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Cato Daily Dispatch for June 7, 2004

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Reagan: An Advocate for Limited Government
Reaganomics Fueled 1980s Economics Prosperity
Reagan's Policies Lead to Longest Economic Expansion

Reagan: An Advocate for Limited Government

President Ronald Reagan passed away over the weekend at the age of 93, and a national day of mourning is scheduled for Friday. The nation's 40th president left many legacies, including the importance of limited government and free markets.

Cato Executive Vice President David Boaz remembers Reagan in a new op-ed. He writes that Reagan was "the most eloquent spokesman for limited government of our time.

"Ronald Reagan often said that 'the very heart and soul of conservatism is libertarianism.' I heard him say that at Vanderbilt University in 1975, when I had the honor to dine with him before his speech and get his signature on my 'Reagan for President' newsletter. These days I put it somewhat differently: the best aspect of American conservatism is its commitment to protecting the individual liberties proclaimed in the Declaration of Independence and guaranteed in the Constitution. Ronald Reagan spoke for that brand of conservatism. That's the conservatism we sorely miss in today's Washington and today's Republican party."

Reaganomics Fueled 1980s Economics Prosperity

Cato Chairman William Niskanen served on President Reagan's Council of Economic Advisers from 1981 until 1985. His book, Reaganomics: An Insider's Account of the Policies and the People (Oxford University Press, 1988, out of print), is regarded as one of the most comprehensive and balanced studies of Reagan's economic policies.

Niskanen and Senior Fellow Stephen Moore wrote in "Supply Tax Cuts and the Truth About the Reagan Economic Record" that "the 1980s were years of economic progress, not decline. Real GDP grew by about one-third in the 1980s. The economic gains were widely distributed among income groups, with every income quintile, from the richest fifth to the poorest fifth, gaining ground in the Reagan years.

"The Reagan tax cuts were not a primary cause of the eruption of the deficit in the 1980s. The main two causes were an unexpectedly sharp reduction in inflation in the early 1980s that led to large real increases in federal spending, and a nearly $1 trillion military build-up during the last phase of the cold war."

Reagan's Policies Lead to Longest Economic Expansion

In "It's the Reagan Economy, Stupid," CNBC's Lawrence Kudlow and Senior Fellow Stephen Moore wrote about how President Reagan was ultimately responsible for the longest business cycle expansion in U.S. history.

"The politician most responsible for laying the groundwork for this prosperous era is not Bill Clinton, but Ronald Reagan. America's economic turnaround started in the early 1980s, a decade before Bill Clinton arrived in Washington. In fact, what we are really celebrating this month is the eighteenth consecutive year of prosperity, according to the Cambridge, Mass.-based National Bureau of Economic Research, the longest period of consecutive prosperity in the 20th century.

"It was Reagan's supply side economic ideas -- the policy of marginal rate tax cuts, a strong dollar, trade globalization (the Gipper started NAFTA with a U.S.-Canadian free trade agreement), deregulation of key industries like energy, financial services and transportation, and a re-armed military -- all of which unleashed a great wave of entrepreneurial-technological innovation that transformed and restructured the economy, resulting in a long boom prosperity that continues to throw off economic benefits to this day."

Jonathan Block, editor, jblock@cato.org