The current moment in American politics is a chaotic one characterized by frequent, unpredictable alternations in power and no clear, dominant vision of governance. A similar moment appears to have occurred in the Gilded Age, when control of the House shifted back and forth for decades after the Civil War, and few presidents left a lasting ideological mark.
On the one hand, the Reagan era vision of government has collapsed. Contrary to the dreams and promises of the Reagan era, the core programs of the New Deal era remain in place, and show every indication of continuing to remain in place, because the American people support them—as President George W. Bush’s failed attempt to privatize Social Security illustrated. In addition, the conservative promise of “smaller government” rings increasingly hollow in the wake of the growth of government spending, and the worsening of deficits, under both Presidents Reagan and the second Bush. Above all, the 2008 financial crisis definitively discredited the economic assumptions of the Reagan era. Financial deregulation led to the crisis, and those who bought into the core economic assumptions of the era failed to see the crisis coming, failed to understand the nature of the crisis as it happened, and continued to make inaccurate predictions in the wake of the crisis. The predictions of generally Keynesian economists were far more accurate.
The Bush administration’s failed response to Hurricane Katrina, and the inequality laid bare in the aftermath of the hurricane, further undermined the credibility of the Reagan-era dream of enhancing freedom by disabling the government.
The economy of the Reagan era has also shown itself to be generally inferior to what preceded it. While the New Deal era was defined by rising wages, decreasing inequality, relatively low unemployment, and decades without a financial crisis in the United States, the Reagan era has offered stagnant middle-class wages, increasing consumer debt, rising inequality, declining or at least stagnating social mobility, and a steadily escalating series of speculative bubbles and financial crises. The economic policies of the Reagan era did not cause all of the weaknesses in the American economy over the last three decades. But it is likely that many of the economy’s pathologies were exacerbated by the Reagan-era embrace of deregulation, and especially financial deregulation; decreased taxation, disproportionately to the benefit of the wealthy; reduced spending on public goods; a smaller safety net; opposition to organized labor; a heavy reliance on corporate subsidies; and in macroeconomic policy, a strong dollar and a greater focus on low inflation than on low unemployment.