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This February 6th marks the 110th anniversary of the birth of Ronald Wilson Reagan. A radio broadcaster, actor, union leader, captain in the U. S. Air Force, governor of California and the 40th President of the United States, Reagan, for some, had it all stacked up against him. After all, he abandoned the Democratic Party, fought communism and was a full throttle conservative when it was unpopular to be one. In his first presidential cabinet meeting, he laid out in layman’s terms what his objectives would be: “I hate inflation, hate taxes and hate the Soviets”. His tenacity, vision, and political will allowed him to prove the left wrong and carry out a seminal paradigm shift in America that had major repercussions in the world.
The “Reagan Revolution” was a realignment of American exceptionalism. This conservative seismic movement consisted of two components: the Reagan Doctrine and Reaganomics. With both, the 40th president and his very capable administration tackled massive problems which faced the United States and the Free World. Communism had made enormous global inroads, because of negligent Détente, coexistence-based policies that previous American governments, both Democrats and Republicans embraced, and which the Soviets took advantage of and had a field day. The second calamity front was economic. Stagflation, that fusion of economic stagnation (no growth), high inflation and high unemployment, a by-product of disastrous, decades old, Keynesian-inspired economic schemes, was killing America. Reagan’s Revolution offered liberation.
The Reagan Doctrine replaced the Truman Doctrine. Containment, the centerpiece of the West’s post-World War II reaction to Soviet communism advancement and named after Harry S. Truman, was failing by the 1960’s and 1970’s. In other words, Marxism had developed an immunity to it. As its substitute, the Reagan administration began an aggressive policy to rollback communism. This untried strategy proved to be fundamental in bringing down Soviet communism.
Through a series of highly effective National Security Decision Directives (NSDD’s), the Reagan team effectively brought down the Soviet Union and, consequently, its Eastern bloc satellites. These Presidential Directives served to guide policy by instructing advisors and departments related to National Security, of the Administration’s objectives. Specifically, there were NSDD’s 24, 41, 48, 54, 66, 70, 75 and 166, all except the latter were signed between February 1982 and January 1983 (NSDD was signed in March 1985). Structurally, these salient NSDD’s sought to challenge Soviet hegemony by a combination of financial strangulation, indirect belligerent confrontation, and proxy checkmating.
From frustrating the Siberian oil pipeline, deploying Pershing missiles in Europe, supporting opposition in Eastern Europe and arming freedom fighters in Central America, Africa, and Afghanistan, limiting technology to the USSR, modernizing the American military, and developing the Strategic Defense Initiative (SDI), Reagan put the Soviets in a difficult spot. On a peripheral level, but nonetheless important, the sale of AWACs planes to Saudi Arabia attributed to Riyadh’s breaking the OPEC’s hold on oil production, bringing prices to dirt cheap levels. The “Gipper” (nicknamed for one of Reagan’s movie roles) knew that oil was the USSR’s main source of hard currency revenues. Not being able to institute the adaptations of a Leninist state with a hybrid economy, like China did, Soviet communism imploded.
The American economic rescue and renaissance that the Reagan Revolution spearheaded was no less grand than its foreign policy results. Reaganomics consisted mainly of the three-legged stool of tax cuts, deregulation, and stable monetary policy. With interest rates at 21%, inflation at 13.2% and unemployment at 7.4%, the country’s economic state was dismal when Reagan came in. Following a strict frugal money supply policy to tame inflation, freeing the economy by a comprehensive deregulatory overhaul, and issuing massive tax cuts, by the end of his presidency, America had been transformed for the better.
Real Gross Domestic Product (GDP) grew 35.7% in his tenure, averaging 4.1% annually. According to the U. S. Bureau of Census, this represented a growth, in real terms, of over a third of GDP. 20 million new jobs and 5 million new businesses were generated. Inflation was lowered to 3.2% in just two years. Interest rates went down to 10% from the monstrous 21% he inherited. Unemployment was lowered to 5.4%. Leftists and big-spending Keynesians attacked the tax cuts and deceptively pointed to the increasing deficits. This was, however, disingenuous.
The fact is that the deficit when measured in absolute terms, disguises the fundamental issue of relativity in economics. The Historical Tables of the Budget of U.S. Government tells us that by the time Reagan left office, the deficit was only 3% of GDP, which was the same percentage when he entered office. The myth of horrific deficits does not play out when analyzed responsibly and measured as a percent of the economy. Additionally, the tax cuts produced an exponential increase in state revenues, as the economic pie was expanded. Total federal revenues doubled from just over $517 billion in 1980 to more than $1 trillion in 1990. This represented a 28% increase in constant inflation-adjusted dollars.
Ronald Reagan was pivotal in placing America back to a “City on a Hill”. After Abraham Lincoln, his presidency may well be the most consequential. Certainly, it was the most paramount in the 20th century. Happy birthday President Reagan! The world salutes and misses you.
Julio M Shiling, political scientist, writer, director of Patria de Martí and The Cuban American Voice, lecturer and media commentator. A native of Cuba, he currently lives in the United States. Twitter: @JulioMShiling // Julio es politólogo, escritor, director de Patria de Martí y The Cuban American Voice. Conferenciante y comentarista en los medios. Natural de Cuba, vive actualmente en EE UU.