Budget Deficit

Rothbard on Reagan in Reason

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In your heart you know he's Ron

In my column Wednesday about Ron Paul and Ronald Reagan, I dug up from the Reason archives some tart and early pessimism (circa the March 1981 issue) from then-Reason columnist Murray N. Rothbard, the influential economist/philosopher who nabbed a dedication in Ron Paul's latest book (and is prominently featured in Senior Editor Brian Doherty's history of the libertarian movement, Radicals for Capitalism). I thought it might be of interest to reproduce some of Rothbard's pugnacious disillusionment throughout Reagan's first term, after which his column came to a close. There are definitely some echoes here of 21st century political concerns, from debt-limit politics to war to Ron Paul himself. So here's Rothbard on Reagan, in chronological order:

June 1981, "The Reagan Fraud":

Libertarians, hard-money buffs, economic conservatives, are hailing President Reagan for his "historic," "revolutionary" cuts in taxes and in the budget and for his full-scale commitment to deregulation and the free-market economy. Liberals, too, are joining the chorus–from the other direction, howling about the millions of poor who will be thrown into the streets and about Reagan taking us back into the 19th century.

Yay or Nay: Bring back the annual financial issue?

All of this is hooey and hokum. There is no "Reagan New Deal," and nothing either historic or revolutionary is going on. The fact that a small handful of libertarians or quasi-libertarians have gotten middle-level jobs in the administration means nothing except that a different cast of characters is fattening at the public trough and that their post-Washington careers will receive a substantial financial boost. The major point is that nothing is really going on. There are no budget cuts; there is no tax cut. The government deficit continues to be huge; the disastrous inflationary monetary policy continues in place. […]

Like Mrs. Thatcher in England, the president is giving us all the fiery and hard-hitting economic libertarian rhetoric but none of the substance. Since, after a brief honeymoon, only solid reality will work, the Reagan program faces inevitable collapse. All those who care about the free market, hard money, and minimal government must begin to act now to prevent this. The Reagan program must be denounced fiercely and uncompromisingly as a fraud and a deception. Otherwise, we all might as well pack it in for another century.

Lots to look at

March 1982, "Do Deficits Matter?"

If I were ever inclined to feel sympathy for any politicians, it would be for the venerable conservative Republicans in Congress, who all their lives voted against any increase in the government debt limit. Then President Reagan, in one of the first acts of his "free market" administration, called upon Congress to vote another whopping boost in the debt limit, this time to over $1 trillion. With tears in their eyes, a host of conservative Republicans voted, for the first time, for such an increase. They did so, they explained, because now, at long last, there was a conservative Republican in the White House, and he had pledged a balanced budget by 1984.

Well, it is now a year into the Reagan administration, and that pledge has already been brutally violated. The prediction of a balanced budget by 1984 has been officially abandoned, and the September projection of a $43-billion deficit in 1982 has also been tossed cavalieerly into the dustbin of history. The latest administration forecasts are for an enormous $109-billion deficit in 1982–by far the largest in American history–to be succeeded by even more whopping deficits of $152 billion in 1983 and $162 billion in the Orwellian year that was supposed to bring us the nirvana of a balanced budget.

So the salt water we were tapping from the ocean was being poured into Stockton and then down the drain in Bakersfield

June 1982, "Yankee Stay Home!"

It's beginning to look like Vietnam all over again. There is the same massive American aid, escalating step by step from economic to military to armed "advisors," to prop up a widely detested military junta. There is the same reach for covert paramilitary action to try to topple the Bad Guys. And above all, there is the same frantic and absurd search for the "outside agitators" upon whom all the war and bloodshed can be blamed. For it is part of the essential mythology of imperialism that the natives inside the trouble spot are happy and content with their lot and that all trouble originates from a handful of outside agitators funneling arms, stirring up discord, and assassinating the "legitimate" rulers of the nation. […]

The US effort is doomed in El Salvador and in the rest of Central America, and the sooner we recognize this the better. The cause of peace, the cause of abstinence from mass murder, the cause of sanity, require that the US government get the blazes out of El Salvador, and immediately.

Ahead of our time!

September 1982, "Flat-Rate Debate"

With Reagonimics in a shambles, the administration keeps looking for some panacea, some gimmick that will bring the economy out of the doldrums and insure political victory. Other politicians and economists are also looking for some quick route out of our economic mess. The latest nostrum being seized on is the flat-rate income tax.

Neoliberal Democrats, Friedmanite economists, Reagnites, and libertarians have all jumped on the flat-rate bandwagon, hailing it as "simple" and "fair," in contrast to the present complex system that soaks upper-income groups while allowing others to avoid paying their "fair share" of taxes. Even my favorite congressman, Ron Paul (R-Tex.) has fallen for this hokum[.]

The most literal cover in Reason history?

December 1982, "Any Way You Slice It"

For nearly two years I have been engaged in a crusade to inform any who would listen that the Reagan administration is in no sense committed to invidual liberty, even, as was so widely supposed, in the area of the free-market economy. Lately I have been pushing on an open door, since the anti-free-market nature of the administration has now become clear to everyone. […]

The departure of principled free-market people from the administration–Martin Anderson, Paul Craig Roberts, Steve Hanke, Doug Bandow–still leaves the problem: How could Reagan do it?

Next thing you now, you libertarians will want PRIVATE fire stations!

March 1983, "Why We're in a Depression"

There are only two alternatives: either a short, sharp recession that liquidates quickly and generates a rapid recovery (such as the intense but very brief depression of 1920-21, the last recession in which the government refused to intervene); or a chronic stagnation, neither fish nor fowl, with recession lingering interminably. That is what we suffered in the 1930s, and this is what the gradualist Thatcher and Reagan regimes have wrought.

And so the Austrian counsel is: the Fed must stop inflating; it must slam the brakes on its own destructive inflationary policies. And then the government must keep hands off the inevitable recession.

Read Brian Doherty's relevant "A Tale of Two Libertarianisms" here, and his oral history of Reason here. Thanks to Lucy Steigerwald for helping dig some of these up.