During the campaign, Barack Obama acknowledged his admiration for Ronald Reagan as a transformative President. Obama’s substantive policies were obviously quite different, but his goal was to change America the way Reagan did in the early 1980’s.
Both Presidents had the greatest of advantages coming into office. If you’re going to have a recession don’t have it at the end of your first term — when you will be (unfairly) blamed for having caused it. If you’re lucky, you’ll get your recession over at the beginning of your first term — so you can claim credit (unfairly) for having solved it.
Presidents and legislatures can accomplish great things for the long-term economic well-being of the nation. Regulating or deregulating, where appropriate, protecting industries or promoting free trade, where appropriate, changing the structure of the tax code in one way or another. But there is almost nothing that can be done positively for the short run in the face of a recession that is the corrective to years of excess.
There is one exception, of course, which is to maintain the confidence of the American people as they muddle through the inevitable adjustments – whether it be unemployment, inflation, or gas lines. For that, a simple message and theme is critical. Think of FDR explaining why — with Britain burning from Nazi bombs — we had to lend them a length of fire hose, even though they couldn’t pay for it right away. Think of Reagan claiming that lower taxes would stimulate economic activity. Think, even, of Clinton empathizing with the people who “play by the rules.” At least the listener thought that the speaker believed what they were telling us, and cared enough about us that they wanted us to believe it too.
Now try to think of a simple theme or message Obama has given us. We could have been facing 15% unemployment. We knew health care costs would go up. We will begin withdrawing from Afghanistan as soon as we finish deploying.
Ronald Reagan knew, or believed, that the terrible economy of 1981 would eventually turn around and that his new tax and regulatory policies — regardless of their effects on the short run — were good for the long-term. Although he lost seats during the 1982 mid-terms, his message was simple. I’m focused on the economy, my policies have been put in place, I’m even open to mid-course corrections like the 1982 “revenue enhancements” that reversed some of the excesses of the 1981 recovery act — and I’m not diverting my focus from the economy to the other items I was elected to address.
The other items on Reagan’s agenda are the infamous “social issues”. Abortion, tax-credits and exemptions for private schools, reversing environmental protections and abolishing the Department of Education — agenda items that Reagan may have believed in, but which he clearly relegated to the back-burner. The focus was on the economy and on beefing up the military budget. The constant mantra of the early 1980’s was — we’ll put that on the second bill. That bill never came of course.
On military matters, the environment itself had changed totally before Reagan ever took office. Jimmy Carter, who had spoken of our inordinate fear of communism, ran in 1980 on a platform of increased military spending. So Reagan was certainly going with the trend as he moved to buttress the military.
On military issues, the country was unhappy in 2008, but Obama had boxed himself in. Iraq was the “bad war” — that was already scheduled to end. Afghanistan was the “good war” that we had diverted resources from. That position was essential to avoid being tarred as an “anti-defence” Democrat. So there was little he could do for his leftist, anti-military base. To them, he threw the bones of delicately phrased speeches — he didn’t actually apologise for Hiroshima, if you read the words — but you can read the words and think that he was thinking we should apologise.
But that antagonized the right and even the middle, I suspect. Where Reagan deferred the divisive social issues — or left them to bureaucrats in the Education, Interior or Justice Departments that he could feign were acting on their own — Obama took on the most divisive issues personally.
On health care — he abandoned his own “middle of the road” primary position — against an individual mandate or changing existing plans — and ultimately was identified as the source of the changes many find most objectionable. But with a Democratic Congress, the issue should not have been whether he would veto a plan that wasn’t liberal enough — the issue should have been whether he would veto a plan that was too liberal.
In a recession, the one thing that the American people could have been sold on — portable health insurance, perhaps a “permanent COBRA” subsidized for the unemployed — is completely missing from Obamacare. If you’re fired now and lose your health insurance, you’re in trouble. There is a temporary state program for insuring those with pre-existing conditions — but it is a lost footnote, where it should have been the “lead”.
After Reagan’s core initiatives were passed — the tax cuts and the military increases — the near constant cry was “let Reagan be Reagan.” His aides fought amongst themselves, but Reagan himself did not take a blatent public position on the “social issues” or other items that were not critical to his economic or military agenda.
Obama could have learned not only from Reagan, but also from Clinton. He could have been triangulating from day one — posing as the “honest broker” between a leftist-controlled Congress and the American people who voted for a change from incompetence to competence. Instead, he began to look to us as if we had elected John Edwards — he of the two Americas.
This is why a recession with high joblessness was not devastating to Reagan, but may be to Obama. He is perceived as not focusing and communicating simply on the core economic issues of concern to Americans, and focusing too much on issues that a majority of Americans — correctly or incorrectly — disagree with his position on.
Donald B. Susswein is a Washington lawyer who practices and writes in the areas of taxation, tax and fiscal policy, and financial institutions and products. He served as an advisor on these issues to the Committee on Finance of the United States Senate. He writes a weekly column for Benzinga every Tuesday.
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