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Our Debt to The Gipper
He had it covered, from the domestic front to the world stage.


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Larry Kudlow

I’m not entirely objective when it comes to former President Ronald Reagan, who celebrated his 91st birthday last week. I worked for Reagan as associate director and chief economist at his Office of Management and Budget. While in that post, I had the honor of seeing one of the finest leaders in this nation’s history in action.

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Certainly, this country owes Mr. Reagan a large debt of gratitude for his many achievements. Through supply-side tax cuts, a strong dollar, and deregulation, he restored economic growth after the stag-flationary 1970s. During the seven-and-half-year prosperity cycle fostered by Reagan’s policies, the economy expanded nearly 4.5% yearly with low inflation and 20 million new jobs. The Dow Jones increased 240% in that time, and interest rates fell by half.

Reagan also rebuilt our military, and he negotiated through strength with the Soviet Union. Combined, these achievements — both on the domestic front and on the world stage — ultimately led to the end of Soviet Communism.

One of President Reagan’s key policy legacies was the crucial linkage between a strong domestic economy and a secure national defense. As the U. S economy soared during the ’80s, Reagan was able to convince Mikhail Gorbachev that the Soviets could never win an arms race with America. The former Soviet Union was literally incapable of producing the goods, while America’s output was rising by leaps and bounds every year.

Reagan critics always point the finger at the increase in national debt, blaming it on excessive tax cuts. But the principal cause of the debt rise was the sharp decline of inflation which stopped government from feasting on inflated taxpayer revenues. Meanwhile, Reagan knew that debt increases to finance growth and a military build-up to restore national security were worthwhile investments in America’s future. Indeed, Reagan’s economic and foreign policies laid the groundwork for two decades of prosperity. As long as President George W. Bush stays on the Reagan path, which he appears to be doing with his own tax-cut efforts and his superb leadership in prosecuting the war against terrorism, we can look forward to a third decade of prosperity.

Looking into the soul of the man, Reagan was the quintessential optimist who provided great leadership to a temporarily sagging nation. Through his political career he was amiable and personable with a good sense of humor. He was enormously popular, too. He charmed opponents, like Speaker Tip O’Neill, as well as adversaries like Gorbachev.

And what you saw and heard was the real Reagan. Through Martin and Annelise Anderson’s book, “Reagan, In His Own Hand”, we’ve learned that Reagan wrote all his own speeches and daily radio broadcasts. Writing in long-hand on yellow legal sheets, he developed his own policy thoughts. This was a key part of Reagan’s genius. There are not many in public life who can say they do the same.

Today, Ronald Reagan is suffering from Alzheimer’s. When he was diagnosed with the disease in the early ’90s he authored a beautiful note to the American public, writing, “I now begin the journey that will lead me into the sunset of my life.” Some historians are already placing him among the top ten of U.S. presidents. I believe he will make the top five when it is all said and done.

Mr. President, it was an honor working for you.

This article first appeared in Investor’s Business Daily.



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