By Carol Kemp / Chronicle contributor
Critics are quick to declare the Obama stimulus package a failure, after only seven months. They choose to forget that 16 months after Ronald Reagan's "miracle" 1981 tax cut, the US was still mired in deep recession, unemployment was a record 10.8 percent, and Reagan's approval rating stood at 35 percent.
The magic of large tax cuts for the wealthiest, supposedly trickling down to spur the economy is a myth. The 1981 tax cut created such a dent in tax revenues that even Wall Street was calling for tax hikes, primarily because of the struggling stock market.
In 1982, the Tax Equity and Fiscal Responsibility Act increased taxes to recover about 25 percent of the lost revenue. The following year the Highway Revenue Act was signed, imposing $3.3 billion in gasoline taxes. Nevertheless, deficits grew.
In 1983, Social Security taxes, largely on working families, were raised. In 1984, the Deficit Reduction Act was passed. The Tax Reform Act of 1986 included the largest increase in corporate taxes to that point.
Altogether there were 13 tax hikes during Reagan's tenure, but we only hear about the miraculous 1981 cut. The tax cut mantra, along with "smaller government, less spending" form the core of the Reagan legacy, completely divorced from reality.
Even with tax hikes, the federal debt skyrocketed under Reagan, from $700 billion to $3 trillion; the federal government grew from 2.8 million employees to 3 million (later slashed to 2.68 million by Bill Clinton); and annual federal spending grew by 2.5 percent.
In less than a decade, we went from the world's largest creditor to its biggest debtor. The gap between the rich and middle-class widened. Deregulation of the savings and loan industry led to a financial meltdown, with a huge taxpayer-funded bailout. Sound familiar?
Reagan today is credited with single-handedly ending the Cold War, although when the Berlin Wall fell polls gave most of the credit to Mikhail Gorbachev.
Then there was Iran-Contra, the scandal in which 14 Reagan administration figures were indicted for illegal activities.
So how did a president rated 26 out of 41 by 719 historians and political scientists in 1996 become one of the greatest?
Former Reagan supporters employed the same "HPS" formula used during his Presidency, the PR technique of "headline, picture, story" to control the narrative, influence news coverage, and frame a positive image.
In 1997, the anti-tax gadfly Grover Norquist established the Ronald Reagan Legacy Project. The objective: to burnish the image of the 40th President, creating a unifying figure for fractured Republicans in the 2000 elections.
One goal was to name a highway or memorial in all 3067 US counties in his honor, beginning by changing Washington National Airport to Reagan National.
Operation Serenade was formed in the mid-'90s after Reagan announced he had Altzhemer's. Plans included the week-long "spontaneous" outpouring of grief upon Reagan's passing, turning his funeral into a "legacy-building event."
Reagan's PR people understood that words and images create a narrative to affect public policy by using emotional triggers. PR flacks are still at it. A high-ranking Bush official told the journalist Ron Suskind "You live in the "reality-based community… that's not the way the world really works anymore… we create our own reality."
This new "reality" — one with outrageous distortions and lies about health care reform or Obama's birth certificate — is a world created by manipulating emotion to achieve policy or political goals.
Buyer beware!
