| Rating: | ★★★★ |
| Category: | Books |
| Genre: | History |
| Author: | William Kleinnecht |
Look around much of the United States today. Besides a huge recession that resists the two year recovery pattern one used to expect in these downturns over the last sixty years, we see an America middle class in full retreat, with a denuded public sector. The powers once in place to protect the values of people's homes, their jobs and their investments have all been stripped away by deregulation through corporate lobbying . And the biggest de-regulator pin-up guy of them all was Ronald Wilson Reagan.
Let's review:
In 1989, the savings and loan industry crashed. The tax payers were put on the hook for $150 billion. The bil to deregulate the savings and loan industry was pushed through Congress by the GOP and some conservative southern Democrats. .Reagan signed the bill, saying "this bill will make a lot of people wealthy". The era of private profits and pubic losses--since all S&Ls were protected with $100,000 dollars of federal bail-out money for each account in each S&L--had begun. Meanwhile, poverty in America went up under Reagan, not down as he promised and the promise he made wasn't kept until a Democrat, Bill Clinton, presided over a let-up in the late 1990's.
Both Clinton and George W. Bush continued to move ahead with Reagan's deregulation mania, the latter being the most enthusiastic. The Republicans who ran Congress from 1995 to 2007 followed suit. The result in part was the Enron mess, where an energy company not only jacked up rates on power and deliberately created shortages (rolling blackouts and brownouts) to consumers in California and other states, but also hid the fact that they were going broke from their own employees and stockholders for months while CEO Ken Lay and Jeffrey Skilling cashed out their stock and lived like kings. (Until Lay died and Skilling went to jail that is.)
But deregulation fever was not done, kids. In 2008, the economy really crashed. Major investment banks--Citigroup, Lehman Brothers, Goldman Sachs, AIG, et al---went belly up. The housing market, which had traded toxic mortgages and Wall Street, which created clever and opaque securities schemes issued by these banks were the culprits. The financial gimmickry together with deregulation and plain old cozy realtionships on the Washington-Wall Street axis did the rest.
Even those who had purchased rock-hard, non-adjustable mortgages found themselves living in homes that were now "underwater"--worth less on the market than they could be sold for the mortgage holder to even break even. Whole areas like Las Vegas and central California were slammed. Foreclosures sky-rocketed.
It is estimated by John McCain, the Arizona Senator and former Republican Presidential candidate, that half the homes in his state were technically "underwater". This in a nation where middle-class people had most of their wealth concentrated in the family home. Or in the 401k program at work, another place where even modest investors found themselves losing decades worth of savings just as many faced layoffs, underemployment or the failure of their small business due to lack of demand in industries like retail sales, manufacturing and construction .
Whole cities in the Middle West , including Reagan's boyhood home of Dixon, Illinois, faced enormous job losses as business, spurred on by tax breaks and low tariffs, headed for overseas climes to get their goods manufactured.
Some of this would have happened without Ronald Reagan you might be thinking, and I agree. But not all of it. Not by a long shot. It was Reagan who first went after the protections afforded by the Glass-Stegall Act of 1933 that separated the commercial banks from the potentially reckless ones. The process was slowly chipped away so that when Bill Clinton foolishly ended the Glass-Stegall protections altogether in a bill signing in 1999, there was little left to save.
But the taxpayer, somehow, was still on the hook. And so were all the people who suffered in the housing crash. The bailouts and the trillions lost that will likely never be fully recovered started in earnest under Reagan.
But why would the son of a shoe salesman and a housewife from rural Illinois, a man who entered the workforce from Eureka College in 1933 when the unemployment rate in the nation was over 24 percent, and a vocal champion of the New Deal of Franklin Roosevelt, have helped decimate the middle class, especially in cities and towns like Dixon, Illinois, his first home? What happened to this son of a midwestern working class family, and, more importantly, how is it that his vision changed America in a way so antithetically to the popular myth of Reagan as a cheerful and benign leader who was supposed to have "restored America" in his eight years of office?
The answer might be from Reagan's own fortunes long before he entered politics. He was a leading man in Hollywood, but somehow his bosses at Warner Bros Pictures saw him mainly as a light romantic lead. When television came in, and Reagan's film roles got worse (see "Bedtime for Bonzo') he began to cultivate powerful friends in the southern California business world. This led to him helping a powerful company, MCA (Music Corp. of America) get a blanket waiver from the Screen Actors Guild to both represent talent in Hollywood but produce programming and movies. Reagan was also a client of MCA and its soon-to-be powerful chairman Lew Wasserman.
He got a regular job as spokesperson for the General Electric Company in 1954 as the host of "GE Presents". It was produced by MCA, in case you hadn't guessed. Part of his duties as host was to go about the country on the company's behalf making speeches at GE plants and at business meetings. The "speech" Reagan delivered for GE became the blueprint for his anti-government trademark "The Speech", that he used effectively to get him into the governorship of California in 1966. Friends at MCA and other companies even bought property he owned near Santa Monica and Northridge (both suburbs of Los Angeles) at wildly inflated prices so he would be set for life financially for his troubles as a candidate.
Was Reagan "bought" or did he just see the light, as he liked to say later?
It really doesn't matter at this point. His manichean world view was either too pro or too anti-government throughout his life. (Was he ever a pragmatist? Yes. But only when his hand was forced by the legislatures in Sacramento and later in Congress.)
What matters is the damage that was wrought. Reagan doesn't deserve as much blame as the author gives to him I believe but he is the man who most embodied the spirit of free-market absolutism.
This book also goes into great detail to explain how Reagan appointed people to positions of power in regulatory agencies who had little interest in regulating the corporations they were supposed ot be watching. This was a trick George W. Bush learned all too well.
And so Ronald Reagan rode off into the sunset in 1989 and now he is supposed ot be a revered figure in American politics. Sad to say, really, for the truth is his rhetoric gave ammunition to a second generation of nihilistic Reagan robots who make him as President on some matters (like protecting Social Security and shoring up deficits by closing tax loopholes) now look like the old New Deal liberal he had been decades earlier.
If you like a little strong irony along the way with your true-life stories , this book is a good place to go to learn how we got into this mess.
A 2009 interview of the author:
ReplyDeleteseems like a great read...I believe The good Mr Reagan's trickle down was actually a broken upstairs toilet. I wouldn't want to be where he is tonight.
ReplyDeleteThe question is, how do we (that is America and the rest of the western world) get out of the mess left behind by these people? It seems that Obama is a busted flush, dogged as he is by bad luck, an economy that stubbornly refuses to turn round and enemies everywhere who peddle the most outrageouse falsehoods which are believed by huge swathes of the electorate across America!
ReplyDeleteAre we to be saddled with more of the right wing dogmatic medicine in a little more than twelve months? Sadly I suspect we will, short of some sort of miracle that is.
History does repeat itself. Any president other than Roosevelt who walks into a bad economy is destined to be a scapegoat even though they inherited a lot of the problems. But blaming it on one man whether it be Reagan, Clinton or either Bush is wrong. Ultimately the Senate and the House of Representatives has the responsibility to monitor the President. They have been collectively drinking the Kool Aide and "blindly" allowed a lot of this to happen.
ReplyDeleteI haven't read it yet (hence; no 'stars') but I will. Good recommendation.
ReplyDelete(I was pretty unpopular when The Gipper died - because I said that if there really was a Hell, he was extra-crispy right about now for all he did to the economy....)
I like that broken toilet analogy, Mike. A lot of people didn't notice theleak until the roof under the bathroom caved in.
ReplyDeleteJim, you've hit on one of the things that is part of the American dilemma. Obama couldn't turn the economy around in a short stretch so the public bought back into power in the House and Senate members of a far right-wing agenda, the so-called "tea party" GOP. They espouse the same economic nostrums that brought us into this mess in the last decade.
ReplyDeleteOver sixty seats fell from Democratic to Republican in the 2010 elections. What should have been a rebuke to Obama---a loss of 20-25 seats as Reagan himself suffered in the 1982 Congressional elections--instead became a drubbing and, in fact, a beat down. The arson inspector took the blame for the fire, in my opinion.
They sell "austerity" and public sector cuts in education as a way to save the economy. You might have noticed a few of those ideas in play with the Cameron and Clegg government, although I doubt Britain's public-sector decimators could be as radical as the lot we have in the USA.
This is a feature of the American Constitution; seperation of powers between Executive and Legislative branches of government. The trick is that this non-Parlimentary style of government can only work if there are enough Congresspeople and Senators on all sides of the political parties to make compromises on important matters. Otherwise it falls apart because the majority in Congress declares defacto war on the Executive and his minority in Congress within his party.
It's a great question Jim. I don't know how we do it until the public embraces old-fashioned American pragmatism--balancing cuts in some government programs with a stronger tax base, geared toward the big winners in the flush times of the past.
Don't count Obama out just yet by the way for 2012 by the way, judging by some of the Howlers running for President on the GOP side.
Some Republican politicos have gone so far rouge that they seem more and more radical than conservative. Even a very strong tree limb will snap and fall if you put too much weight too far out on the limb.
That's true Fred. And that's why I said some of this would have happened even without Reagan in office. But I submit that, unlike the Congress (which does indeed bare a lot of responsibility) the President sets a national tone so to speak. He (or eventually she) is the one figure in Washington who can use that "bully pulpit" to set the political agenda. But, in day to day governing, you're exactly right---Congress needs to take a share of the blame. I guess its easier to focus on one man or woman than a cadre of reprsentitives and their lobbying pals in one blog.
ReplyDeleteReagan was very attuned to the interests of his friends in corporate America. That is nothing new to American politics, really. What was new was this notion that government isn't a necessary part of the economy. FDR proved it was necessary and many Republican Presidents before Reagan understood the need for major government projects like NASA and the Interstate Highway system, and local needs like public education. No one likes to pay taxes, but to believe "government is the problem" as Reagan said, is as immature as the hippies we used to see on television saying "don't trust anybody over thirty years old ,man!"
Reagan was, ironically, often willing to compromise, first as governor of California with the Democratic majority legislature and later in shoring up some government programs. He seemed to be against business regulation in a way that put too many foxes in the hen house, so to speak. The biggest problem I see right now is that these tea party Republicans remember what Reagan said very well, and are trying to obliterate what measure of practicality he brought occasionally to the table with guys like Tip O'Neill. This puzzles me.
Thanks Will. I hope you get a chance to read this book.
ReplyDeleteI suspect Reagan is sitting down right now with Colonel Sanders on KFC fame, discussing how they marketed themselves as a public brand. I will not speculate as to where their souls might be, but I suspect the Gipper had some " 'plaining to do" with St. Peter.
...and some arguing to do with Che Guevara, with whom they're probably sharing a hot-rock right about now (if not Che's cigars)....
ReplyDeleteLOL! The rock will preclude the need to have a cigar lighter.
ReplyDelete