"Reagan Democrats" Still Key to Economic Reform

Published February 16, 2011

The Gold Standard Now

In his memoirs, President Ronald Reagan (Feb. 6, 1911-June 5, 2004) recalled, “To get the spending and tax cuts we wanted through Congress, we needed the help of a substantial number of Democrats in the House as well as the votes of nearly all the Republicans in both houses of Congress.”

Despite deep partisan divisions, Reagan won majorities of Republicans, Independents and “Reagan Democrats” by heeding James Madison’s observation in Federalist No. 10 that “the most common and durable source of factions is the various and unequal distribution of property.” (Madison defined ‘property’ broadly to include what’s now called ‘human capital.’)

Voter party self-identification shadows the shares of family income received as gross labor or property income (chart below). This is why treating labor and property income roughly equally—e.g. cutting marginal income-tax rates “across-the-board” in 1981 and 1986 and rebalancing pay-as-you-go Social Security retirement pensions in 1983—was the glue in Reagan’s winning coalition. Fiscal policy has been a losing issue for GOP presidential candidates since.

The next successful president—including success in reforming monetary policy—will readopt Reagan’s winning fiscal strategy.


John D. Mueller is the Lehrman Institute Fellow in Economics at the Ethics and Public Policy Center.

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