Bruce Bartlett

 One of the amusing things about the liberal media is their compulsion to always present an alternative perspective to conservative successes, even when it looks ridiculous doing so. Only liberal successes are allowed to be presented without some reporter saying, "On the other hand ..."
Thus, reports of Ronald Reagan's accomplishments are always accompanied by boilerplate about his alleged failures, whether it was his inability to cure AIDS, the Iran-Contra scandal or something else.

 Unfortunately, even conservatives sometimes fall victim to this compulsion. Two areas where this often occurs are on inflation and the deficit. It is said that Paul Volcker, chairman of the Federal Reserve Board, deserves all the credit for eliminating inflation, with Reagan as some kind of passive observer. It is also said that large budget deficits prove that Reagan's economic policy was a failure. Both perspectives are seriously misinformed.

 It is true that inflation fundamentally is a monetary phenomenon. The inflation of the 1970s came about primarily because Fed Chairman Arthur Burns gunned the money supply to get Richard Nixon re-elected in 1972. He was followed by G. William Miller, appointed by Jimmy Carter, who didn't have a clue about monetary policy and only made the dismal inflation situation that he inherited far worse.

 The Consumer Price Index, which rose 4.9 percent in 1976, the year Carter was elected, jumped steadily to 6.7 percent in 1977, 9 percent in 1978 and 13.3 percent in 1979. At this point, Carter realized that he had made a serious error appointing Miller to the Fed. But he could not be fired, so Miller had to be induced to leave voluntarily. Consequently, Carter fired Treasury Secretary W. Michael Blumenthal, who had been doing a fine job, in order to open the position for Miller, who left the Fed to replace him.

 Under pressure from Wall Street, Carter reluctantly appointed Paul Volcker to be chairman of the Federal Reserve Board in 1979. Volcker had been undersecretary of the treasury under Richard Nixon and was then serving as president of the Federal Reserve Bank of New York. However, it is naive to think that Volcker was given a free hand by Carter. His inability to fully implement a tight money policy is why the inflation rate fell only to 12.5 percent in 1980, despite a sharp recession that year.

Bruce Bartlett

Bruce Bartlett is a former senior fellow with the National Center for Policy Analysis of Dallas, Texas. Bartlett is a prolific author, having published over 900 articles in national publications, and prominent magazines and published four books, including Reaganomics: Supply-Side Economics in Action.

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