Reagan’s Farewell Address, 1989: or, Common Sense

Posted on March 25, 2015. Filed under: Politics, Truth v. Myth, What History is For | Tags: , , , |

Welcome to part 2 of our close reading of President Ronald Reagan’s Farewell Address of January 11, 1989. Here we pick up from where we left off in part 1 with Reagan explaining the “American miracle” that won him the respect, at last, of all those aristocrats at the G7 meeting in Ottawa.

Well, back in 1980, when I was running for President, it was all so different. Some pundits said our programs would result in catastrophe. Our views on foreign affairs would cause war. Our plans for the economy would cause inflation to soar and bring about economic collapse. I even remember one highly respected economist saying, back in 1982, that “The engines of economic growth have shut down here, and they’re likely to stay that way for years to come.” Well, he and the other opinion leaders were wrong. The fact is, what they called “radical” was really “right.” What they called “dangerous” was just “desperately needed.”

—That “highly respected economist” was Lester Thurow, and his complaint was with Reagan’s “trickle-down economics” theory which said that if you cut income taxes and suspend all federal regulation of business, you will get business owners with plenty of cash on hand to expand by any means necessary and voila, you will have more jobs and more output and a booming economy. This enticing idea won many people over to Reagan in 1980 and 81. He advertised it during a 1981 speech with this graph:

reagan

With “their bill” the average family’s taxes would skyrocket between 1982 and 1986, while with “our bill” they would drop then flatline. What proof do we have today that unregulated business and banking combined with massive tax cuts for business and banking and the rich did not work? Notice at the top of Reagan’s chart: the average family income is $20,000. Three things come to mind: even in 1980, average family income was much higher than this, at about $48,000; next, no family today could live on $20K a year; and last, it is precisely the poorest families that are paying the highest taxes today. “Our bill” has achieved what “their bill” could only dream of.

But in 1989, Reagan could boldly state that “what they called ‘radical’ was really ‘right’. What they called ‘dangerous’ was just ‘desperately needed.'” Luckily, presidents give their farewell speeches long before the effects of their economic programs have fully played out.

And in all of that time I won a nickname, “The Great Communicator.” But I never thought it was my style or the words I used that made a difference: it was the content. I wasn’t a great communicator, but I communicated great things, and they didn’t spring full bloom from my brow, they came from the heart of a great nation—from our experience, our wisdom, and our belief in the principles that have guided us for two centuries. They called it the Reagan revolution. Well, I’ll accept that, but for me it always seemed more like the great rediscovery, a rediscovery of our values and our common sense.

Common sense told us that when you put a big tax on something, the people will produce less of it. So, we cut the people’s tax rates, and the people produced more than ever before. The economy bloomed like a plant that had been cut back and could now grow quicker and stronger. Our economic program brought about the longest peacetime expansion in our history: real family income up, the poverty rate down, entrepreneurship booming, and an explosion in research and new technology. We’re exporting more than ever because American industry became more competitive and at the same time, we summoned the national will to knock down protectionist walls abroad instead of erecting them at home.

—Reagan is correct in saying that his economic program was not new; Harding and Coolidge both slashed the taxes paid by the wealthy. Harding cut them from 73% to 25% in just two years. Both  men also slashed federal regulation of business and banking. And the 1920s ended in the Stock Market Crash and the Great Depression. Reaganomics, as the plan came to be known, was indeed a “rediscovery” of a certain human value—the desire for wealth—over the founding principles of this nation.

Where to start with the second paragraph; “the people” didn’t really have their tax rates cut—that was mostly for the wealthy, and even Reagan actually had to raise taxes in 1982 and 1984 to offset spiraling defense spending. That long “peacetime expansion” was fueled by an enormous increase in Cold War military spending. Family incomes were up but did not keep par with inflation, and we “summoned the national will to knock down protectionist walls abroad” mostly through exploitive (and unregulated) business practices.

Common sense also told us that to preserve the peace, we’d have to become strong again after years of weakness and confusion. So, we rebuilt our defenses, and this New Year we toasted the new peacefulness around the globe. Not only have the superpowers actually begun to reduce their stockpiles of nuclear weapons—and hope for even more progress is bright—but the regional conflicts that rack the globe are also beginning to cease. The Persian Gulf is no longer a war zone. The Soviets are leaving Afghanistan. The Vietnamese are preparing to pull out of Cambodia, and an American-mediated accord will soon send 50,000 Cuban troops home from Angola.

The lesson of all this was, of course, that because we’re a great nation, our challenges seem complex. It will always be this way. But as long as we remember our first principles and believe in ourselves, the future will always be ours. And something else we learned: Once you begin a great movement, there’s no telling where it will end. We meant to change a nation, and instead, we changed a world.

Countries across the globe are turning to free markets and free speech and turning away from the ideologies of the past. For them, the great rediscovery of the 1980’s has been that, lo and behold, the moral way of government is the practical way of government: Democracy, the profoundly good, is also the profoundly productive.

—There is nothing more wryly ironic than celebrating a “new peacefulness around the globe” that you brought about by arming yourself to the hilt. It is absolutely true that under Reagan the U.S. did have its first nuclear arms reductions treaties with the Soviet union. No argument there. But that’s why under Reagan we a) boosted our conventional weapons and armed presence around the world and b) started looking toward unconventional nuclear weapons (like the Strategic Defense Initiative dubbed “Star Wars”) that weren’t covered by the SALT agreements.

What the “great movement” is that we began, or what “believing in ourselves” means to Reagan we don’t know. When Americans really believe in themselves, they believe in their founding principles, and realize that bringing peace to the world can and should be achieved by setting an example for real democracy and supporting democracy wherever it is found. To Reagan, in this speech believing in ourselves sounds a lot like believing we have the right to take our status as a military superpower to the next level.

If his statements about countries around the world embracing democracy and capitalism and rejecting “the ideologies of the past” (read socialism and communism) were true, then under Reagan the U.S. would not have been fighting dozens of covert wars against communists and socialists in Asian and Latin American nations throughout his two terms. Many Americans in the 1980s protested U.S. coups and civil wars in foreign nations as the opposite of “the moral way of government” and the opposite of democracy and profound good.

Next time: American history a la Reagan


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