For three decades now, liberals, er, progressives have been trying to explain why the Reagan recovery—that explosion of economic growth that lasted two decades—actually happened. It followed the down economy of the 1970s, when both unemployment and inflation soared in tandem. This wasn’t supposed to happen. The liberal economists of the School of Keynes were perplexed. Their remedy of more and more government spending didn’t work. And they were loath to credit President Reagan’s supply-side tax cuts that Congress had enacted in 1981.
Now the puzzle has been solved: The Reagan recovery didn’t exist. In a New York Times review of Jack Kemp: The Bleeding-Heart Conservative Who Changed America, Timothy Noah says the tax cuts produced “a disaster.” It was Kemp who had persuaded Reagan to adopt across-the-board cuts in individual income tax rates. This, Noah says, “inaugurated two decades of sky-high budget deficits, accelerated a nascent growth trend in income inequality and did (depending on who you ask) little or nothing to ease the brutal 16-month recession that began around the same time the bill was passed.” That’s it. No mention of any recovery. It never happened.
The review doesn’t bother to explain, absent a recovery, how Reagan could have declared “Morning in America” and won reelection in 1984 in a landslide. Was the public misled about the condition of the economy? Reagan was dubbed the Great Communicator, but convincing the public the economy was in great shape when it wasn’t—even he couldn’t manage that. In truth, he didn’t have to. The economic numbers did it for him.
Something caused the economy to grow at a rate of 4.6 percent in 1983, 7.3 percent in 1984, and 4.2 percent in 1985. Over the rest of Reagan’s presidency, the growth rate was 4.5 percent, and through 2000 the economy grew on average 3.7 percent. Those numbers, taken together, would seem to indicate a recovery occurred. What could have sparked it? Perhaps the tax rate cuts worked in the 1980s and 1990s, just as they had in the 1960s when JFK’s tax cuts became law. Just a guess.
