Monday, November 26, 2012

Reagan's Second Term and the Bizarre Reputation of Tax Reform

Politico today has a pretty weak item about second terms and what Barack Obama should do to secure a good one. I'm no expert on Teddy Roosevelt, so I'll pass on that part of it (and remind myself that I should really learn more about that era; suggested reading?), but calling Ronald Reagan's second term a success is, well, odd.

In particular, calling Reagan's second term a success compared to Bill Clinton's is odd. Politico's Edward-Isaac Dovere acknowledges the Iran-Contra scandal, but seems to vastly underappreciate it. In several ways. First, it was pretty obviously a bigger deal in policy terms than the Lewinsky scandal. Second, the effect on personnel was large, beginning with a White House Chief of Staff and a National Security Advisor. And, third, the effect on presidential popularity was entirely different. The Lewinsky scandal coincided with a Clinton surge in popularity, with Clinton consistently over 60% approval throughout 1998. Reagan, however, was hit hard by Iran-Contra; he fell about 15 points right away, and stayed at his new level of just around or below 50% throughout 1987 and into the summer of 1988 before finally recovering.

(As Brendan Nyhan notes, the article generally buys into myths about Reagan's popularity and his communications skills).

Anyway, what redeems Reagan's second term for Dovere is...tax reform. Well, some foreign policy triumphs too, but I'd put those aside, given that it was about 90% Gorbachev, and Reagan's main accomplishment was not messing it up (and he almost did, in Iceland).

But: tax reform? Really? I've been seeing a lot of this lately, and I don't get it, really. Oh, I'd say it was an accomplishment; as policy, it was probably just fine, and it didn't unravel all the way, even now. But it was only somewhat Reagan's, as opposed to Congress's, achievement. It had nothing at all to do with Reagan's real goals. And...it just wasn't all that big an accomplishment, was it? It certainly didn't seem so at the time, and I don't see how subsequent events have proven it to be.

I guess my general feeling about tax reform is that it's a mixed bag. First of all, I'm with those who don't understand why reducing the number of tax brackets is even remotely a good thing (or a significant bad thing; it's just sort of change-for-change-sake). So that leaves the benefits of reducing special tax treatments and lowering rates. I'll trust the economists who say that the benefits of that are real, if not especially large. But I'll also note that the inevitable next step is that the various favorable treatments creep right back in after reform.

Now, perhaps the benefits of cleaning the whole thing out once a generation or so are still worth it (even given that there are presumably costs of change, too). Maybe not. But it's just hard for me to take the 1986 tax reform as any sort of big deal.

Is it good advise for Barack Obama to point to Reagan's tax reform "achievement"? I'm not really convinced. Consider one of Bill Clinton's second term achievements: children's health care (S-CHIP, 1997). Isn't that something far better for Obama to emulate? Not in health care, of course, but the analogous issue area for Obama -- one where his legislative initiated failed during his first two years -- is climate. The idea would be for Obama to find some relatively small, but still meaningful, climate program, and find some way to get it through a divided Congress (for Clinton is was a thoroughly Republican Congress, so Obama may have a slightly easier task).

I do think that revenue-neutral tax reform is probably something that Obama could get done over the next four years, and if House Republicans want it I don't really see why he should oppose it. I just don't see why Obama should consider that an important goal.

And, really, I don't see why any president should seek to emulate Reagan's second term. His first term? Yes, Reagan does have solid lessons for any president, conservative or liberal. But his second term? It's full of examples to avoid, not ideas to use.

7 comments:

  1. To me, what makes Reagan's second term a success in political terms is the thawing of the Cold War. Even if you say that Gorbachev was more responsible for that than Reagan, you have to remember that there were many right-wingers at the time who thought that Reagan was being taken in by Gorbachev. Reagan has never been given enough credit by liberals for defying what was in 1985-88 a still vocal anti-Soviet right wing.

    In any event, whether because of or in spite of Reagan, the country was peaceful and prosperous in 1988--and voted for Reagan's vice-president to succeed him. If the country is equally peaceful and prosperous in 2016 and votes for a Democrat to succeed Obama, I would say that Obama's second term would be a success, even if he accomplished nothing legislatively except to prevent the rolling back of the ACA and other first-term accomplishments.

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  2. Revenue-neutral tax reform should not be a goal of any progressive, and I doubt if it is really a goal of Obama's. My recollection is that he campaigned on raising tax revenues from the wealthy, and that his preferred method for that was two-fold: implementing the Buffet Rule on wealthy individuals, which eliminates the special tax treatment of investment income, and eliminating corporate tax breaks while implementing a hard 20% rate for all corporations.

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  3. Yeah not to mention that the 1986 midterms were a disaster for the Republicans, they lost eight seats in the Senate and the majority including a lot of very conservative Reagan allied senators that were swept in with Reagan in 1980. Also ummm, Robert Bork? Yup, Reagan tried to enshrine his "revolution" into the highest court of the land and it blew up right in his face. Oh also remember when Attorney General Ed Mease got caught with mafia guys, kick backs and cooked books in the Wedtech scandal? Also there was a never ending series of screw ups with his second term chief of staff Don Regan, that culminated in Regan being forced out in a palace coup.

    Oh yes and Nancy and her astrologers.

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    1. @LWDL: yeah, but those were never their seats to begin with. Those Rs got lucky in 1980, and the only reason the Senate remained R until 1986 was their 6 year term. I wouldn't blame Reagan for that.

      But, yeah, the other things can be laid at the feet of a rather checked-out Reagan.

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    2. I don't know. It doesn't seem crazy to me that Republicans might have kept seats in South Dakota, North Carolina, Georgia, Alabama, or Florida, which were five of the seats that went Republican in 1980 and back to Democratic in 1986. Winning seats in North Dakota and Nevada hardly seems guaranteed, either (and neither was a "democratic seat to begin with). Barbara Mikulski in Maryland wasn't replacing a "Democratic seat to begin with," but long-time moderate Republican Charles Mathias.

      The only Democratic gain in 1986 that really fits your pattern is Brock Adams's win over Slade Gorton in Washington.

      Meanwhile, freshman Republicans in Alaska, Idaho, Indiana, Iowa, New Hampshire, New York, Oklahoma, Pennsylvania, and Wisconsin were re-elected. I'd think people like Chuck Grassley, Warren Rudman, Al D'Amato, Arlen Specter, and Bob Kasten fit much better your definition of "fluke Republicans winning in Republican year" than the actual Republicans who were defeated, but they were all re-elected.

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    3. I stand ready to stand corrected; although I wonder how many of those seats were in the "wrong" hands due to Watergate? And the whole realignment of the South thing.....

      It's answerable, I just don't have the answers at my fingertips..

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  4. Because Reagan is lauded by conservatives for driving, with the aid of Margaret Thatcher, the Soviet hordes from Europe, it's difficult for liberals to accept just how recalcitrant the GOP foreign policy establishment was to Reagan's overtures. What makes it more difficult to understand were Reagan's own contradictory moves: he'd write by hand a letter (over the objections of the State Department) to Brezhnev wondering when to meet to discuss world peace, then push for MX missiles in Western Europe.

    The best book on Reagan's Cold War policy is James Mann's "The Rebellion of Ronald Reagan," which I found more revelatory than his book on the Vulcans.

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