Paul Kengor is professor of political science and executive director of the Center for Vision & Values at Grove City College. These articles are republished from V & V, a web site of the Center for Vision & Values. Paul Kengor is author of God and Ronald Reagan: A Spiritual Life (2004) and The Crusader: Ronald Reagan and the Fall of Communism (2007). His latest book is The Judge: William P. Clark, Ronald Reagan's Top Hand (Ignatius Press, 2007).
Could You Survive Another Great Depression?
I just read two very interesting articles on the U.S. economy, written from historical perspectives. They compelled me to share my own historical perspective. And what I want to say is more about our changing culture than our economy.
One of the articles, by Julie Crawshaw of MoneyNews.com, notes that the "Misery Index" - the combined unemployment and inflation rates - made infamous under President Jimmy Carter, has hit a 28-year high. It's also 62 percent higher than when President Obama took office.
But that's nothing compared to Mort Zuckerman's article in U.S. News & World Report. Zuckerman measures the current situation against the Great Depression. He writes:
The Great Recession has now earned the dubious right of being compared to the Great Depression. In the face of the most stimulative fiscal and monetary policies in our history, we have experienced the loss of over 7 million jobs, wiping out every job gained since the year 2000. From the moment the Obama administration came into office, there have been no net increases in full-time jobs, only in part-time jobs. This is contrary to all previous recessions. Employers are not recalling the workers they laid off. . . . We now have more idle men and women than at any time since the Great Depression.
Zuckerman is a perceptive writer who looks at economies from a historical perspective. In my comparative politics course at Grove City College, I use his article on the Russian collapse in the 1990s, which Zuckerman showed was worse than our Great Depression.
I can't say we're teetering on that precipice, but Zuckerman's article got me thinking: Imagine if America today experienced an economic catastrophe similar to the 1930s. How would you survive?
I remember asking that question to my grandparents, Joseph and Philomena. How did they survive the Great Depression?
My grandmother, never at a loss for words, direly described how her family avoided starving. Compensation came via barter. Her father, an Italian immigrant, baked bread and cured meats in an oven in the tiny backyard, among other trades he learned in the old country. My grandmother cleaned the house and babysat and bathed the children of a family who owned a grocery store. They paid her with store products. Her family struggled through by creatively employing everyone's unique skills.
What about my grandfather? When I asked that question as he sat silently, my grandmother raised her loud Italian voice and snapped: "Ah, he didn't suffer! Don't even ask him!"
My grandfather, also Italian, returned the shout: "Ah, you shut up! You're a damned fool!"
Grandma: "No, you're a damned fool!"
After the typical several minutes of sustained insults, my grandfather explained that, indeed, his family didn't suffer during the depression. They noticed no difference whatsoever, even as America came apart at the seams.
Why not? Because they were farmers. They got everything from the land, from crops and animals they raised and hunted to fish they caught. They raised every animal possible, from cattle to rabbits. They ate everything from the pig, from head to feet. There were eggs from chickens and cheese and milk from goats and cows. There were wild plants.
I was captivated as my grandfather explained his family's method of refrigeration: During the winter, they broke ice from the creek and hauled it into the barn, where it was packed in sawdust for use through the summer. They didn't over-eat. They preserved food, and there was always enough for the family of 12.
When their clothes ripped, they sewed them. When machines broke, they fixed them. They didn't over-spend. Home repairs weren't contracted out. Heat came from wood they gathered.
And they didn't need 1,000 acres of land to do this.
They were totally self-sufficient - and far from alone. Back then, most Americans farmed, knew how to grow things, or provided for themselves to some significant degree.
That conversation with my grandparents came to mind as I read Zuckerman's piece and considered life under another Great Depression. I realized: The vast majority of Americans today would be incapable of providing for themselves. If you live in the city with no land, you'd be in big trouble. Even most Americans, who have a yard with soil, wouldn't know what to do.
Isn't it ironic that with all our scandalously expensive education - far more than our grandparents' schooling - we've learned so little? We can't fix our car let alone shoot, gut, skin, and butcher a deer.
Think about it: If you lacked income for food, or if prices skyrocketed, or your money was valueless, what would you do for yourself and your family?
Americans today are a lifetime from their grandparents and great grandparents. God help us if we ever face a calamity like the one they faced - and survived.
Two Negotiators: Obama Vs. Reagan
Editor's note: This article first appeared at The American Spectator.
Presidential scholars write on all sorts of aspects of the American presidency. Among the most interesting have been several important works on so-called presidential character and temperament. And when it comes to the temperament of our current president, we've learned quite a bit during the recent debate over the debt ceiling.
The most illuminating report I've read was a Politico piece titled, "Obama abruptly walks out of talks." The article described President Obama's bitter negotiations with nemesis Eric Cantor, the Republican House Majority leader. Obama "abruptly walked out of a stormy debt-limit meeting," Politico reported, "a dramatic setback to the already shaky negotiations." Eric Cantor said of the president's behavior: "He shoved back and said 'I'll see you tomorrow' and walked out."
The Politico continued: "the White House talks blew up amid a new round of sniping between Obama and Cantor, who are fast becoming bitter enemies." When Cantor told the president that they were too far apart to get a deal by the fateful August 2 deadline, Obama, according to Politico, "began to lecture him." Obama indignantly told Cantor that no other president - including Ronald Reagan - would condescend to sit through such negotiations.
Alas, it was Obama's Reagan reference that nags at me.
In truth, Ronald Reagan was a remarkable negotiator, both incredibly patient and principled. Negotiating was one of Reagan's greatest but most unappreciated attributes, to the point where I've many times considered doing a book strictly on Reagan as a negotiator.
When we think of Reagan as a negotiator, we remember his crucial walkout of the Reykjavik Summit in October 1986. Some Obama supporters want to invoke that example here, which is shortsighted at best. Reykjavik was just one of five separate, extended Reagan one-on-ones with Mikhail Gorbachev: Geneva (November 1985), Reykjavik (October 1986), Washington (December 1987), Moscow (May-June 1988), and New York (December 1988).
I could detail any number of examples of Reagan negotiating, from Hollywood in the 1940s to the White House in the 1980s. However, I'd like to cite an example that I believe is most instructive and applicable to Obama right now in dealing with Congressional Republicans. To his credit, Reagan biographer Edmund Morris wrote about it. Beyond Morris, one needs to venture to the Reagan Library to dig through boxes and folders from Reagan's gubernatorial years.
It was 1971, and Governor Reagan squared off with the speaker of the California legislature, a tough Democrat foe named Robert "Macho Bob" Moretti. California was on the verge of a major policy success - a historic welfare-reform package. First, Moretti and Reagan would need to sit down together, side by side, and hammer out specifics. Moretti made his way to Reagan's office, walked in by himself, and announced: "Governor, I don't like you. And I know you don't like me, but we don't have to be in love to work together." Reagan replied simply, "Okay." He committed to a good-faith effort to work with Moretti.
The two endured a long, windy path of binary and plenary sessions, as well as much less formal settings, marked by battle after battle for six weeks. Moretti himself calculated that he sparred with Reagan for "seventeen days and nights," "line by line, statistic by statistic," and obscenity by obscenity. At times, Reagan burned with frustration - "that's it, I'm through with this" - but never gave up.
Grudgingly, Moretti came to respect Reagan, who he saw as hard on his principles but flexible in the details - an observation of Reagan shared by numerous aides over the decades. The Governor surprised Moretti by yielding to fair and rational arguments, once even agreeing to renegotiate a point that the speaker had regretted conceding.
As Morris shows in his biography, Moretti was most impressed with Reagan's honesty as a deal maker. He admired the fact that the governor never lied and honored every commitment he made. This was a character trait Reagan had learned in Hollywood as head of the Screen Actors Guild.
In the end, on August 13, 1971, the California Welfare Reform Act became law. Reagan rightly called it "probably the most comprehensive" such welfare initiative in U.S. history. It was way ahead of its time, predating what would happen in much of the rest of America in the 1990s, made possible by the decentralization, block granting of welfare by President Bill Clinton and the Republican Congress - another bipartisan example of working together.
The negotiations between Reagan and Moretti were somewhat of a microcosm of the Reagan-Gorbachev talks. Then, too, the two men spent many intense hours, exchanging heated words and a few obscenities. For Reagan, there were non-negotiables then as well, of which SDI (at Reykjavik) was the most dramatic. There were items that Reagan insisted upon, such as addressing the USSR's persecution of its own citizens (especially Russian Jews), and giving no quarter in his belief in the superiority of the American system. He and Gorbachev likewise were locked horn to horn. The results were historic changes in arms control. Like Moretti, Gorbachev learned to like and respect Reagan.
I'm not privy to the records on all of President Obama's negotiations with House Republicans like Eric Cantor and John Boehner. From what I'm reading, however, we're seeing a very different kind of chief executive. Barack Obama is not only no Ronald Reagan on economic policy. He's also no Reagan when it comes to negotiating skills. Obama doesn't understand Reagan at all, and that's a loss for this nation.
No Contest: The Reagan Stimulus Vs. Obama's
Editor's note: A version of this article first appeared in USA Today.
How ironic that as America debated its debt ceiling all summer and faced a stunning credit downgrade, the nation approached a most timely anniversary: It was August 13, 1981, that President Reagan signed the Economic Recovery Act. Understanding Reagan's thinking 30 years ago is critical to discerning where we are now.
Reagan's initiative was the antithesis of President Obama's $800-billion "stimulus" that didn't stimulate. The 2009 version was the single greatest contributor to our record $1.5-trillion deficit. It was, plain and simple, what Reagan didn't do.
When Reagan signed the Economic Recovery Act at his ranch near Santa Barbara, it was the largest tax cut in American history. He also revealed leadership that Democrats and Republicans alike agree we are not seeing currently from the White House. Even the Washington Post called Reagan's action "one of the most remarkable demonstrations of presidential leadership in modern history."
The enemy that day was America's progressive federal income-tax system, birthed in 1913 by Congress and President Woodrow Wilson. It was revolutionary, requiring a constitutional amendment. That tax, which began as a 1 percent levy on the wealthy, would rocket up to a top rate of 94 percent by the 1940s.
Ronald Reagan personally felt the toll. In the 1940s, the so-called "B"- movie actor was one of the top box-office draws at Warner Bros. Then a Democrat, Reagan saw no incentive in continuing to work - that is, make more movies - once his income hit the top rate. He also realized who suffered from that choice. It wasn't Reagan; he was wealthy. It was the custodians, cafeteria ladies, camera crew, and working folks on the studio lot. They lost work.
Reagan viewed such rates as punitive, confiscatory - "creeping socialism," as he put it. In speeches in the 1950s and 1960s, he blasted the tax as right out of Marx's Communist Manifesto.
By the late 1970s, Reagan concluded that out-of-control taxes, spending, and regulation had sapped the economy of its vitality and ability to rebound. And so, on that August day in 1981, Reagan, with a Democratic House and Republican Senate, secured a 25 percent across-the-board reduction in income tax rates over a three-year period beginning in October 1981. Eventually, the upper rate would drop to 28 percent.
As biographer Steve Hayward notes, even when Reagan compromised with Democrats on tax increases in exchange for promised spending cuts in 1982, he "never budged an inch on marginal income tax rates." Reagan understood that not all taxes, or tax increases, are equal.
After a slow start through 1982-83, the stimulus effect of the cuts was extraordinary, sparking the longest peacetime expansion in U.S. history. The "Reagan Boom" not only produced widespread prosperity but - along with the attendant Soviet collapse - helped generate budget surpluses in the 1990s. Carter-Ford era terms like "malaise" and "misery index" vanished. Only now has America re-approached similar misery-index levels, reaching a 28-year high.
Unfortunately, liberals have so maligned Reaganomics that they are unable to separate facts from myths - to the detriment of their party and president. Among the worst myths is that Reagan's tax cuts created the deficit, even as the deficit increased under Reagan.
In fact, Reagan inherited chronic deficits. Since Franklin Roosevelt, the budget had been balanced a handful of times, mainly under President Eisenhower. From 1981-89, the deficit under Reagan increased from $79 billion to $153 billion. It peaked in 1983-86, hitting $221 billion. Yet, once the economy started booming, the deficit steadily dropped.
Tax cuts were not the problem. Tax revenues under Reagan rose from $599 billion in 1981 to nearly $1 trillion in 1989. The problem was that outlays all along outpaced revenue, soaring from $678 billion in 1981 to $1.143 trillion in 1989.
The cause of the Reagan deficits was the 1982-83 recession and spending - as is always the case. And, yes, the culprit was not just social spending by congressional Democrats but Reagan defense spending designed to take down the Soviet Union. What a bargain that turned out to be: It helped kill an "evil empire" and win the Cold War, paving the way for a peacetime dividend in the 1990s.
Yet it is clear today that we have refused the proper lessons of history. For one, our problem remains excessive spending. Obama must bear this in mind if he's considering tax increases (which hamper growth) as part of his "balanced" approach to deficit reduction. More than that, the best "stimulus" relies on the tried-and-true American way: Let free individuals stimulate the economy through their earnings and activity.
Ignoring such realities explains the mess we face in August 2011 - a millennium removed from the wisdom of August 1981.
It's the Spending, Stupid: A Crucial Historical Look at Federal Government Spending
We have failed to heed the lessons of economic history, with terrible consequences for our economy and country. And the most crucial of those lessons, particularly since the start of L.B.J.'s Great Society, is this: deficits have been caused not by a lack of income-tax increases but by recession and, most of all, by excessive government spending.
The failure to learn that lesson is again on painful display, as President Obama travels the country pointing the finger at "the rich" for not forking over enough income. By this narrative, the 36 percent income-tax rate paid by the wealthiest Americans is somehow robbing the poorest Americans, whose income-tax rate is zero percent; something one would never know from Democrats' class rhetoric.
Because I comment on this topic so frequently, especially in the context of Reaganomics, I constantly deal with these issues from a historical perspective. Here, I would like to make it easy for everyone to see the numbers themselves and understand the root of the problem.
The answers are as easy as googling the words "historical tables deficit." Two sources pop up: CBO historical tables and OMB historical tables. "CBO" is Congressional Budget Office; "OMB" is Office of Management and Budget. These are the official go-to sources for data on deficits, revenues, and government expenditures.
Either source will work. To keep it simple, I'll focus on the OMB numbers. At the OMB link is Table 1.1, titled, "Summary of Receipts, Outlays, and Surpluses or Deficits: 1789-2016." That is an official scorecard of spending by the federal government since the founding of the republic.
Looking closely at the chart is an eye-opening experience. As the first two columns show, receipts (i.e., revenues) and outlays (i.e., expenditures) moved up and down throughout our history. In 1965, however, something historically unusual, something literally deviant, began: Spending increased every single year, non-stop, consistently, without exception, into the Obama presidency, from 1965-2009.
There are few constants in the universe: gravity, the sunrise, the oceans, the moon. Add another: spending by the federal government; it rises every year.
Significantly, revenues don't increase every year. The most dependable reason for declines in revenues is not a lack of tax increases, or high enough income-tax rates, but recessions. Since 1965, as the data shows, annual revenues declined seven separate times.
At the start of the Great Society, in 1965, revenues and expenditures were nearly equal, with expenditures only slightly higher, leaving a manageable deficit of $1.4 billion. By 2009, however, annual expenditures ($3.5 trillion) had far outpaced annual revenues ($2.1 trillion), leaving a record deficit of $1.4 trillion.
Significantly, the biggest one-year drop in revenues was from 2008-9, when they declined from $2.5 trillion to $2.1 trillion. Worse, President Obama and the Democratic Congress responded with an $800-billion "stimulus" package that didn't stimulate. In other words, they responded in the worst way: with another $800 billion in government spending. That further mushroomed the record deficits/debt we face. The math is very simple.
Government spending, which has hampered growth rather than spark growth, caused this fiscal crisis.
It is crucial to realize that this spending addiction is a new thing in American history. Previous generations of politicians showed much more restraint. Prior to 1965, expenditures were not following an ever-upward trajectory; expenditures decreased year-to-year frequently, nearly two-dozen times between 1901 and 1965, even during the administrations of big-government liberal presidents, like Woodrow Wilson and Franklin Roosevelt.
This changed in the mid-1960s, when the federal government began a serious spending problem.
How do we communicate the crisis to the wider public, beyond charts and data?
I suggest comparing the situation to a household: Your family's annual revenue has probably not enjoyed a 40-year-plus consecutive increase. For some years, you were paid less. Perhaps you lost a job, took a pay cut, or switched jobs. Maybe your spouse was laid off, or left work to have a child. You bought a house one year, another 20 years later, spent a ton of money on your children's college education, lost on a bad investment.
I doubt your family's yearly revenue has been a steady upward climb since 1965. Life obviously doesn't work that way.
And yet, imagine if each successive year, without fail, you spent considerably more money than the previous, including money that isn't yours. You added debt each year, creating massive debts for your family and children. You paid taxes with a credit card.
How long would this go on before you ended up with a credit downgrade or in jail? Get the picture?
If President Obama and the Democrats don't, they should. Warren Buffet certainly should. Our fiscal crisis is due not to insufficient income taxes but uncontrolled, undisciplined spending.
To paraphrase Bill Clinton's 1992 campaign slogan, "It's the spending, stupid."
The Secret Memo That Predicted the Soviet Collapse
Editor's note: This article first appeared at National Review Online.
It was 20 years ago this summer that the final disintegration of the Soviet Union rapidly unfolded. In June 1991, Boris Yeltsin was freely elected president of the Russian Republic, with Mikhail Gorbachev clinging to power atop the precarious USSR. In August, Communist hardliners attempted a dramatic coup against Gorbachev, prompting a stunning succession of declarations of independence by Soviet republics, with seven of them breaking away in August alone, and four more following through mid-December.
The writing was on the wall - not the Berlin Wall, which had collapsed two years earlier, but the graveyard of history, which would soon register the USSR as deceased. It was December 25, 1991, the day the West celebrates Christmas - a celebration the Communists had tried to ban - that Gorbachev announced his resignation, turning out the lights on an Evil Empire that had produced countless tens of millions of corpses.
Historians debate the credit that goes to various players for that collapse, from Gorbachev to Ronald Reagan, Pope John Paul II, Margaret Thatcher, Lech Walesa, and Vaclav Havel, to name a few. These are the people who get books written about them. But there were many behind-the-scenes players who performed critical roles that have never seen the light of a historian's word processor. Here I'd like to note one such player: Herb Meyer. Specifically, I'd like to highlight a fascinating memo Meyer wrote eight years before the Soviet collapse.
From 1981 to 1985, Meyer was special assistant to the director of central intelligence, Bill Casey, and vice chairman of the CIA's National Intelligence Council. In the fall of 1983, he crafted a classified memo titled, "Why Is the World So Dangerous?" Addressed to Casey and the deputy director, John McMahon, it had a larger (though limited) audience within the intelligence community and the Reagan administration, including President Reagan himself. Later, it would earn Meyer the prestigious National Intelligence Distinguished Service Medal. Even so, the memo has eluded historians, which is a shame. It ought to rank among the most remarkable documents of the Cold War.
Meyer began his eight-page memo of November 30, 1983, by describing a "new stage" that had opened in the struggle between the free world and the Soviet Union. It was a "direction favorable" to the United States. He listed positive changes in America that suddenly had the USSR "downbeat." Not only was the U.S. economy "recovering," but Meyer foresaw a "boom" ahead, "with the only argument" having to do with its "breadth and duration."
Meyer listed seven signs of America's surge before providing even more symptoms of Soviet decline - a decline that was unrecognized by most pundits and academic Sovietologists. His insights into what he saw as an imminent Soviet collapse were prescient. After 66 years of Communist rule, the USSR had "failed utterly to become a country," with "not one major nationality group that is content with the present, Russian-controlled arrangement." It was:
. . . hard to imagine how the world's last empire can survive into the 21st century except under highly favorable conditions of economics and demographics - conditions that do not, and will not, exist.
"The Soviet economy," Meyer insisted, "is heading toward calamity."
Meyer nailed not only the Soviet Union's economy but also its "demographic nightmare." Here, he was way ahead of the curve, reporting compelling information on Russian birthrates, which were in free-fall. He recorded an astounding figure: Russian women, "according to recent, highly credible research . . . average six abortions."
As for the Soviet Bloc, Meyer didn't miss that either. "The East European satellites are becoming more and more difficult to control," he wrote, emphasizing that it wasn't merely Poland that was in revolt. "[O]ther satellites may be closer to their own political boiling points than we realize."
"In sum," concluded Meyer, "time is not on the Soviet Union's side."
He summed up with two predictions, nearly identically worded, as if to let the reader know he knew the magnitude of what he was saying: (1) "if present trends continue, we're going to win the Cold War;" and (2) "if present trends continue we will win." He quoted President Reagan's May 1981 Notre Dame speech, where Reagan proclaimed that history would dismiss Soviet Communism as "some bizarre chapter in human history whose last pages are even now being written." Meyer felt that Reagan was "absolutely correct," adding that the USSR was "entering its final pages." His memo projected a window no longer than 20 years.
Herb Meyer was dead on. I know of no other Cold War document as accurate as this one.
I recently talked to Meyer about his memo. He had no idea it had been declassified until someone sent it to him last month. "I was astonished," Meyer wrote me in an e-mail, "and it's a weird feeling to read something you'd written decades ago and hadn't seen since."
Meyer remembered well certain elements of the memo, particularly the Cold War predictions. He also had not forgotten the memo's reception. Within the intelligence community, there was a general feeling that Meyer had lost his mind. That was just the start of the backlash.
The memo was leaked to syndicated columnists Evans & Novak, who devoted a column to it. There was subsequent uproar throughout Washington, which made Meyer very nervous. He was summoned to his boss's office.
"Herb, right now you've got the smallest fan club in Washington," Bill Casey told him grimly. As Meyer turned pale, Casey laughed: "Relax. It's me and the president."
Today, Meyer says with a chuckle: "If you're going to have a small fan club - that's it."
CIA director Casey, like President Reagan, was committed to placing a dagger in the chest of Soviet Communism. He was pleased, and he encouraged Meyer. Meyer recalls: "My orders were, in effect, to keep going."
Meyer particularly remembers Reagan's being shaken by the statement about Russian women averaging six abortions. To Meyer's knowledge, Reagan "never went public with that astounding statistic. . . . Come to think of it, no one - except some Russians - ever talked about it."
Of all the items in the memo, that one remains the most far-reaching. Demographers today foresee Russia plummeting in population from 150 million to possibly 100 million by 2050. Meyer's memo is a prophetic warning that isn't finished. For Russians, the internal implosion isn't over.
When we look back at the Cold War, we remember big names and big statements and documents. There's nary a college course on the Cold War that excludes George Kennan's seminal "Long Telegram," sent from the U.S. embassy in Moscow in February 1946. Kennan's memo prophetically captured what the free world faced from the USSR at the start of the Cold War, forecasting a long struggle ahead. Herb Meyer's November 1983 memo likewise prophetically captured what the free world faced from the USSR, but this time nearing the end of the Cold War, uniquely forecasting a long struggle about to close - with victory.
George Kennan's memo is remembered in our textbooks and our college lectures. Herb Meyer's memo merits similar treatment. *