June 14, 2004
By Edwin J. Feulner, Ph.D.
My office windows in Washington, D.C., overlook more than half a
dozen American flags, all flying at half-staff in memory of Ronald
Reagan. Those flags will remain lowered as we mourn the passing of
our 40th president.
But a month from now, those flags will be back at the top of their
poles, flying proudly over a powerful and influential nation. And
fittingly so. Because those traits -- American pride, American
power and American leadership -- are President Reagan's
To appreciate why, it helps to recall just how bad things were when
Mr. Reagan took office in 1981. After all, Americans are by nature
optimistic, so we tend to forget the bad things that happen to us.
Or at least we put them behind us and move forward.
But optimism was mostly absent in the late 1970s.
It was the era of "stagflation." Prices went up, but economic
growth didn't. The "misery index," a combination of unemployment
and the rate of inflation, hit 20 (for comparison, today it's less
than 7.5). Keynesian economics had failed.
Around the world, there was reason to think the American experiment
was a failure. Socialist West Germany had lower unemployment than
we did. The Communist Soviet Union was advancing, even as American
power seemed to be waning. Soviet troops were moving into
Afghanistan, while Iranian students held 52 Americans hostage for
more than a year. President Carter's Secretary of State resigned
when his boss dared even to attempt to use the military to free the
captives. Worse, the mission had failed.
It was time for a change. Mr. Reagan cheerily campaigned in 1980,
and when he took office, he kept his promises.
He started with tax policy. Under Carter, the top federal
income-tax bracket was 70 percent. It made more sense for wealthy
people to hide their money in tax shelters or government bonds than
to attempt to start a business or open a plant. Clearly our leaders
had forgotten the axiom "Whatever the government wants less of, it
taxes more." Investment, however inadvertently, was being treated
as smoking and drinking were -- something to be taxed out of
President Reagan changed that. He pushed through The Economic
Recovery Tax Act of 1981, slashing tax rates by 25 percent.
Suddenly, it made sense to invest again. And Americans did. The Dow
Jones Industrial Average soared for the next 18 years. On Reagan's
watch, it went from 800 in 1982 to 2,100 in 1988.
New businesses opened their doors and started hiring. And hiring.
And hiring. By the time he left office early in 1989, Mr. Reagan
could announce, with characteristic modesty, "the people of America
created -- and filled -- 19 million new jobs." Indeed, the people
created them, but the government, under Reagan, helped by getting
out of the way.
Tax-cut naysayers in 1981 warned that the wealthy would no longer
"pay their fair share," and that overall tax revenues would
decline. Again, Mr. Reagan knew they were wrong.
After his supply-side tax cuts, the top 1 percent of taxpayers saw
their share of the total tax burden increase from 19 percent in
1980 to 27 percent in 1988. And the money came pouring in. Total
tax collections rose from $500 billion in 1980 to $1 trillion in
1990 (in constant dollars).
In an economy that rewards achievement, Americans achieved
spectacularly. Before long, governments worldwide were following
our lead and cutting taxes to stimulate growth.
President Reagan was optimistic about our prospects overseas as
well. Unlike his predecessors, he didn't believe in containing
communism or boycotting it. He wanted to defeat it. "My idea of
American policy toward the Soviet Union is simple," he told Richard
Allen, who would become his first national security adviser, in
1977. "It is this: We win, and they lose."
He made that victory possible by rebuilding our military. And he
placed missiles in Europe, where they could protect our allies and
directly threaten the Soviet "evil empire." But his most important
idea was the Strategic Defense Initiative.
A missile defense will finally go online later this year, giving
the United States, for the first time, a measure of protection
against foreign missiles. Mr. Reagan believed so passionately in
missile defense that he was willing to walk out of the 1986
Reykjavik summit rather than put SDI on the table. As Mr. Reagan
knew, the Soviet Union couldn't keep up with our military or our
economic growth. Combined, they made our victory in the Cold War
Early in his presidency, Mr. Reagan said, "What I'd really like to
do is go down in history as the president who made Americans
believe in themselves again."
Mission accomplished, Mr. President. Thank you.
Ed Feulner is the president of The Heritage Foundation
(heritage.org), a Washington-based public policy research
First appeared in Investor's Business Daily
My office windows in Washington, D.C., overlook more than half a dozen American flags, all flying at half-staff in memory of Ronald Reagan. Those flags will remain lowered as we mourn the passing of our 40th president.
Edwin J. Feulner, Ph.D.
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