The National Catholic Review

You will recall that presidential candidate Barack Obama once (in)famously said “Ronald Reagan changed the trajectory of America in a way that Richard Nixon did not and in a way that Bill Clinton did not.” The response was predictable: liberals were furious, conservatives were nauseous and cable news junkies started shooting up. Praising the arch-nemesis of progressive politics, after all, is an unusual tactical choice for a Democratic politician.

Now whether Obama was right about Reagan’s legacy is a debatable question, but it is a fact that Reagan changed at least the trajectory of his presidency and Mr. Obama might find in the Reagan record a hint of things to come for his own. The Reagan mythologizers would have us believe that Mr. Reagan, armed with only manly conviction and his budget and commie-busting whip, rode triumphantly into Washington and proceeded to relieve the town of the mis-guided, if well-intentioned, leadership of Pastor Carter. The townsfolk rejoiced and then re-elected him sheriff by a landslide.

The trouble with this Zane Grey history is that it simply isn’t true. Ronald Reagan was hugely unpopular throughout the first half of his first term. In addition to some very big and unpopular legislation, which had alienated huge swaths of the electorate, voters also held Reagan personally responsible for the dormant economy. Sound familiar? It should, because in terms of public perception, Mr. Obama’s presidency most closely resembles the Gipper’s. If you don’t believe me, then take a look at the numbers put together by the usually reliable pollster.com. Their research reveals that in terms of national opinion polling, Obama is not only tracking on the same general trajectory as Reagan, but in a month-to-month analysis, their numbers are in almost perfect synch. Though Reagan’s disapproval rating was actually two points lower than Obama’s at the same point in his presidency, his approval rating was almost four points lower than Obama’s.

The parallels don’t end there. The New York Times reported today that one of the 2010 Republican talking points is that unemployment is higher now then when President Obama took office. That is certainly true. Yet republicans would do well to remember that the same thing was true in 1982. One of the reasons why the 1982 midterms produced a 26-seat gain for the Democrats is that joblessness continued to rise throughout the first half of Reagan’s first term. The strategy that the Reagan White House adopted in response was to blame the Democrats for the country’s troubles. That too is a striking parallel: Also from today's New York Times: Obama advisor “David Plouffe told reporters on Thursday that his party’s candidates should confront anger about the economic crisis head on—and then blame Republicans.”

This all just proves one of Malone’s Political Rules: “Study history so you can be sure to repeat it.” In other words, if blame-gaming worked before, it’ll probably work again. People don't change that much. So expect more of the same: an angry electorate, a besieged president, lots of scapegoating and a few more stories about how Obama has lost his touch. They’ll be some losses in November, some more blaming, and then, if the economy turns around, improved presidential approval ratings and media stories about how Obama’s magic is back. In the best case for Democrats, 2011-12 will then be a new morning in America. The big “if” in that scenario, of course, is the economy. For all the similarities with ’82, the current recession is deeper and longer by most accounts. That obviously worries the White House. But the President has a famously audacious hope and a look at Reagan’s political trajectory gives him cause for it.

Comments

Anonymous | 10/11/2010 - 9:47am
There is a significant difference between Reagan & Obama not accounted for in this analysis.  Obama has seemingly lost his ability to connect and appeal to the average voter.  Reagan, for all his early term troubles, never lost this basic connection.  Obama has come off as aloof and more liberal and partisan than he promised and campaigned as.  Perhaps a GOP victory in the House & gains in the Senate will wake him from his stupor, and it appears as though he will have lots of fresh faces in the office soon, that will also help.  But unless and until he appears to "get it", he will be more like Carter than Reagan.
Stanley Kopacz | 10/10/2010 - 2:39am
Interesting.  Thanks for the links, at least the CBO one.  But as I expected, what is explicitly summarized is the appropriation for operations in the wars.  I doubt this includes the direction of other parts of the military budget toward the support of two occupations.  The US has bought equipment specialized for these wars, for instance, V-bottom hulled vehicles that are IED resistant.  In addition, there is vehicle reconditioning.  It would be naive to think that all military efforts, even R&D, have not been oriented toward solving problems specific to these wars.  I still maintain that the real cost of these wars is a multiple of the stated amount and hidden in the rest of the military budget.  Sacrifices in our general military capability have probably been made to support these wars.  These may materialize as costs in the future if these deficiencies have to be addressed.
Anonymous | 10/10/2010 - 1:10am
I was wrong, the Iraq War and Afghan war did cost a little more than the stimulus package.  The Iraq part of the war cost a lot less.  Most of the Iraq War cost was spent in the last couple years for the Surge.
 
Here are two links.  One is the Congressional Budge Office, that well known Republican spreadsheet, and the other is from the Washington Examiner which puts some of the data in perspective.
 
 
http://cbo.gov/ftpdocs/117xx/doc11705/08-18-Update.pdf
 
 
http://www.washingtonexaminer.com/opinion/blogs/beltway-confidential/Little-known-fact-Obamas-failed-stimulus-program-cost-more-than-the-Iraq-war-101302919.html
 
Notice the chart of the deficits and how they ballooned when the Democrats started writing the budgets and how much the Iraq War was of the deficits and the entire budget.  Now to be fair, the economy was starting to slow down in late 2007 due to the sub prime mess and that impacted revenues but the Democrats did write the budget for that year and since.
Tom Maher | 10/10/2010 - 1:08am
The economy is "deleveageing"  meaning it will be five to seven years from 2007 for the housing market to be back to normal.  In the mean time we have a glut of unsold housing from the housing boom prior to 2007/  So many area will not have the same level of home construction for a while.  Nationwide housing prices thich were sky high prior to 2007 at still way to high and will likely have to go down 30% more.   So Housing will not help us get out of the recession this time around. 

Obama will face the continued downturn in housing in the next two years.  Noone is forecsting a strong recovery anytime in the next two years even if Obama economic policies were to make sense.  
Anonymous | 10/10/2010 - 12:26am
''Mr. Cosgrove writes as if Democrats can do no right and Republicans can be excused for doing wrong.''
 
 
When each does something wrong they should be criticized.  The authors on this site have no remorse at mocking the Republicans.  Two have associated the terms ''witch'' and ''Nazi'' with one running for senator.  Republicans and Democrats have different philosophies on how to govern and how to run the economy.  When they get in charge, they often do very similar things because they are constrained by reality so some times it is hard to tell the difference.  One party emphasizes freedom, the other equality.  These two objectives are not compatible so it eventually plays out differently in economic and social policies.  One approach has a poor track record for success, the other a very good one.
 
 
The stimulus package was directed toward Democrat constituencies and not to the general public and was not meant to build any lasting framework for employment.  A Republican approach would be to direct it toward the general public and business with the objective of building permanent employment through new business incentives.
 
 
The Democrats have governed poorly.  They have left town with no budget for the coming year nor any plan on what to do with taxes.  Such a scenario paralyzes individuals and businesses as they have no idea on how to plan for the future.  Read Charles Krauthammer's column today.
 
 
http://www.thestate.com/2010/10/09/1504120/krauthammer-the-colbert-democrats.html
 
 
''So, Mr. Cosgrove, where should the working poor hang their hats?''
 
Rent, that is what my wife and I did with two children till I got enough for a 15% down payment.  We lived in an apartment complex with several other families that had children.  I finally did get help from my mother for part of the down payment but we were planning on continuing to rent till we could get enough money.  I know families who rented for 10 years before they could afford a house.

Stanley Kopacz | 10/9/2010 - 9:40pm
I am quite aware of the White House's foot dragging in installing the solar cells.  It IS , of course, mostly symbolic, and one we need right now.  I voted for Obama because I had no other choice but that doesn't mean I have to lionize him like our conservative correspondents seem to have to lionize their crew.

As for the cost of war, most of it will be hidden on purpose.  The cost of maintaining M1A2 tanks, Stryker vehicles, Apache helicopters, etc. in a hostile environment will be listed as routine maintenance.  The bribes or stimulus packages we have to give to various foreign governments to get their cooperation, be it as it may, is probably called foreign aid and not included.  The cost of medical treatments and benefits for the wounded will go on for decades. The returning veterans, even those physically intact, will bear the scars of war and these will reverberate through our country until that generation passes away.  And this will cost money and productivity, if htat is one's main concern.  Who knows what all the contractors are getting and from what sources in the black part of the budget.   Both wars costing less than the stimulus package?  Has to be a Republican spreadsheet.
Marie Rehbein | 10/9/2010 - 4:12pm
Nasty, nasty politics.  Mr. Cosgrove writes as if Democrats can do no right and Republicans can be excused for doing wrong.  Honestly, there is plenty of blame to go around.  Nevertheless, it is important for people of limited means to be able to buy their homes.  In the long run, this will help their families raise their standard of living.  What they don't need, though, are loans that are unpredictable and approvals that are based on imaginary futures.  So, Mr. Cosgrove, where should the working poor hang their hats?
Anonymous | 10/9/2010 - 12:45pm
''The deregulation of the financial industry that began in the 80s under Reagan and continued under the Clinton and Bush administrations and that gave us the fairy tale credit swap derivatives takes pride of place as the first mover of the collapse. ''


That is nonsense.  Credit Default Swaps make great headlines and contributed to the problem but they were a small part.  One can argue that most of Wall Street activity is useless and I would agree with that.  Essentially they push money around looking for small advantages but the numbers are so large that small gains are huge in an absolute sense.  The problem is that when ordinary people and businesses make money, what do they do with it.  The mattress sometimes looks good.  For example, each day about 5 trillion dollars of currency is traded and only about 3% of this is for transactions linked to trade between one country and another.  The rest is speculation by currency traders as they seek small advantages that end up being large amounts to the rest of us.

I have read quite a lot about the financial crisis and there tends to be several things that get conflated.  Most of the bad loans were not with Wall Street Investment Banks but with the GSE's.  GSE's held the vast majority of the sub prime loans as they securitized the mortgages with the underwriting help of Wall Street investment banks but they essentially held the loans.  Some of the Wall Street Investment banks then bought mortgage banks to bypass the GSE's and they paid the price for this.

Many of them took on a lot of these bad mortgage bonds in the form of CDO's and it brought down Bear Stearns, Lehman, Merrill Lynch and Citi Bank and some others.  Merrill and Citi Bank were rescued and Bear Stearns absorbed by J. P. Morgan.  But the total amount they owned was a small amount of the total. Because they were intertwined with others, this caused a credit crisis in September of 2008 where the commercial paper market almost dried up and would have caused real havoc in the economy as many would not be able to make pay rolls or pay creditors for supplies.  Everybody was afraid to lend to everyone else.  Essentially this was all over by late November and early December 2008 though no one knew it at the time and it took the Stock Market about 5 more months to understand this.  So the first part of the financial crisis was solved quickly and before Bush left office.

But the basic housing crisis was real and did not go away and is still one of the two main problems in the country along with unemployment as about 25% of homeowners are under water.  Actually there is a bigger problem than either of these and it was exacerbated by the stimulus program.  That is the unfunded public sector entitlement programs which is to a large part due to the inflated wages in the public sector and unfunded promises to public service and teacher unions.  The stimulus money essentially paid this excess for a year instead of forcing the states and municipalities to make hard choices such as cutting salaries or laying people off.  It is not going away and is just over the horizon.
Anonymous | 10/9/2010 - 12:02pm
A few points brought up by commenters.


First, the Iraq and Afghan Wars cost less than the Stimulus Package from last year.  The Iraq War did increase the deficit a little each year but the deficit was heading back to zero in 2006.  Two things happened then, The Democrats took over Congress and started writing the budget bills and the sub prime problem started affecting the economy.  Deficits started to skyrocket.  

Anyone complaining about the deficits have got to look at who wrote the budgets and starting in 2007 it was the Democrats under Nancy Pelosi.


Second, there would not have been any financial crisis without the collapse of housing prices.  The problem was why did the housing prices rise 90% in just 6 years when normal housing price increases are about 1-2% a year.  There were several exacerbating factors but the housing loan policy shift in the late 90's and early 2000's by banks is at the root of all the problems.  There are other contributing factors including the incredibly friendly business environment in the early part of the decade that generated huge amounts of cash, all looking for someplace to go.  There might have been bad investments in other areas if the housing prices had been kept in check but once housing prices started to rise, people wanted to invest that money there.  It was similar to the stock market bubble in the late 90's.

The inexpensive loans for houses are the result of two actions.  First the Community Reinvestment Act under Carter and later strengthened under Clinton suggested that loans be made available to low income people.  This suggestion later turned into the forcing of such loans on banks.  HUD, first under Cisneros and then Andrew Cuomo designed the NINJA loans,with no money down and no looking at assets or jobs to pay.  Cuomo and Kirsten Gillibrand, the current senator from New York, would then go to banks around the country and encourage the use of these new loan policies.  

This was primarily a Democrat initiative.  Bush did cheer lead this along when he was president and his housing people did not over see it carefully, so there is some blame for Bush but when they tried to reign in the GSE's they were fought by the Democrats in Congress.  This is on video and can be viewed on the internet.  The irony in all this is that Gillibrand's husband who essentially did not have a job made money shorting the banks doing the financing and which his wife sold the ideas to.

The only deregulation that caused the housing crisis was the deregulation insisted upon by Democrats to force loans to low income people.  As I said Bush's housing people did not do a good job overseeing the banks so that contributed but the basic policy originated from the Democrats and defended with great effort.


The solar panels were offered to Obama several months ago and he refused them and only after the bad PR resulting from this did he agree to take them back.  They are at best a token gesture.
Stanley Kopacz | 10/9/2010 - 11:49am
One reason Reagan was elected was his "don't worry, be happy" message to an electorate still in shock from the gas crises.  Carter was sensible in his call for energy conservation and alternate energy sources.  Reagan had no problem wasting government money de-installing the solar energy systems.  The message was clear.   Live as if there's no comeuppance.  Live for today.
Craig McKee | 10/9/2010 - 11:04am
I don't know much, but I do know that Pres. Obama just re-installed the SOLAR PANELS on the White House originally put in place by Jimmy Carter in 1979 and unceremoniously REMOVED by Ronald Reagan in 1986.
Winifred Holloway | 10/9/2010 - 9:04am
To Mr. Cosgrove: The banks making risky loans to people without the resources to pay them back is just one small part of the economic meltdown.  The deregulation of the financial industry that began in the 80s under Reagan and continued under the Clinton and Bush administrations and that gave us the fairy tale credit swap derivatives takes pride of place as the first mover of the collapse. 
Stanley Kopacz | 10/9/2010 - 8:20am
Since these recent wars were fought over energy, it's only fair that the portion of the deficit generated  (probably four trillion) by these adventures be paid off by a gasoline and oil tax.  That way, those who are not bothered by blood and treasure for oil can pay for it in their proper proportion.  People will still be free to heat their tacky, oversized McMansions and drive around in gas guzzlers, but they will no longer have hidden costs subsidized by the general population.
Anonymous | 10/9/2010 - 1:40am
''It is easy to project deficits in Social Security, Medicare, and similar programs, and to assume cuts will be necessary.  What about that other large chunk of federal expenditure for wars that are supposed to be 'over' soon?''
 
 
In order to understand the budget deficit problem, I suggest people watch a video that illustrates it better than anything else I have seen.  It is 
 
 
http://wimp.com./budgetcuts/
 
 
Cuts in defense spending would be a drop in the bucket compared to interest payments, social security, medicare, and other entitlements.  That is not saying that there shouldn't be cuts in defense but to use it as a way to cut the deficit spending is not realistic.  The main thing that will make a dent in the deficit is growth in GDP which will generate jobs and taxes from the new salaries and growth.  Unless one wants to supports cuts in entitlements such as postponing social security and medicare for a few years.   That would make a huge dent but be extremely unpopular.

Anonymous | 10/9/2010 - 1:14am
The difference between Reagan and Obama are more striking than similar.  The economic policies Obama implemented were the failed ones that Reagan corrected. I suggest that Fr. Malone and other Jesuits who comment here read Robert Samuelson's 


The Great Inflation and Its Aftermath


The policies that caused the Great Inflation and also extended the Great Depression are what Obama has implemented or hopes to implement.  The one big change is the Fed's easy money policy which is just the opposite of what was done during the Depression.  But Obama has managed to cause paralysis with his legislation and his proposals to raise taxes, which is just what Roosevelt did to stifle business in the 1930's.


Also the problems that Reagan inherited were the result of Democrat policies though Carter did hire Paul Volcker but it was Reagan who got him to squeeze the economy down in order to eliminate inflation.  Today, the problems of the economy were not made by the previous administration's policies but by the Democrats themselves, namely the housing policy of providing loans with no ability to repay.  Obama did nothing to  correct the problem but actually exacerbated the problem with large scale distribution of monies to Democrat constituencies, namely state and municipal employees and labor unions. He essentially froze business out of the recovery and this suppressed hiring as he supported the bloated salaries of public employees while private employees went on unemployment.


The similarities between Obama and Reagan are superficial both in terms of the persons involved and the situation inherited and the policies implemented.  Yes both had high unemployment during their first 24 months, one by design the other by ineptness.  Reagan cut regulation, Obama has just saddled business with massive regulation.
Tom Maher | 10/8/2010 - 8:22pm
Before sorting out mythologies one needs to have the historic facts down straight.  The basic causes of unemployment and receession where quite different in 1981 than 2009.

In 1981 the United Staes had a raging inflation while in 2009 the United States had a deflated economy where several (but not all) key economic sectors collapsed such as the housing market and financal and credit markets.  The appropriate economic response to these economic conditions are very different.

Reagan responded by tax reform which he had ran on that massively loweref all categories of taxes such as lowering personal,and corporate taxes by 36%.  At the same time governemnt non-military expediture were reduced thererby reducing a major contributer in inflating the American economy - government spending.  By lower taxes and reducing goverment spending a hugh shift of financial resources to the private sector was effected which stimulated the economy without inflating the economy.  Real economic productivity replaced a stagnent economy and ever  higher prices on everything.   Inflation which had been growing worse since the late 1960s was finally brought under control the the right economic policies.  Reagan unlike Jimmy Carter had no problem being reelected for a second term in 1984.   Reality shows Reagan won 48 states in a landslide in 1984.    


We will have to see if the Obama adminstration can get the right policies to handle the economy.  So far his policies have not been effective nor are they likely to be effective without substantial policy changes.  Noone running for office this November is advocating the Obama economic policies and many including many Democrats are running against Obama's economic policies.  The upcoming election will likely be a referandum on the Obama administration failed economic policies.  We will see.
Anonymous | 10/8/2010 - 5:45pm
"The Reagan mythologizers would have us believe that Mr. Reagan, armed with only manly conviction and his budget and commie-busting whip, rode triumphantly into Washington and proceeded to relieve the town of the mis-guided, if well-intentioned, leadership of Pastor Carter. The townsfolk rejoiced and then re-elected him sheriff by a landslide."

- I just love it when liberals lecture conservatives about Reagan's legacy!  And as if America needed yet another new liberal blogger!