Penguin History of the United States of America (129 page)

Ronald Reagan, like Jimmy Carter, was an outsider and a man of many contradictions; unlike Carter, he knew how to make his inconsistencies work for him. As a young man his good looks, charm and natural aptitude had swiftly led him to Hollywood, where he soon became a star of the second magnitude – he was not in the same league as Clark Gable, John
Wayne and Humphrey Bogart, but he was a conspicuous figure none the less. In a generation when everyone went to the movies, everyone had seen him. He was also drawn from the first to politics, and was active as a leading liberal Democrat during the forties and early fifties (as a sharp observer noticed, even after thirty years as a Republican he remained a cultural Democrat
¹⁷
). He first showed his formidable political talent when called before the HUAC. Other liberal witnesses grovelled, or defied their inquisitors with unpleasant results, or betrayed their friends and themselves; Reagan, without doing any of these things, had the committee eating out of his hand. He was then what was known as a ‘cold war liberal’: in other words, he was firmly anti-communist; but he did not move to the Right until his acting career began to fade and he took a job as a television spokesman for General Electric. Until then he had been an ardent New Dealer, but he made a swift transition, and before long sounded too conservative even for General Electric. When, in 1964, the conservative cause was clearly sliding towards shattering defeat with Barry Goldwater, Reagan cheered up its supporters by delivering what became known as The Speech, in which he stated his new creed with eloquence and conviction but, still more, with warm good humour. It was such a success that a group of Californian millionaires decided to back him for high office. He won the governorship of California in 1966, and was re-elected in 1970. He decided not to run again in 1974, instead devoting himself to the pursuit of the presidency. He did not have an easy time getting the Republican nomination, for there was a general (quite accurate) impression that his economic proposals did not make sense: one rival said that they were all smoke and mirrors, and another (George Bush, later his Vice-President and successor) said they were ‘voodoo economies’. And he was elected President chiefly because he was not Jimmy Carter; but then, in 1932, Roosevelt had been elected because he was not Herbert Hoover.

Reagan was sixty-nine on Inauguration Day, 1981; the oldest man, by a wide margin, ever to have been elected President: he was only a few months younger than the runner-up, Eisenhower, had been at his retirement. This was an advantage to him, because it meant that he had lived through all the important phases of American history since the First World War, and profited by the experience. He clung tenaciously to this lived past; he was old-fashioned rather than conservative. His inaugural speech might have been given by a Democrat rather than a Republican; indeed, except for two short pious references to George Washington and Abraham Lincoln, it
was
given by a Democrat, or Democrats, for it consisted of blatant borrowings from the inaugurals of Thomas Jefferson, Franklin Roosevelt and John Kennedy; and it included a gracious tribute to Jimmy Carter (but there was no trace of Lyndon Johnson). It was Jeffersonian in its assertion of states’
rights and distrust of big government, Rooseveltian in its tribute to the forgotten man (‘Putting America back to work means putting all Americans back to work.’). Reagan never abandoned his hero-worship of FDR, lavishly celebrating Roosevelt’s centenary in 1982 when Congress was barely prepared to notice it at all. He modelled his style on Roosevelt’s. He was called the Great Communicator because he too knew how to simplify complex issues and bring them home to ordinary citizens by homely anecdotes; he responded to crises of every kind with eloquence, humour or courage, as necessary (‘Honey, I forgot to duck,’ he remarked to his wife Nancy just after being shot and wounded by a madman); above all, he understood that Americans best respond to bold and optimistic leadership, which suited him splendidly, as he was by nature a cheerful soul. ‘We will not return to the days of hand-wringing, defeatism, decline and despair,’ he said in 1984. He was talking of foreign and defence policy, but such was his attitude to everything; like his hero, he held that Americans had nothing to fear but fear itself.

There was no reason to think that the voters in 1980 had meant to register their support for any particular menu of Reaganite policies, but Reagan remembered how Roosevelt in 1933 had exploited his own landslide to do as he thought best. The Republicans had greatly increased their numbers in the House of Representatives, as well as capturing the Senate; the Democrats were demoralized; Reagan convinced both Congress and journalists that he had a mandate, he had momentum; he launched what his fans called ‘the Reagan Revolution’, just as FDR had launched the New Deal, and for his first year in office won victory after victory on Capitol Hill. Happy days were here again.

But there was one fundamental difference between Reagan and Roosevelt. Roosevelt’s programme had been a genuine New Deal. It had been a comprehensive attempt to meet an overwhelming national crisis, the Great Depression, and to restructure the United States, to rescue the ‘forgotten man’ for good from the selfishness and stupidity of the rich. Now the rich had a chance to strike back. Their attitude was chiefly negative. They wanted to undo what they regarded as the mistakes of the years since Eisenhower; to dismantle the Great Society and all the supplementary legislation of the Nixon and Carter years; some of them wanted to dismantle the New Deal as well; but they had no structures to serve as replacements. They did not think them necessary. As their leader remarked, ‘government is not the solution to our problem’.

Still, it was fun to be the government. ‘God has given us the papacy: let us enjoy it,’ had been the maxim of Pope Leo X. Such was Reagan’s attitude too. Hollywood came to Washington. Not since Kennedy had there been an administration so fond of partying (though the President’s favourite entertainment was an evening at home with his wife watching television); not since Andrew Jackson had an inauguration announced so decisively that the foundations of American politics had altered. The money, as well
as the population, was now in California, and Reagan relied heavily on Californian businessmen and lawyers for the personnel and ideas of his administration. This was not entirely wise, any more than it had been wise for Carter to rely so heavily on his Georgians. It took the Californians some time to discover that the experience of governing the Golden State, even though it was so big, was not sufficient training for running the United States. Mistakes were made, but so had they been under Jackson. On the whole, it was a healthy thing that the West Coast compelled the East Coast to recognize its weight in the Union in matters of taste as well as power. If New York, Boston and Philadelphia found the exuberant enjoyment of wealth vulgar, so much the worse for New York. The Vanderbilts and Astors had not always been known for their restraint.

Reagan had complete faith in his programme. It was time, he said, to shift power and responsibilities back to the states from the federal government, which had swollen enormously in the previous twenty years. Federal taxes should be cut ruthlessly, to free the entrepreneurial spirit of the American people; the budget should be balanced, to stabilize the economy and kill inflation; defence expenditure should be massively increased, to discourage Soviet adventurism; the role of the federal government in supervising and restricting the economy should be severely reduced by a process of deregulation.

It did not take a genius or a political rival to see that this programme was as contradictory as Jimmy Carter’s: for instance, it was most unlikely that the budget could be balanced if the Pentagon was let loose to spend as much as it liked on whatever took its fancy. Nor did it really contain any new ideas. Power can always find intellectuals to do its necessary dirty work. As the conservative tide rose during the seventies, magazines, think-tanks and prophets multiplied to give an air of brilliance and innovation to some venerable opinions. True-blue Republicans in the tradition of Herbert Hoover, Robert A. Taft and Gerald Ford had always disliked high taxes, big government and unbalanced budgets; and since the Second World War, which demonstrated how profitable defence-related industry could be, they had always supported big defence budgets. It was gratifying that monetarists and supply-siders and repentant New York communists could give these stale notions a pinchbeck sheen, it was even helpful in the battle for public opinion, but the new bottles held the same old wine. And by 1981 it was not even a strictly Republican vintage any more. Jimmy Carter had believed in increased military spending; Jimmy Carter had tried to introduce deregulation; Jimmy Carter had tried hard to balance the budget in order to curb inflation – and in large part lost the election thereby. The Reagan Revolution was not really revolutionary, and ‘Reaganomics’ (another favourite term of the period) was a joke.

But as Emerson had long ago remarked, a foolish consistency is the hobgoblin of little minds. Had Reagan been as inept a politician, or as intellectually honest, as Carter, he would probably have met the same fate.
And indeed the first fruit of his stewardship was a renewed recession which strikingly reduced his popularity. But his cheerful faith in himself, his opinions and his country steered him through to overwhelming success. His inconsistencies proved to be a source of great strength, and incidentally laid bare a truth about the place of the United States in the world which showed how badly Carter had misjudged the risks and opportunities before him.

Or perhaps it was just Carter’s famous bad luck. By 1982 the machinations of the Organization of Petroleum-Exporting Countries (OPEC) in driving up the price of oil had had what classical economists would have regarded as an absolutely predictable result: the world’s producers extracted and sold as much as they could, glut resulted, and the price collapsed. Mr Reagan’s experiments were not going to be sabotaged by a renewed energy shortage. And in one important respect, economic policy was largely out of the President’s hands. The Federal Reserve System had been given great independence by its founder, Woodrow Wilson, which subsequent legislation had increased. In 1981 its chairman, Paul Volcker, decided that enough was enough: following the strictest monetarist logic he determined to bring inflation under control whatever the cost; he raised interest rates and curtailed credit. The result was a ‘strong’ dollar. Exports fell and imports rose; America’s trading partners used the dollars thus earned to buy into the American economy and to finance the US national debt, which nearly tripled during Reagan’s two terms in office. American heavy industry suffered badly in the process; unemployment and bankruptcies stalked the Rustbelt; but millions of new jobs (mostly low-paid ones) were created; overall, Reagan America exuded an air of prosperity, though the profits went overwhelmingly to those who were already rich.

The administration did its bit in helping this process along. The huge military expenditures of Reagan’s first term, the huge tax cuts, the huge outlays on unemployment benefits and other such disbursements made necessary by the Volcker squeeze, the drop in revenue consequent on the initial recession, and the failure to cut federal spending significantly (Reagan refused to curtail his defence programme or to touch Social Security benefits, the two biggest items of the federal budget) meant that the deficit soared, from $58 billion in Carter’s last year to $221 billion in 1986–7. This was counter-cyclical policy on a heroic scale: Keynes might have gasped, but the effects were just what he might have predicted. The absurdity was that the Reagan administration was full of monetarists and supply-siders. In later years their only excuse would be that their policies would have worked wonderfully, had they been tried.

To sober economists this was the policy of a madhouse. The rich got richer and the poor got poorer, just as in the 1920s; investment slumped, especially in the country’s infrastructure; unemployed workers and threatened industries began to clamour for protectionist measures; the Republicans lost control of the Senate in the 1986 elections though Reagan
had been re-elected by a crushing majority in 1984. The last detail was probably the most persuasive in inducing the administration to change course. Monetary policy was relaxed – the dollar weakened – foreign funds began to leave the country, and there was a stock market crash in October 1987, which sliced $500 billion off the value of shares. But this was not 1929 all over again. The market soon recovered, and in 1988 the Republicans again won the presidential election (though they did not win back the Senate).

A great truth had inadvertently been demonstrated. The US economy was so big that merely by existing, and however ill it was managed, it created stability in the world economy, from which it was itself the chief beneficiary. It would have taken more perversity than even the Reaganauts were capable of to wreck this happy state of affairs. The difference from the 1920s was that then the United States had been the only solidly prosperous society in the world; in the 1980s it was one among many. So when Uncle Sam messed up his business, others could take advantage. The Japanese, above all, poured their cheap exports into America, and by investing much of their profits there kept the American people (or most of them) employed and comfortable. And in the years after Reagan, under President Bush and President Clinton, when US economic policy gradually corrected itself, the great American engine began once more to make a positive contribution to world trade and to its own continuing prosperity.

Reagan appears to have been well aware that his actual conduct of economic policy bore little resemblance to the expectations of the zealots whom he brought into office. ‘It is true I never submitted a balanced budget to Congress,’ he remarked soon after his retirement. ‘I may be old, but I’m not stupid.’ In some ways he was an unsuitable leader for the religious Right. His friends were mostly drawn from the movie world, where morals were easygoing, to say the least; his own first marriage had ended in divorce, and one of the funnier episodes of the 1980 election was the television interview in which Reagan tried to persuade his interviewer and himself that he was a ‘born-again’ Christian, like Jimmy Carter: even his polished acting technique could not hide his embarrassment. But that did not prevent him from letting his right-wingers loose in every department that mattered to them – education, for example – so that they too had a chance, like the economic evangelists, to discover the immutable realities of American politics.