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.