Tag: Reagan

The NYT Reportage on Government Lands Forgets a Chapter

The recent “occupation” of government-owned lands in Eastern Oregon by disgruntled ranchers’ motivated Quoctrung Bui and Margot Sanger-Katz of the New York Times (NYT) to produce an edifying essay on January 6th. It was aptly titled “Why the Government Owns So Much Land in the West.” Curiously, the NYT essay fails to mention one of the most significant, recent, and contentious attempts to “dispose” of federal public lands.

When Ronald Reagan was elected president for his first term in 1980, he received strong support from the so-called Sagebrush Rebels. The Rebels wanted lands owned by the federal government to be transferred to state governments.Their champion was James Watt, a self-proclaimed Sagebrush Rebel who became the Secretary of the U.S. Department of the Interior.

When I was operating as one of President Reagan’s economic advisers, an early assignment was to analyze the federal government’s landholdings and make recommendations about what to do with them. This was a big job. These lands are vast, covering an area six times that of France.

Is Obama Really the Most Frugal President of the Past 50 Years?!?

Two years ago, there was a flurry of excitement because MarketWatch journalist Rex Nutting crunched annual budget numbers and proclaimed that Barack Obama was the most fiscally conservative president since at least 1980.

I looked at the data and found a few mistakes, such as a failure to adjust the numbers for inflation, but Nutting’s overall premise was reasonably accurate.

As you can see from the tables I prepared back in 2012, Obama was the third most frugal president based on the growth of total inflation-adjusted spending.

And he was in first place if you looked at primary spending, which is total spending after removing net interest payments (a reasonable step since presidents can’t really be blamed for interest payments on the debt accrued by their predecessors).

So does this mean Obama is a closet conservative, as my old—but misguided—buddy Bruce Bartlett asserted?

Cambridge Resists a Changing World

The noted biographer Justin Kaplan, who won both a Pulitzer Prize and an American Book Award for his biographies of Mark Twain, Lincoln Steffens, and Walt Whitman, has died at the age of 88. He had a long and distinguished career in American letters, not just with his biographies but as an editor of such writers as Bertrand Russell, Will Durant, Nikos Kazantzakis, and C. Wright Mills.

He also edited the 16th edition of Bartlett’s Familiar Quotations, published in 1992. I wrote a review of that book. I can’t recall where it appeared, nor can I find it on the web. But along with praise for many of the changes he made, notably in making it fresher and more multicultural, I did note one concern with his selections, which I suggested was common among East Coast intellectuals:

The dozen years since the fifteenth edition have been marked by a worldwide turn toward markets, from Reagan and Thatcher to the New Zealand Labor Party’s free-market reforms to the fall of Soviet communism.  This historical trend seems to have escaped editor Kaplan, of Cambridge, Mass., who has given us more quotations from Karl Marx, Vladimir Lenin, and Robert Heilbroner, while virtually eliminating F. A. Hayek and Milton Friedman, the intellectual gurus of the free-market revolution.  A bust of Hayek now sits in the Kremlin, but Cambridge is holding out against the tide.

Hayek has been reduced to two quotations, neither of which reflects his particular contributions to social thought.  Friedman is represented by three, including the wrongly attributed aphorism, “There’s no such thing as a free lunch.”  Meanwhile, the towering figure of John Kenneth Galbraith receives 11 citations.  (William F. Buckley, Jr., is unrepresented.)

As in 1980, the Bible is second only to Shakespeare in the number of quotations included.  But Ayn Rand, who came in second to the Bible in a 1991 Gallup survey on most influential authors, gets only three citations.  Margaret Thatcher likewise is represented with three quotations, none of which captures her free-market radicalism.

The American Roots of Tax Aversion

In last Sunday’s Washington Post, Jennifer Rubin wrote that Republicans must move beyond their adoration of Ronald Reagan and recognize, among other modernizations, that

America will not return to the pre-New Deal era. Limited government, not small government, must be the aim. That requires low taxes, not taxes that never increase.

She wants Republicans to give up “the pledge” and be willing to raise taxes if that’s the prudent thing in any circumstance.

Republicans and conservatives and libertarians who don’t want to follow her advice could find some historical support just a few inches away on the same page of the “Outlook” section. Reviewer Walter Isaacson quotes this line from a new book on the origins of the Boston Tea Party and the American Revolution, Bunker Hill by Nathaniel Philbrick:

Rather than propose a means of raising revenue that they deemed fair, the colonials were more than happy to direct their considerable energies toward opposing whatever plan the British ministry put forward.

That is, the American revolutionaries didn’t feel obligated to help the British government raise all the money it wanted. They were satisfied to oppose what they regarded as unwarranted taxation.

Tax resistance: an American tradition since 1773. Or 1767. Or 1687.

And the King of the Fiscal Squeeze Is…Bill Clinton?

When Congressman Paul Ryan takes the stage at CPAC Friday morning, he will, of course, tout his new budget as a solution to America’s spending problem. The 2014 Ryan plan does aim to balance the budget in 10 years. That said, it would leave government spending, as a percent of GDP, at a hefty 19% – as my colleague, Daniel J. Mitchell, points out in his recent blog.  

Proposals like the Ryan budget are all well and good, but they are ultimately just that – proposals. If Congressman Ryan really wants to get serious about cutting spending, he should look to the one U.S. President who has squeezed the federal budget, and squeezed hard.

So, who can Congressman Ryan look to for inspiration on how to actually cut spending? None other than President Bill Clinton.

How can this be? To even say such a thing verges on CPAC blasphemy. Well, as usual, the data don’t lie. Let’s see how Clinton stacks up against Presidents Barack Obama and George W. Bush. As the accompanying chart shows, Clinton was the king of the fiscal squeeze.

Yes, Bill Clinton cut government’s share of GDP by a whopping 3.9 percentage points over his eight years in office. But, what about President Ronald Reagan? Surely the great champion of small government took a bite out of spending during his two terms, right? Well, yes, he did. But let’s put Reagan and Clinton head to head – a little fiscal discipline show-down, if you will (see the accompanying chart).

And the winner is….Bill Clinton. While Reagan did lop off four-tenths of a percentage point of government spending, as a percent of GDP, it simply does not match up to the Clinton fiscal squeeze. When President Clinton took office in 1993, government expenditures accounted for 22.1% of GDP. At the end of his second term, President Clinton’s big squeeze left the size of government, as a percent of GDP, at 18.2%. Since 1952, no other president has even come close.

Some might argue that Clinton was the beneficiary of the so-called “peace dividend,” whereby the post-Cold-War military drawdown led to a reduction in defense expenditures. The problem with this explanation is that the majority of Clinton’s cuts came from non-defense expenditures (see the accompanying table).

Admittedly, Clinton did benefit from the peace dividend, but the defense drawdown simply doesn’t match up to the cuts in non-defense expenditures that we saw under Clinton. Of course, it should be noted that the driving force behind many of these non-defense cuts came from the other side of the aisle, under the leadership of Speaker Gingrich.

The jury is still out on whether Ryan (or Boehner) will prove to be a Gingrich – or Obama, a Clinton. But, at the end of the day, the presidential scoreboard is clear – Clinton is the king of the fiscal squeeze.

So, when Congressman Ryan rallies the troops at CPAC with a call for cutting government spending, perhaps the crowd ought to accompany a standing ovation for the Congressman with a chant of “Bring Back Bill!”

You can follow Prof. Hanke on Twitter at: @Steve_Hanke

Challenge for Keynesian Anti-Sequester Hysterics, Part II: Why Did America’s Economy Boom When Reagan and Clinton Cut Spending?

Triggered by an appearance on Canadian TV, I asked yesterday why we should believe anti-sequester Keynesians. They want us to think that a very modest reduction in the growth of government spending will hurt the economy, yet Canada enjoyed rapid growth in the mid-1990s during a period of substantial budget restraint. I make a similar point in this debate with Robert Reich, noting that  the burden of government spending was reduced as a share of economic output during the relatively prosperous Reagan years and Clinton years:

Being a magnanimous person, I even told Robert he should take credit for the Clinton years since he was labor secretary. Amazingly, he didn’t take me up on my offer.

Which President Is the Biggest Spender, Part II

Last week, I jumped into the surreal debate about whether Obama has been the most fiscally conservative president in recent history.

I sliced the historical data from the Office of Management and Budget a couple of ways, showing that overall spending has grown at a relatively slow rate during the Obama years. Adjusted for inflation, both total spending and primary spending (total spending minus interest payments) have been restrained.

So does this make Obama a fiscal conservative?

And how can these numbers make sense when the President saddled the nation with the faux stimulus and ObamaCare?

Good questions. It turns out that Obama’s supposed frugality is largely the result of how TARP is measured in the federal budget. To put it simply, TARP pushed spending up in Bush’s final fiscal year (FY2009, which began October 1, 2008) and then repayments from the banks (which count as “negative spending”) artificially reduced spending in subsequent years.

The combination of those two factors made a big difference in the numbers. Here’s another table from my prior post, looking at how the presidents rank when you subtract both defense and the fiscal impact of deposit insurance and TARP.

All of a sudden, Obama drops down to the second-to-last position, sandwiched between two of the worst presidents in American history. Not exactly a ringing endorsement.

But this ranking is incomplete. At that point, I was trying to gauge Obama’s record on domestic spending, and the numbers certainly provide some evidence that he is a stereotypical big-spending liberal.

But the main debate is about which president was the biggest overall spender. So I’ve run through the numbers again, and here’s a new table looking at the rankings based on average annual changes in inflation-adjusted primary spending, minus the distorting impact of deposit insurance and TARP.

Obama is still in the second-to-last position, but spending is increasing by “only” 5.5 percent per year rather than 7.0 percent annually. This is obviously because defense spending is not growing as fast as domestic spending.

Reagan remains in first place, though his score drops now that his defense buildup is part of the calculations. Clinton, conversely, stays in second place but his score jumps because he benefited from the peace dividend after Reagan’s policies led to the collapse of the Soviet Empire.

Let’s now look at these numbers from a policy perspective. Rahn Curve research shows that government is far too big today, so the goal of fiscal policy should be to restrain the burden of government spending relative to economic output.

This means that policy moves in the right direction when government grows more slowly than the private sector, as it did under Reagan and Clinton.

But if government spending is growing faster than the productive sector of the economy, as has been the case during the Bush-Obama years, then a nation eventually will become Greece.

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