this in the December 1981 article that resulted in President Reagan infamously taking Stockman "to the woodshed." It was never the same for him at OMB, despite his remaining at OMB into 1985.

Now, on the ocassion of Reagan's 100th birthday, Lew Rockwell has taken the opportunity to publish Murray Rothbard's 1989 detailed takedown of the Reagan legacy. Stockman emailed Rockwell and commented on Rothbard's article:
Thanks for reprinting Murray Rothbard’s classic take-down of the “Reagan Revolution.” With the passage of time, the mythology only gets amplified—so people need to be reminded about the truth. I took a modest crack at this in the attached interview in which I reminded readers that the Reagan Revolution was a Lincoln Day Dinner speech! It never actually happened in the real world of fiscal policy. And as you might recall, program after program was saved by stalwart conservatives like Jesse Helms, Ed Meese, etc.
There's a lot of hype surrounding Reagan and his legacy, but when all is analyzed and we keep in mind the current situation where the problems that Reagan supposedly solved, the deficit problem, the social security problem, etc. are major clouds over our heads today, the only conclusion that can be reached is one that bucks the positive popular view about Reagan. The truth is as Rothbard and Stockman state it:
There was no Reagan Revolution.
Reagan came out of Hollywood a B actor and stayed that way. Always playing the tough guy and fighter for liberty, but never taking one inch of land for the cause. In truth, if he had more range as an actor, he should have played the role of President the way John Banner played the role of Seargeant Schultz in the series Hogan's Heroes.  It would have been more honest, becasue when it came to the encroachments against liberty taking place all around Reagan, when he was President, he "saw nothing.".


  1. What bullshit. I usually like your writings, Robert, but this time you are way out of line.

    You site Murray Rothbard as if he has something credible to say. Rothbard's attempt at assassinating Reagan's character after he was out of power falls completely flat. Rothbard discusses Reagan's "Teflon Coat" as if it were some kind of right wing conspiracy. Do you know the real reason Reagan was said to have a Teflon Coat?

    The press and certain intellectuals continually attacked Reagan, frequently just making stuff up. If Reagan said "It's sunny today," the press and the intellectia would say that Reagan said it was rainy and out of touch with reality because he doesn't know what the weather is. We saw this happen every day, over and over and over until it became cliche. Constantly, they would lie about Reagan. Their lies would be proven false. Instead of admitting they were lying through their teeth, they invented this myth that he had a magic Teflon Coat. What utter and total bullshit!

    Rothbard cites a story in which Reagan supposedly claimed military service and claimed to be in Europe when he could only have been in California. There is no substantial evidence to back up that story. There were a couple of new reporters (you know, the some of the guys who were making up stuff about Reagan) who made claims about what Reagan said. Where are Rothbard's references. Here is one of mine:

    Much of Rothbard's attack on Reagan centered on budgeting issues. Let me explain a simple thing about how American government budgeting works. The House of Representatives sets the budget. Reagan fought constantly to reduce the budget and cut costs much more than Tip Oneil would accept. Much, if not all, of Rothbard's attack piece against Reagan attacked issues having to do with works of Congress that went against the desires and efforts of Reagan. Much of Rothbard's attack piece was about problems of American government that he blamed completely on Reagan.

    The true Reagan Revolution was the rebirth in the belief in the goodness of America and American values. That is what we love about the guy. Hello? Anyone home here?

    The problems with American government as I point out repeatedly is the fact that America is a democracy and democracies tend to be neither moral nor rational. Because of that, democracies tend last About 200 years and then collapse in economic and social chaos. One of the signs of the illness of democracy as suggested by Madison in Federalist No. 10 is "A rage for paper money, for an abolition of debts, for an equal division of property, or for any other improper or wicked project ..." You do good addressing some of those kinds of symptoms of the illness of democracy. But when are you going to drop the useless and mindless infighting and help cure the disease of democracy before it destroys your country? All you are doing right now is making a lot of whiney noises and patting yourself on the back for being such a great guy. "Hurrah for me. See how smart I am everyone? I can attack that dead guy, Ronald Reagan." Wow. (ahem)

    You are smart and knowledgeable. You can do better than this, Robert.

  2. I was listening to Larry Kudlow's Saturday radio show, and he was not only praising Reagan lovingly, which I suppose any loyal Reagan Administration flunky would have to do, but he was listing all of Reagan's "accomplishments" in a totally grandiose, far-from-reality manner.

    Kudlow was actually saying that Reagan reduced the size of the government, which is the opposite of the truth. He expanded government big time!

    Kudlow listed Reagan's tax cuts, but didn't note the tax HIKES under Reagan,such as the Tax Equity and Fiscal Responsibility Act of 1982. According to Wikipedia, "Bruce Bartlett wrote in National Review,that‘TEFRA raised taxes by $37.5 billion per year’, elaborating, ‘according to a recent Treasury Department study, TEFRA alone raised taxes by almost 1 percent of the gross domestic product, making it the largest peacetime tax increase in American history.’ However, this ‘increase’ was achieved primarily through the cancellation of future tax cuts scheduled by ERTA [The 1981 “Reagan tax cuts”] the year before that had yet to take effect at the time of TEFRA's passage.”

    Sheldon Richman has this further elaboration with specifics in this article:

    But as I was listening to Larry Kudlow yesterday, I was wondering if he perhaps had too many drinks before the show, or if he actually really believed what he was saying about Reagan's record. It was like listening to the script of the Beatles' "Yellow Submarine."

  3. Thank you Scott for your thoughtful comment. It is unbelievable to me that free-market advocates fail to understand the debt that is owed to Reagan. With a Democratic house and a country increasingly weaned on big government and a media enamored as it is today with the idea of elitist utopian central planning, Reagan indeed was limited with how much change he could enact. Nevertheless, he still reduced the highest income tax rate from 70% to 28%, restrained the growth of nondefense domestic spending, and pushed back on union power.

    Furthermore, Reagan's words demeaned big government and promoted the ideas of limited government; those words inspired and will continue to inspire millions. The principles of liberty and self-government that he was able to successfully associate with strength and prosperity altered the conventional view to the point that terms like "liberal" and "tax and spend" became pejoratives. How else would it have ever occurred that a Democratic president would announce (falsely, unfortunately, as we see with Obama) that the era of big government was over?

    Whatever crisis occurred was never used by Reagan as an excuse to falsely malign free markets and grow regulation and government power. Reagan was considered a crazy extremist by the opposition and his desire to eliminate entire departments (department of energy, commerce, education) or reduce the welfare state were opposed fervently. So although Reagan did not deregulate and reduce the welfare state and reduce the size of government to the extent he would have wanted; he knew that the big government elitist movement had been dealt a serious blow and that by capturing the hearts and minds of so many, the hope was that others would continue the fight in the future and be successful. Who can forget some of these Reagan gems?

    The more the planners fail, the more the planner plan.
    The government view of the economy can be summed up as follows: if it moves tax it, if it works regulate it, if it stops working subsidize it.
    There are no great limits to growth because there are no limits of human intelligence, imagination, and wonder.
    How do you tell a communist? Well, it's someone who reads Marx and Lenin. And how do you tell an anti-Communist? It's someone who understands Marx and Lenin.
    Government is like a baby. An alimentary canal with a big appetite at one end and no sense of responsibility at the other.
    Today, if you invent a better mousetrap, the government comes along with a better mouse.
    It's time we asked ourselves if we still know the freedoms intended for us by the Founding Fathers. James Madison said, "We base all our experiments on the capacity of mankind for self government." This idea? that government was beholden to the people, that it had no other source of power is still the newest, most unique idea in all the long history of man's relation to man. This is the issue of this election: Whether we believe in our capacity for self-government or whether we abandon the American Revolution and confess that a little intellectual elite in a far-distant capital can plan our lives for us better than we can plan them ourselves.

  4. Courageous post, Robert. The Government-Corporate Monstrosity, Eisenhower's MIC on steroids, hates to be called out.

    The myths are many...

  5. "David Stockman served during the Reagan Administration, from January 3, 1977 until January 27, 1981, as Director of the Office of Management and Budget,"

    Not quite. From Wikipedia ( Stockman was elected to the United States House of Representatives for the 95th Congress and was reelected in two subsequent elections, serving from January 3, 1977, until his resignation January 27, 1981, to accept appointment as Director of the Office of Management and Budget under U.S. President Ronald Reagan.

  6. Thanks, corrected. In error, I put the years he served in Congress.

  7. Great post. The Triumph of Politics was a book all should read.