The Reagan Solution

New Reagan Statue in the Capitol Rotunda
New Reagan Statue in the Capitol Rotunda

Nancy Reagan came to Washington, DC, last week to participate in the unveiling of a statue of President Reagan, which will stand in the Capitol Rotunda.

I am pleased that Reagan is getting this type of recognition. It’s a little discordant, though, to see Nancy Pelosi beaming at Mrs. Reagan’s side. If it were up to the Speaker of the House, I’m sure there would have been no statue. Pelosi disagrees with everything Reagan stood for.

One of the sad things right now is that many Republicans also seem to disagree with the man who gave new life to the Republican Party. Some are saying that the era of Reagan is over. They say he was fine for the 1980s, but now we face new problems and the solutions must be different.

I beg to differ.

When Reagan took office in 1981, the economy was in shambles after the foolish polices of the 1960s and 1970s, fostered by both Republicans (Nixon and Ford) and Democrats (Johnson and Carter). We were suffering from what was called “stagflation,” a combination of stagnation and inflation, which had never occurred before. Economists even had to come up with that new term to describe the situation.

Interest rates were sky high, much more than today. Unemployment was rising, and in the first two years of Reagan’s presidency topped 10%, a figure we are going to see pretty soon. Inflation was higher than at any time in American history, again more than today.

So what was Reagan’s solution? First, get the government out of people’s way; second, lower tax rates and allow investment to operate. The result? The greatest peacetime economic expansion in American history.

Critics blamed Reagan for the recession of 1981-1982, but that was a holdover from the Carter years. Reagan’s tax cuts didn’t go into effect immediately (Congress didn’t allow that), and his first budget didn’t take effect until October 1981, nine months after his inauguration. The recession obviously wasn’t his fault.

Our current disaster is different in one way. Obama got his stimulus package immediately, promising that it would lead to a quick economic recovery. Five months into his presidency, it is becoming clearer even to his adherents that this hasn’t worked. The rising umemployment we now see is in spite of his supposed “stimulus.” We are racking up debt that may never be repaid. As a nation, we are in danger of losing the confidence of the world—some talk of the United States losing its high credit rating. There is no end in sight, not with Obama’s policies; it will only get worse.

It’s time to acknowledge that Reagan’s path was correct. Changing times don’t mean that principles change. If a principle is true, it will be applicable at any time. Republicans need to regain their perspective. They need a recovery too—a recovery of their principles.