June 10, 2004,
EDITOR'S NOTE: The August 31, 1992, issue of National Review, set out to set the record straight about the Reagan administration's economic record. We reprint the content of the issue here.
Ronald Reagan inherited an economy that was in the midst of its worst crisis since the Great Depression. In January 1981 the unemployment rate stood at 7.4 per cent, on its way up to 10 per cent. Persistent double-digit inflation had pushed interest rates to an unbelievable 21 per cent. Real pre-tax income of the average American family had been dropping since 1976, and - thanks to bracket creep - after-tax income was falling even faster. The supply of oil and other raw materials seemed precarious. The outgoing President warned of a bleak economic future.
That era, roughly coinciding with the Carter Administration, was the last time liberal policies held sway over the economy.
Two years into Ronald Reagan's Presidency the economy began to recover. By most conventional indices the recovery was strong and sustained, outlasting Mr. Reagan's Presidency by nearly two years. And yet it was widely felt that the recovery was illusory - "smoke and mirrors," as Mario Cuomo memorably put it - and that the stock market crash in 1987 was merely the foretaste of the post-1990 recession. We propose to examine these claims in detail in the balance of this section.
Mr. Rubenstein is NR's economic analyst.