Reagan and the Founding Fathers: Right on the Economy

By November 25, 2006Economy

A lot has been written since the recent election about the new crop of Democratic and Republican freshmen and that this election, more than others before it, show the extent to which Ronald Reagan’s economic legacy has become an accepted dimension of the U.S. political and economic landscape.

The newcomers were by and large elected on a platform that The Gipper would have been comfortable with: smaller government, lower taxes and limited judicial interference. Polls show over and over again that this is where the American center lies. Virginia Senator-elect Jim Webb ran ads in my state featuring Ronald Reagan’s endorsement of him as Navy Secretary. Those ads helped pull in GOP and independent voters for Mr. Webb and, as we know, his election determined the political make up of the U.S. Senate.

We are fortunate to have a new book out that discusses the principles of the Reagan Revolution and how they have built the platform on which today’s U.S. prosperity is built. The author, Gene Heck, is a former U.S. foreign service officer who is currently a business development economist working in the Mideast.

Building Prosperity, Why Ronald Reagan and the Founding Fathers Were Right on the Economy is a good book for anyone interested in the direction of the U.S. economy. Mr. Heck reminds us that the Reagan Presidency left the economy transformed: “the top marginal tax rate had been sharply reduced from a 70 percent high to 28 percent….inflation had been brought down [from 15 percent] to 4.1 percent, unemployment [from 11 percent] to 5.2 percent and the federal discount rate [from 14 percent] to 6.5 percent.” His chapters cover these essential topics that are highly relevant to today’s manufacturing:

* why regulatory costs matter
* why tax levels matter
* why global trade competitiveness matters
* why technology-based development matters and
* education and the technology-development process.

Mr. Heck uses quotes from Madison, Jefferson, Franklin and others throughout his book to tie his premise with their views about government and the economy. He also quotes Jeremy Leonard, author of two studies by NAM, The Manufacturing Institute and The Manufacturers Alliance/MAPI about costs government impose on U.S. manufacturing. Our recent report, The Escalating Cost Crisis, shows that this country adds at least 31.7 percent in costs to U.S. manufacturers when compared with nine overseas rivals. If you read our study along with Mr. Heck’s book, you’ll have a pretty good idea of the agenda the U.S. government should follow if it wants to spur the U.S. manufacturing sector.