1981

This blog and others have looked to 1933 as the model for what’s to come. Democrats, in control of everything, turning a Republican mess into a “new deal” that transformed America. Another model, one less comfortable to Democrats, is the one I lived through in 1981—the arrival of Reagan and the conservatives. Yes, Democrats with glee will reverse “the Reagan revolution” and the peace and prosperity Reagan’s policies of less government, lower taxes, and a strong national defense generated over the following 25 years (21 of which had Reagan, the Bush family, or Gingrich in power).

But recall Reagan first year excesses that hint at the coming 2009. Under David Stockman, tax and budget cuts reduced aid to education, welfare, and food stamps, and budget policies that took place, in Stockman’s words, in an atmosphere where "none of us really understands what's going on with all these numbers" helped produce a sharp economic contraction that led to 10.8% unemployment by December 1982. To get the tax cuts through congress, Stockman said, “The hogs were really feeding. The greed level, the level of opportunism, just got out of control.” The deficits that began under Stockman dominated American economic policy discussion until Clinton and a Republican congress brought them under control in the late 1990s.

Meanwhile, James Watt was taking a hatchet to environmental policy (bad), and Reagan himself (with Transportation Secretary Drew Lewis) dealt a major blow to unions by breaking the striking air traffic controllers union (good—but unions expect Obama to just as dramatically help unions by passing a law to take away the secret ballot in union elections).

When the new folks get power, expect extremism.