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As the nation’s attention turns back to the fractured debate over immigration, it might be helpful to remember that in 1986, Ronald Reagan signed a sweeping immigration reform bill into law. It was sold as a crackdown: There would be tighter security at the Mexican border, and employers would face strict penalties for hiring undocumented workers.

But the bill also made any immigrant who’d entered the country before 1982 eligible for amnesty — a word not usually associated with the father of modern conservatism.

As crazy as it might be to suggest, I maintain that most “Reagan conservatives” know next to nothing about the actual presidency of Ronald Reagan (I have blogged about it before here). Reality is that Ronald Reagan was far from your modern day Tea Party disciple. Reagan opposed torture, was against military action against terrorists, and actually supported amnesty for illegal aliens. But setting all of those points aside for now, I want to focus on what is arguably the most popular component of “Reagan conservatism”, that being “Reaganomics.”

If you were to ask your average Reagan disciple what “Reaganomics” or “Trickle Down” economics are all about, chances are you would hear a lot of rhetoric about cutting taxes, eliminating government oversight, creating jobs, privatizing industry, experiencing indescribably Utopian prosperity, yadda, yadda, yadda. In short, you’d get a lot of hot air with little actual history behind it, almost like a talk radio pundit. Funny thing about those political pundits, isn’t it. They really don’t like ACTUAL history, do they?!?

The truth about “Reaganomics” is that Ronald Reagan didn’t have a whole lot to do with it. Ronald Reagan’s tax plan actually had its roots in the 1970s, with economist Arthur Laffer. Laffer originally drew up his ideas on a restaurant napkin and shared them with an advisor to President Ford. His idea outlined the obvious paradoxes that exist whenever tax rates approached 0% and 100%. Laffer suggested that raising taxes too high would reduce business activity, while lowering taxes would result in dangerously low revenue (really nothing all that profound, even to the layman). Ronald Reagan liked Laffer’s basic approach to economics, and consulted with him and others on his staff regarding how best to implement it. The difference, however, was that Reagan (unlike many on his staff) pushed for a much lower tax rate initially than did his advisers. According to many member of his staff, Reagan seemed to be oblivious to the idea of needed tax revenues, and enchanted with the idea cutting them. In David Stockton’s words, it seemed as though Reagan “had only the foggiest idea of what supply side was all about.” Stockton warned Reagan repeatedly that a large tax cut would spell doom to the national deficit, unless cuts in spending could be implemented. Even during the campaign of 1980 George Bush, Reagan’s opponent for the Republican nomination and eventual vice-president, called Reagan’s economic plan “voodoo economics.” Eventually, Reagan would realize the error of keeping such low tax rates in place, and as a result, raised taxes on four different occasions during his administration. Not exactly the type of facts you hear from self-proclaimed “Reagan Conservative” Sean Hannity!

Reagan’s economic philosophy embraced the idea that by lowering taxes, the people would end up with more money in their pockets. Reagan called his plan a “new beginning” for Americans, and a sure-fire way to economic recovery. This idea was, in part, fulfilled. While the majority of Americans experienced little or no actual economic prosperity, the top 1% of Americans blossomed. The net worth of the 400 richest Americans quadrupled under Reagan’s presidency, and corporate CEO’s made, on average, 93 times as much money as did the common American.

While it is true that Reagan’s economic policy gave relief to the problems of the 70s (a fact that Republicans should be very proud of), Reagan also managed to impact the federal deficit as well, which soared from 700 billion to 2.7 trillion during his eight-year tenure. Reagan’s commitment to military buildup created a conflict with his desire to lower taxes. Many began questioning where Reagan planned to find the money. To increase revenue, Reagan signed legislation that created “sin taxes” on alcohol and tobacco (isn’t Glenn Beck against those taxes?). Reagan also increased social security taxes, and forced the burden of funding various programs onto the states, who in turn raised taxes as well to fund the programs. In essence, “Reaganomics” was hardly the tax-cutting phenomenon that so many conservatives celebrate today. In fact, President Clinton had a lower tax rate than did Reagan!

Thanks to tireless efforts by historical revisionists over the past two decades, Ronald Reagan has gotten a lot of credit for achievements that he had nothing to do with. “Winning” the Cold War is a good example.

In reality, Reagan’s policies had little or nothing to do with the collapse of the Soviet Union. In fact, the last thing the Military Industrial Complex ever wanted was to see the Cold War’s end (and with it the trillion-dollar gravy train of “defense” contractor funding).

On the other hand, Reagan should get credit for something that he actually did achieve: laying the groundwork for the death of capitalism as we know it.

Capitalism had its first near-death experience during the Great Depression. Ironically, it was saved by the most progressive president that the U.S. ever had: Franklin D. Roosevelt. Although attacked by the business community at the time, FDR’s New Deal in fact resurrected capitalism and gave it new life. The New Deal created the Great American Middle Class: tens of millions of well-paid workers that actually had the money to buy the products that the system produced.

Here is one thing we know about Mitt Romney: He loves Ronald Reagan (or at least he does now). Here is another: He also loves the Cayman Islands. It’s something he kind of shares with the Gipper: creativity in sheltering his fortune from the prying eyes of tax collectors. But here’s something he does not share with Ronald Reagan at all: skill at waving his hands and making the story go away. Not many people remember this now, but when Reagan was governor of California in the early 1970s, it came out that he’d paid no state income taxes – none – one year, despite being a wealthy man. And yet, he went on to run – twice – for the highest office in the land, without the revelation making any sort of dent at all. Learn from the master, Mitt.

It happened like this. One Friday in late April of 1971, a student-operated radio station at Sacramento State College reported that Reagan’s 1970 California tax return claimed the governor owed precisely zero dollars and zero cents.

Brazen stuff. For one thing, Gov. Reagan pulled his tax dodge during an election year, when he was running for a second term. For another, his big crusade after reelection was fighting the Democratic legislature’s attempts to institute tax withholding on salaries to make up for a budget shortfall. He wanted people should know exactly what they were paying; “taxes should hurt,” was his slogan.

The following week, the story was the talk of the State Capitol. At Reagan’s weekly press conference, after he announced the state was running so short of cash that by fall it would be forced, for the first time since the Great Depression, to rely on outside borrowing to pay the bills – because, of course, Democrats were “playing fast and loose with the fiscal integrity of this state for purely partisan advantage” – a newsman asked him if it was true that he himself had contributed nothing to state coffers the previous year. Obviously taken aback, he responded slowly: “You know something? I don’t actually know whether I did or not. I’d have to check up …. I have a fellow making it our for me — a lawyer makes it out.” He added, “I know in the federal the last couple of years I got a rebate back.”

Five minutes after the press conference his office released a one-sentence statement: “Because of business reverses of Gov. Reagan’s investments, he owed no state income tax for 1970.”

Well. The UPI wire service did the accounting. It turned out that, in addition to his $41,100 salary as governor, for which a Californian would ordinarily owe $2,700 without deductions, Reagan had sold 236 acres of his Yearling Row Ranch in the Malibu Mountains in 1968 to 20th Century Fox studios for a reported $1.93 million. (To figure these sums in current dollars, multiply by a factor of about 5.5). He refused to say how this all added up to an absence of taxable income. He also refused to make his tax records public, or say what the “business reversals” were – refused with a vengeance. Arriving at the Capitol the next day, asked whether he would clarify his federal tax status, he answered, “Why should I have to clarify the status? Frankly, I think the Capitol press corps demeaned itself a little by engaging in invasion of privacy.” (Turn the question around, playing the victim card against the wicked jackals of the press: Newt Gingrich would absorb the lesson well.)

When comparing Reagan’s policies with Republican proposals today, several things stand out. Inflation is low now. We are not looking at “bracket creep” or sharply rising taxes, as we were in the late 1970s. The top income tax rate is 35 percent, half the rate Reagan inherited. And federal revenue is at a 60-year low of about 15 percent of GDP, compared with a post-World War II average of about 18.5 percent.

These differences are essential to understanding why Reagan’s policies worked when they did — and why they are not appropriate today.

All of the evidence tells us that the economy’s fundamental problem today is not on the supply side but the demand side. According to a recent study by Credit Suisse, two-thirds of the difference in growth at this point in the business cycle, compared with previous cycles, is due to slower consumer spending. And low inflation — as well as widespread unemployment, vast stocks of unsold houses, empty factories and other indicators — tells us that money is tight, not loose, as was the case in the late 1970s.

“Low interest rates are generally a sign that money has been tight,” economist Milton Friedman wrote in 1997. Yet, absurdly, Republicans continually berate the Federal Reserve for being too easy; some even insist, insanely, that the United States should return to the gold standard, even though it was a key cause of the Great Depression.

Because inflation and interest rates are low, Fed policy is constrained today in ways it was not in the early 1980s. Back then, the Fed could bring down the federal funds rate to a little less than the inflation rate and create negative real rates, thus stimulating borrowing, investment and consumption. It can’t do that now because it can’t reduce market interest rates below zero.

Economic conditions are entirely different today than they were in Reagan’s era, and different conditions demand different policies. Those who say otherwise are simply engaging in cookie-cutter economics — proposing whatever was popular and seemed to work once, without regard to changing circumstances.

Imagine if Israel would launch a successful preemptive strike against a country that is building a nuclear bomb that threatens its very existence, and the American president would describe it as “a tragedy”.

And then, not only would the U.S. administration fail to “stand by its ally”, as Republicans pledged this week, but it would actually lend its hand to a UN Security Council decision that condemns Israel, calls on it to place its nuclear facilities under international supervision and demands that it pay reparations (!) for the damage it had wrought.

And then, to add insult to injury, the U.S. president would impose an embargo on further sales of F-16 aircraft because Israel had “violated its commitment to use the planes only in self-defense”.

Can you imagine the uproar? Can you contemplate the brouhaha? I mean, if Mitt Romney believes that President Obama “threw Israel under the bus” just for suggesting that a peace settlement with Israel be based on the 1967 borders - what would he say about a president who actually turns his back on Israel in its greatest time of need? That he hurled Israel over the cliff with a live grenade in its pocket and into a burning volcano?

(via Homebrewed Theology)

In 1982, Reagan raised taxes and the right assured Americans this would be a disaster. The right was wrong, and the economy boomed.

In 1993, Clinton raised taxes and the right was even more certain this would be a disaster. The right was wrong again, and we instead saw the longest and strongest sustained recovery in recent memory.

In 2001, Bush slashed taxes and the right swore up and down this would work wonders. The right was wrong again, and the Bush policy failed spectacularly in every possible way.

In 2009, Obama spent heavily to turn the economy around and the right predicted a disaster. The right was wrong, and conditions improved almost immediately. The economy that had been in a tailspin, hemorrhaging jobs, began growing and creating jobs.

Master your narrative.

Reagan defined his party’s principles with a “master narrative”—a familiar story structure with a plot, heroes and villains, and a clear sense of right and wrong. Even his opponents knew it by heart—and it lives on today as the GOP “brand.”

Harness the power of American mythology.

Reagan seamlessly wove the stories that shape the nation’s identity into his own narrative: the Land of Opportunity, the American Dream, the Land of the Free.

First win hearts; minds will follow.

Reagan knew that facts and policy agendas mean little unless they illustrate a greater vision. He played up big, sweeping themes and let the details tag along behind.

Talk in Technicolor.

From his “shining city on the hill” to “morning in America,” Reagan brought concepts alive with vivid imagery and powerful metaphor.

Keep your sunny side up.

Reagan demonstrated that you don’t have to be a Pollyanna to end on an optimistic and inspiring note.

Ronald Reagan scored a comfortable victory in 1980, promising a new day in Washington and the nation. Then Reaganomics ran into brick wall. Unemployment—7.4 percent at the beginning of his term—was heading toward 10 percent by the summer of 1982. The gross domestic product declined 1.8 percent. On Election Day, voters punished him by taking 27 House seats from his Republican Party, including most of the ones gained in 1980. That gave the Democrats a 269–166 seat advantage—far greater than the 51-seat advantage Republicans enjoy today.

The day after that woeful election, Reagan’s aides sent him into a press conference with defensive talking points. He tore them up. “We’re very pleased with the results,” he said, claiming that the GOP had “beat the odds” for off-year elections (he went back to 1928 to make the claim). “Wasn’t he in worse shape for 1984?” he was asked. “I don’t think so at all,” he replied. Hadn’t it been a historically uncivil campaign? He agreed—because of all the opposition did to “frighten voters.”

Barack Obama gave a press conference the day after his “shellacking” too. The contrast to Reagan couldn’t have been more stark. Ignoring the fact that the electorate had pretty much been switching their party preference every two years since 1992, he conceded the loss as an epochal sea change. “I did some talking,” he said of his meeting with Republican leaders the night before, “but mostly I did a lot of listening.” When asked about jobs, he talked about the deficit. He then boasted that when it came to what was essential to recovery, he really didn’t have essential principles at all: the answers were not to be “found in any one particular philosophy or ideology.”

Which conservative in the mid-1980s could have imagined the Age of Obama? Who could have predicted that statist liberalism would come roaring back to life with such persuasive power? Kirk, a friend of Reagan’s and an honored guest at the White House, wrote glowingly in his memoirs of Reagan’s achievement: “To the American people, Ronald Reagan had become the Western hero of romance—audacious, faithful, cheerful, honest, and skilled at shooting from the hip.” He had reformed education, had reduced taxes, inflation, and unemployment, and had stood up to Libya and the Soviet Union, Kirk recalled.

Such an endorsement from one of the greatest inspirations of the post-World War II conservative renaissance carries considerable authority with the movement. And rightly so. It should give pause to anyone reckless enough to challenge Reagan’s legacy. But that legacy itself raises nagging questions. The federal payroll was larger in 1989 than it had been in 1981. Reagan’s tax cuts, whatever their merits as short-term fiscal policy, left large and growing budget deficits when combined with increased spending, and added to the national debt. His tax increases were among the largest proportionate ones in U.S. history. And more than one historian has called Reagan’s foreign policy “Wilsonian.” In short, it is hard in 2009 to point to any concrete evidence that the Reagan Revolution fundamentally altered the nation’s trajectory toward bloated, centralized, interventionist government. Conservatism in the 1980s made its peace with much of liberalism—if not with all of its legislative agenda, then at least with its means to power. Republicans and Democrats now argue over how big the bailouts should be or how long the troops should remain deployed, rarely about first principles.