Reagan's Economic Policies

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The following is from Thomas Sowell. Compassion Versus Guilt. pp. 119 - 121

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Reagan's Economic Policies

Mr. President, all Washington was shocked today when the administration introduced legislation to end agricultural price support subsidies. Can you explain the reason for this drastic move?"

"Well, it's no more drastic than cutting food stamps or school lunches. You can't very well go around saying that we're in an economic emergency requiring painful cutbacks in bloated government, and still keep pouring billions of dollars of tax money into the coffers of farm owners and huge agricultural corporations."

"Mr. President, if I may follow up on the other reporter's question: does this mean an end to dairy price supports as well?"

"Yes. A lot of the fat in government is butterfat."

"Excuse me, Mr. President, but won't there be political hell to pay among your supporters? What will Sen. Dole say when you cut off all that federal money to Kansas wheat farmers? Won't Sen. Helms be mad when you end subsidies to tobacco farmers in North Carolina?"

"Well, a handout's a handout, no matter who gets it. When we're trying to get people off welfare, we can't keep Kansas farmers on the dole. (No pun intended.) As for tobacco, I thought that was hazardous to your health."

"How far are you prepared to carry this, Mr. President? Would you deny federal disaster aid to people whose homes slid down the hillsides during the recent California rains?"

"Much of that disaster occurred in some of the most affluent areas in the country. When you build a mansion on top of an unstable hill, how can you expect the average payer to help you put it back up there after it's slid down?"

"But federal rebuilding loans are not a handout, sir. The recipients have to repay them with interest."

"But how much interest? If the federal government borrows money at 17 percent and lends it at 7 percent, that's the same as giving away 10 percent of the loan."

"I suppose you could look at it that way, Mr. President, but . . "

"Let me finish. Now, when somebody rebuilds a half-million-dollar mansion in Marin county, a loan subsidy of 10 percentage points is $50,000 a year. Why should the ordinary taxpayer be giving that kind of money every year to somebody who can afford a half-million-dollar mansion?"

"Mr. President, would you also stop aiding the automobile companies?"

"You mean the Chrysler bailout? Yes. If the market place says it's a lemon, there's no reason for the U.S. Treasury to say it's a peach."

"Well, I wasn't just thinking of Chrysler. What about your administration's pressure on Japan to stop sending so many cars here?"

"That policy's being changed, too. I just told the Japanese ambassador, 'The more the merrier.'"

"That's a stunning reversal of policy, Mr. President. Won't that have a disastrous effect on our automobile companies?"

"Why should the ordinary citizen be compelled to subsidize the automobile companies? If he can save hundreds of dollars by buying an import, that's his right."

"Have you no compassion for the automobile company stockholders and workers?"

"They have their own safety nets. An automobile worker who loses his job gets so many benefits that he will have more money coming in when he is unemployed than millions of other Americans get for working full-time."

"And what about the stockholders, Mr. President?"

"Stockholders get paid for taking risks. That's why stocks earn more than insured savings accounts."

"You would cut them off without a cent of federal aid?"

"The private sector can take up the slack."

"How, Mr. President?"

"Lots of ways. In the good old American tradition, their friends and neighbors could pass the hat at the local country club. Nieman-Marcus or Lord & Taylor might give them a special discount. There are lots of ways, without always relying on government."

"But is it right, Mr. President, to single out stockholders for special sacrifice, while the government is still spending billions on the sick and the poor?"

"Well, we've already cut CETA and housing subsidies, and we're getting ready to cut Medicare and Social Security. So we are spreading the sacrifice around. After all, I am president of all the people."

"Ronnie! Ronnie!"

"Who's calling me, 'Ronnie'?"

"It's me, Ronnie! Wake Up!"

"Oh, Nancy. My God! I just had a nightmare. Reporters were asking the damndest questions—and I was giving the damndest answers."

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29 May 2024