- The Washington Times - Tuesday, August 13, 2002

A recent single-panel cartoon in the New Republic has the heading: "The preceding 22 years. A synopsis." Below, a caricatured President Reagan stands in the left of the frame, pointing to his right. "Government is the problem!" reads the word balloon above his head. To Mr. Reagan's left, seemingly out of his view, two suited CEOs raid a bank vault, cramming their briefcases and pockets with wads of cash.

How quickly we forget. After nearly 20 years of unparalleled economic growth, during which time the Dow Jones average went from 800 to more than 11,000 and the United States enjoyed the longest economic boom during peacetime in its history, suddenly some turn to "blaming" the architect of this age of prosperity for the corporate excesses of the 1990s.

Today marks the 21st anniversary of the signing of the Economic Recovery Act, still the largest single tax cut in American history. Ronald Reagan signed this historic piece of legislation at his ranch in Santa Barbara, clad in a jeans jacket and cowboy boots, with his trusted dog Victory at his side.

The Washington Post, a harsh critic of supply-side economics championed by Mr. Reagan, called this act "the most remarkable display of leadership in modern presidential history." It is this kind of leadership that America needs in the White House during these turbulent times.

In the face of a weakened stock market, a wobbly economy and widespread public distrust in the corporate system, Washington-based politicos on both sides of the aisle are turning to bigger government as the solution. This is a repeat of the performance we saw in the capital in the late 1970s, when the country faced a similar crisis. "See," goes the argument, "look what those greedy companies and their corrupt CEOs did with our money. It's time for the government to step in and make things right."

Higher taxes and increased regulation are a temporal "fix" in the face of economic difficulty. Their effect will be disastrous. The American economy is built on risk. Business failure has now been criminalized, producing jail time in addition to bankruptcy for entrepreneurs and risk-takers. This will stifle our economic vitality.

Do the current corporate accounting scandals disprove Mr. Reagan's thesis that "government is the problem" or do they reinforce it? Many investors relied on the SEC and other government watchdogs that taxpayers lavishly fund and staff to prevent such scandals. Despite government's purported prowess, and almost unlimited powers, it missed blatant malfeasance, but succeeded in lulling investors into a false sense of security. And cooking the books isn't limited to the private sector. Mr. Reagan knew few government programs are sold to us on an accurate cost-assessment. Medicare was only going to cost $11 billion. Social Security was going to have a true "trust fund." Mr. Reagan wouldn't suggest that corporations adopt the accounting practices of politicians.

It seems as though the more troublesome the economy becomes, the quicker politicians rely on "experts" and academicians, rather than past experience. Mr. Reagan was fond of saying about this class: "One definition of an economist is somebody who sees something happen in practice and wonders if it will work in theory." There was always truth in the president's humor.

Part of the Gipper's brilliance was that, as supply-side ally Jack Kemp put it, "Ronald Reagan reduced political debates to their most fundamental level." It's easy to see the economic issues facing our nation today as too complex to be understood by the average citizen or the average politician, for that matter. But Mr. Reagan knew better. Sure, the economy is complex, but he knew that few key, fundamental principles would hold true, no matter what the age or situation.

"This isn't a Keynesian Recovery produced by big-spending bureaucrats. Instead, this recovery was created by the incentives of tax-rate reductions, which shifted resources away from government back to American producers, savers and investors," Mr. Reagan said of the already apparent success of his tax cut in the early 1980s.

Mr. Reagan brought a revolution to Washington, and many dubiously referred to his "simplistic" view of the economy as Reaganomics. But Mr. Reagan was a keen student of history, and his ideas, although new in the 1980s, were not untested. As he said, "When John F. Kennedy's tax program … which was not too dissimilar to ours … was passed, the same thing happened more revenues at lower [tax] rates. It happened back in Coolidge's administration, and they cut the taxes several times in that period."

When our 40th president signed the Economic Recovery Act in Santa Barbara, his presence at the ranch carried with it important symbolism. This was not the act of a Washington insider, entrenched in conventional politics. This was the act of a man willing to lead the people by trusting them to do what's best not assuming that the government had all the answers.

Mr. Reagan's tax cut left income in the pockets of the people who earned it. Mr. Reagan knew individual Americans are better able to manage their money than either the manipulators on Wall Street or Pennsylvania Avenue. Mr. Reagan wanted a tax cut so Americans could invest in themselves, their family's education and, yes, even in their homes and ranches.

Let's hope that President Bush shows a similar resolve in the months ahead. And that the time Mr. Bush spends at his ranch in Texas will rejuvenate his commitment to being a Washington outsider, in the same vein as the Gipper.

Floyd Brown is executive director of Young America's Foundation, an educational, nonprofit organization.

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