RIP Reagan

I remember Reagan primarily as a (literally) absent minded puppet on Spitting Image but it seems he still drives some people in the US crazy. Here was a man who defeated Communism--a force with killed millions in Stalin's Gulag's and impoverished tens of millions more on the Eastern side of the Iron Curtain, and navigated through the very real threat of nuclear armageddon, with nary a shot fired. Clearer minds would honor, or at least acknowledge, such an achievement, but not the frothers at Slate. This is how they understand the fall of the Iron Curtain and the avoidance of the end of all Life on the planet Earth:

Reagan can probably claim some credit for ending the Cold War, but his principal weapon, characteristically, was spending—the Soviets bankrupted themselves trying to keep up with the Pentagon's weapons-buying binge through the 1980s. Reagan's greatest achievement in foreign affairs was therefore linked to his greatest achievement in domestic affairs. He taught Republicans that they could be even less responsible than Democrats.

Sigh.
But I cheered up when I read the next paragraph because it was quite funny:

Government spending is not (at least in my view) inherently irresponsible. What is irresponsible is spending money you don't have. Perhaps the moist poignant passage in Reagan's first inaugural address is the one expressing what today seems a very old-fashioned Republican concern about deficit spending: "For decades, we have piled deficit upon deficit, mortgaging our future and our children's future for the temporary convenience of the present. To continue this long trend is to guarantee tremendous social, cultural, political, and economic upheavals."
"You and I, as individuals, can, by borrowing, live beyond our means, but for only a limited period of time. Why, then, should we think that collectively, as a nation, we are not bound by that same limitation?"

One of the most useful things a government can do is to shift spending from areas of excess (such as booms) to areas of shortage (such as busts) and thus smooth out the very real pain and dislocation that comes from a business cycle turning. What governments all around the world have proven to be awful at is 1) killing dud programs, 2) financing programs with long term liabilities honestly (such as Social Security and Medicare), and 3) not spending money they have as soon as (or slightly sooner than) they get it. The only time government has ever ended up with a surplus is when it 1) lied about its long term liabilities and 2) got the money by surprise. Deficits are the only control for fiscal policy we have, and it is a bad one. Some analog for a central bank would be helpful here.