Analysis: Reagan years still pack punch

By Robert S. Boyd
Knight Ridder Newspapers

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Starting with his passionate paean to conservatism during the Goldwater-Johnson presidential campaign in 1964, he shoved the center of the nation's political and judicial systems several giant steps to the right.

For a man who began the job with a skimpy background in foreign affairs, Mr. Reagan had greater impact on the international stage than at home.

His militant foreign and defense policies drove the Soviet Union to the brink of collapse, cinching a victorious end to the Cold War for his successor, George H.W. Bush, the current president's father.

The so-called Reagan Doctrine called for using U.S. military aid and covert operations to roll back leftist gains in the Third World, which Mr. Reagan believed were part of a larger communist offensive against the West.

He came to office growling about the "evil empire," and his detractors portrayed him as a trigger-happy cowboy. But before the end of his first term — 14 months before reformist Soviet leader Mikhail Gorbachev came to power — Mr. Reagan began calling for reconciliation between the U.S. and the Soviet Union and for unprecedented nuclear-arms cuts.

In Berlin in 1987, he challenged Gorbachev to "tear down this wall." At a meeting in New York three years later, after the Berlin Wall came down, Gorbachev toasted him as "a man who did a lot to make relations with our country the way they are now."

Mr. Reagan's sunny faith in free markets, free trade and personal freedom have spread to every part of the globe.

Economy, nation's debt boom

Domestically, however, despite his conservative rhetoric, Mr. Reagan had little effect on the role of government or on social policy.

Revered by the religious right, he espoused its values in public but did little to advance its agenda. Abortion rights were not repealed. Welfare rolls were not cut. School prayer stayed out of bounds.

Mr. Reagan did less to trim red tape and regulation than his predecessor, Democrat Jimmy Carter. He had promised to eliminate two federal departments: Education and Energy. Instead, they survived, and he created another Cabinet-level agency, for veterans.

During the Reagan years, from 1981 to 1989, 95,000 employees were added to the federal payroll. The government's share of the nation's wealth dipped only slightly, from 22.2 percent to 21.5 percent of the gross domestic product. In contrast, the Clinton administration shed 353,000 government workers as federal outlays fell to 20 percent of the gross domestic product.

"The steady growth of government that began in 1933 during Franklin Delano Roosevelt's New Deal continued unabated during the Reagan presidency," wrote his biographer Lou Cannon.

Mr. Reagan's most striking economic legacy is written in red ink. The national debt rocketed from $995 billion to $2.9 trillion while he was in charge, from less than one-third to more than half of the gross domestic product.

The ballooning debt was the result of Mr. Reagan's insistence on slashing tax rates even though he was doubling defense spending: from $157 billion to $304 billion. In his eight years, he never submitted a balanced budget, and the federal deficit averaged almost $200 billion a year.

Partly as a result, the economy boomed. The country broke out of the "stagflation" — a combination of inflation and stagnant growth — that had afflicted it for a generation. Inflation plunged to 4.4 percent from the 12.5 percent in Carter's last year, largely thanks to the stern-fisted chairman of the Federal Reserve Board, Paul Volcker, a Carter appointee Mr. Reagan kept on. Interest rates also dropped, from 15 to 9 percent.

Rich get richer

Although the worst recession since World War II marred Mr. Reagan's first two years in the White House, after that the nation enjoyed 72 straight months of recovery. Unemployment declined from 7.1 to 5.5 percent. Discounting inflation, after-tax income rose from $9,722 to $11,326 per capita.

But the goodies were not distributed evenly. When he ran for president, Mr. Reagan asked voters: "Are you better off now than you were four years ago?" The answer, when he left office, depended on who you were. While most people had more money, the gap between rich and poor grew wider.

Government statistics portrayed a clear "shift of income away from the bottom 80 percent of the population toward the most affluent 20 percent," Kevin Phillips wrote in his book "The Politics of Rich and Poor."

In 1980, for example, 4,414 individuals reported personal incomes of more than $1 million on their federal tax returns. In 1987, 34,944 did so. Meanwhile, the top tax rate was reduced from 70 to 28 percent.

In 1989, the richest 40 percent of U.S. families received 67.8 percent of the national income, the largest share in the 40 years the Census Bureau has kept such statistics, according to Cannon. The poorest 40 percent got 15.4 percent, the lowest share in 40 years.

One of Mr. Reagan's most durable legacies is the U.S. judiciary He appointed more federal judges than any previous president: 290 district judges, 78 appeals-court judges and three Supreme Court justices. From William Rehnquist, whom he promoted to chief justice, on down, the courts have been tougher on criminals, friendlier to business, less willing to meddle with social policy and more respectful of the states' powers than since the Roosevelt era.

Mr. Reagan's imprint on the Republican and Democratic parties alike is also lasting. When he broke onto the national political scene in 1964, the GOP was divided between moderate and conservative wings, identified with New York Gov. Nelson Rockefeller and Arizona Sen. Barry Goldwater. Mr. Reagan was defeated in his first two tries for the Republican nomination, and as late as 1980, moderates backing George Bush for president tried to portray him as a right-wing fanatic.

Now, however, every GOP presidential hopeful claims to be Mr. Reagan's heir. Even the Democrats under Bill Clinton moved in his direction. "The era of big government is over," Clinton said, as he set about cutting the federal payroll and trimming welfare rolls.