Article in Politics / Taxation
Governments do not achieve success unless the people do, for it is the achievement of families all across this country that allowed the government to hold a shiny mirror to its performance.
 
 
 

A Journey Begins With a Single Step

A Journey Begins With a Single Step

Robert E. Freer, Jr

President Kennedy was fond of saying that a journey of 10,000 miles begins with but a single step, and surely America’s journey from the financial malaise of the Carter administration began with a metaphorical first step as well. To prepare the country for recovery, Governor Reagan laid out what he would do if elected. This created the atmosphere for financial success by all our citizens. Hearing his pitch, the electorate believed him, supported him and together created an unparalleled period of financial well-being. Governments do not achieve success unless the people do, for it is the achievement of families all across this country that allowed the government to hold a shiny mirror to its performance.

During the presidential campaign of 1980, Reagan the candidate made it clear that the financial problems of the country had been caused by too much government not too much freedom. Our economy needed to be freed of burdensome interference by government and reattached to economic principle so that all those who worked hard could be certain that investments would prosper through their own hard work not government fiat. The Reagan government would not stifle economic activity with overly burdensome regulation but only that required for orderly markets and public safety.

Government would also not destroy entrepreneurial spirit by excessive taxation. Once in office, President Reagan followed through on his promises and convinced Congress to reduce the top tax rate to 50 percent and then to 28 percent to spur the investment zeal of our bright and energetic people. To further spur the private sector, he cut non-defense spending by 30 percent over several budget years and burdensome regulation wherever it could be found.

The Great Communicator, as he had been dubbed, combined an informational outreach with tax cuts, cuts in non-defense spending, reduced regulation of business and anti-inflationary monetary policy to unleash our economy which by late 1983 was on its way to 92 months of steady increases in economic activity and job growth. Unlike our present situation, he kept his message clear and consistent and pursued a balanced economic policy that weighed what was going on in its free market fiscal policy with a strict monetary policy to keep the economy on a non-inflationary track as it expanded. Unlike our woeful creeping forward of the last six years, The Reagan years saw the economy expand by more than 30 percent with twenty million new jobs . As noted in my last article economic management that is uneven in application of both fiscal and monetary restraints causes anomalies such as the great increase we have suffered in this latest financial collapse in withdrawals from the work force. With their departure it makes statistical reporting of joblessness virtually meaningless. The strong bond of trust that existed between the President and the electorate was an important factor in this success. This is particularly true because the intense economic pain of unemployment, inflation and joblessness did not end overnight with his election but yielded to the strong medicine of the free market and tight money to ultimately bring inflation under control while markets accelerated.

This President has wanted full employment, expanding markets and a healthy economy and has failed in all three. The macro forces in play in a society of our size and complexity may be affected but never controlled. The free market is simply too powerful. The forces of control will cause anomalies and ultimately will either bring collapse or bring to bear their own forces that replace those we can predict with decay and perversity which themselves will harm the economy as it seeks an equilibrium. If there is a change in control of Congress in November, the policy separation that plagues the Executive and Legislative Branches now will make the next two years very challenging. The natural culmination of one set of economic assumptions meeting the reality of market forces and an invigorated Congress pressing hard for a market based fiscal policy may be beyond the skill of those currently at the helm and bring with it its own unique challenges.

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Professor Freer. Former assistant to Sec. Caspar Weinberger, is a veteran of more than 40 years in and out of government and has recently retired from The Citadel where he was the First BB&T Chair of Ethics and Free Enterprise Leadership.


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About the Author 

Prof. Robert E Freer, Jr.
Founder & Chairman Emeritus Free Enterprise Foundation/ Former BBT Chair Ethics & Free Enterprise Leadership, The Citadel, Charleston SC.

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