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Reagan’s Lessons in Economic Leadership

I saw him put the country’s interests ahead of his own more than once. We could use a leader like that now.

By Phil Gramm
Aug. 16, 2022 6:23 pm ET


President Biden’s signing of the so-called Inflation Reduction Act brings back four-decade-old memories of better economic leadership. On Aug. 13, 1981, President Reagan signed the Omnibus Budget Reconciliation Act into law. It unleashed a quarter-century of American prosperity, which made it possible to restore price stability and win the Cold War.

In this time of harsh rhetoric and political zealotry, it is comforting to remember Reagan not only for what he did for the country but for the kind of man he was. Let me share two previously untold examples of his extraordinary leadership and humanity that I witnessed during the making of the Reagan Revolution.

In 1980 I was a freshman Democratic congressman from Texas. Rep. David Stockman (R., Mich.) and I offered a substitute for President Carter’s final budget. Reagan appointed Mr. Stockman director of the Office of Management and Budget, and our bipartisan proposal became the foundation of the Reagan budget. Rep. Delbert Latta of Ohio, ranking Republican on the House Budget Committee, and I jointly authored the Reagan budget in the House. The word is overused, but I feel confident in calling the Gramm-Latta budget transformative.

While the budget was a dramatic change in public policy, the initial vote set only broad parameters, cut no programs, and was easily passed. The reconciliation bill implementing it was the most difficult vote of the Reagan era. It contained the largest postwar cuts in domestic spending and eliminated three Social Security benefits to address the impending bankruptcy of the system. While there were strong arguments for ending each of these add-on benefits, a vote to eliminate them meant touching the third rail and endangering a lawmaker’s career.

As the House vote approached, some 30 Republicans asked for a meeting with the president to demand changes in the reconciliation bill. I was asked to join the discussion, and before the meeting I was taken to the Oval Office to meet with Reagan. He asked me what I thought we should do. I said that before offering my advice I needed to remind him that three years ago I was teaching college economics and that I had never done anything remotely this important in my life. Reagan smiled and said, “Well, neither have I.”

When we stopped laughing, I asked, “If we fix one group’s problems, won’t another demand changes? Where do we stop?”

Without responding, Reagan got up and led the way to the meeting. Sitting down at the cabinet table the president said, “You called this meeting, so let me listen to what you have to say.” The first speaker assured the president that he was for our program but he had problems with his constituents. It quickly became clear that the attendees had planned out what they were going to say, and almost every member raised concerns about his constituency. When they had all spoken, the president said nothing for what seemed like five minutes as he looked at each of the 30 members in puzzled silence.

“I have been confused,” he said finally. “I thought this vote was about the future of our country. I didn’t know it was about our political constituencies.” He then got up and walked out of the room. The stunned silence continued for several minutes and more than a few congressmen teared up as they got up to leave. When the final vote was taken, not one person who had been in that room voted no.

Reagan was more than a leader who knew who he was and what he wanted to do. He was a man who could keep things in perspective. With the economy enduring double-dip recessions, Republicans lost 26 House seats in 1982, and even with the support of conservative Democrats, Reagan no longer had a bipartisan conservative majority. In one of their first acts, my Democratic colleagues voted to throw me off the Budget Committee. The president and Republicans publicly urged me to change parties, but I had been elected as a conservative Democrat, and I felt that if I just changed parties, some people in my district might feel betrayed.

The only honorable thing to do was to resign from Congress and stand for election as a Republican. While many later saw this as a clever political move, it didn’t feel that way at the time. No Republican candidate for Congress in the history of my district had ever received more than 35% of the vote. On the eve of my resignation I called Lee Atwater, the president’s political director, to tell him what I had decided to do. He told me he believed that I would be defeated and urged me simply to change parties. I said I thought I could win, and it was the right thing to do regardless, so I was going to do it.

Atwater rushed into Reagan’s office and pleaded with him to call me and tell me not to resign. When the president called, he started by telling me that Lee was on the verge of having a stroke—could I please explain what I was doing and why? I explained, and told him it was the right thing to do. To my astonishment, the president agreed: “People have a way of judging a person’s character and knowing when a man is doing right.”

I didn’t discover until after I had resigned, run against nine Democrats and won that Lee Atwater had demanded that the president call me back that day. He predicted that I was going to lose and, in the wake of the 1982 defeats, that it would be the beginning of the end of the Reagan presidency. Reagan responded: “Lee, the whole world does not revolve around me or my presidency. This is about Phil Gramm, and he is doing the right thing, and I can live with whatever the result turns out to be.”

To paraphrase Archie Bunker, we could use a man like Ronald Reagan again.

Mr. Gramm is a former chairman of the Senate Banking Committee and a nonresident senior fellow at American Enterprise Institute.

Long live Reagans influence in the Republican party and Nation.
He led by example honor and dignity.

... required reading for WTF!

Reagan’s Lessons in Economic Leadership Originally Posted by lustylad

Tears almost came to my eyes while I was reading that. Reagan was a great man. He put our country before politics. That's all too rare among our leaders these days.

Reagan was a great Leader selling bullshit economics. I don't blame him...I blame the idiots that keep falling for the same bullshit 40 years later.

Phil Gramm...Google him and Enron or him and the housing bubble!

So once again I give Reagan his leadership props....he led a group of jackasses to a mudhole and convinced them it was a fresh spring!

Reagan was a great Leader selling bullshit economics. I don't blame him...I blame the idiots that keep falling for the same bullshit 40 years later.

Phil Gramm...Google him and Enron or him and the housing bubble!

So once again I give Reagan his leadership props....he led a group of jackasses to a mudhole and convinced them it was a fresh spring! Originally Posted by WTF

So let me see, the Keynesian bull pucky economics has created the mess of the 70's and the inflation mess now, but you think the economic philosophy that got us out of the mess was idiotic.

I voted for him first time he ran. Of course by today’s standards, he’d be a Democrat.

He actually suffered from Alzheimer’s during his second term and didn’t know what day it was, or the difference between a vegetable and a condiment.

Not without his foreign policy sleazery either, if you care to recall.

So let me see, the Keynesian bull pucky economics has created the mess of the 70's and the inflation mess now, but you think the economic philosophy that got us out of the mess was idiotic. Originally Posted by farmstud60

Actually Reagan started these huge deficits

He actually cut taxes on high income taxpayers early on and then had a massive tax increase on the middle class with his tax increase on SS.

He also praised the contributions of immigrants. The real tax increase on the middle class however,was the elimination of deductions for basically all consumer interest except for mortgages. That was the only way to make the 1986 tax law revenue neutral. Today he would be considered a RINO since he was never authoritarian or autocratic enough. Oh and didn't Trump target the Reagan Foundation after they asked the RNC to stop using his likeness in campaigns?

Actually Reagan started these huge deficits

He actually cut taxes on high income taxpayers early on and then had a massive tax increase on the middle class with his tax increase on SS. Originally Posted by WTF

WRONG, Democrats taxed Social Security

WRONG, Democrats taxed Social Security Originally Posted by farmstud60

Perhaps you should re-check your facts. Reagan was a Republican. In 1986 when the bill was passed, the Senate was Republican controlled.

Long live Reagans influence in the Republican party and Nation.
He led by example honor and dignity. Originally Posted by winn dixie

Spent taxpayers money like a drunken sailor with honor and dignity.

I'll give that to ya!

WRONG, Democrats taxed Social Security Originally Posted by farmstud60

Another good point... Reagan started taxing SS benefits!

So let's let Tiny and lustylad refute that.

I suppose Tiny will blame that on Democrats and lustylad will go consult Phil "Enron" Gramm.

Spent taxpayers money like a drunken sailor with honor and dignity.

I'll give that to ya! Originally Posted by WTF

We get you dont like Reagan. We get you dont like much of anything. Except high gas prices.

This Country saw 8 of its greatest years under Reagan. Then 4 more with his VP as President. It was a good time to be alive.

Is that what led to 8 years of Clinton?