Happy Birthday Ronald Reagan (Thanks for Ruining America)

Ronald Reagan's 98th birthday is being celebrated today at a time that should be a cause for soul searching among his admirers. The conservative revolution that Reagan unleashed upon the nation and much of the world lay in ashes, and Washington is embarking on a new epoch of government intervention to eradicate the excesses of free-market purism. One would expect liberals to be out in the streets looking for statues of the Gipper to topple from their pedestals.

But nothing of the kind is happening. While George W. Bush is now the bane even of many conservatives, a Marine Corps contingent will lay a wreath at Reagan's gravesite safe in the knowledge that much of the nation holds his memory in a warm embrace.

Historians may one day view this as an odd historical conundrum, since Reagan's legacy is so clearly imprinted on the myriad of forces that have vitiated the American dream for millions of working people and brought wreckage to the world economy.

The continuing fallout from Reagan's policies – the meltdown of the financial sector, widening income inequality, the emergence of lockdown America, the obscene inflation of CEO compensation, the end of locally owned media, market crashes, blackouts, drug-company scandals, rampant greed and materialism -- is all around us. As D.H. Lawrence once wrote in another context, "The cataclysm has happened, we are among the ruins."

The subprime mortgage crisis, the root of the chaos in the financial sector, is a case in point. Its antecedents clearly lay within the Reagan administration, beginning with an appearance by Donald T. Reagan, Reagan's first treasury secretary, before the Senate banking committee in early 1981, when he laid out a detailed vision for near-complete deregulation of the financial industry.

On Regan's behalf, Richard Pratt, Reagan's first chairman of the Federal Home Loan Bank Board, drafted the Garn-St. Germain Depository Institutions Act of 1982, which included a provision, Title VIII, that enabled lenders for the first time to issue adjustable-rate mortgages and other exotic loans, such as those requiring interest-only payments. The provision was aimed at helping rescue the savings and loan industry by allowing thrifts to respond to the volatility in interest rates that prevailed in the early 1980s, but it would be precisely these types of loans that brought about foreclosures on hundreds of thousands of home mortgages in 2007 and 2008.

Even more significant for the future of the American economy was the decision by Reagan's appointees at the Federal Reserve in 1987 to allow large bank holding companies to handle the underwriting of mortgage-backed securities. This measure was one of several aspects of financial deregulation in the 1980s and afterward that promoted banks' headlong rush into the securitization of mortgages, with the dire results that now engulf our nation.

But it wasn't just Reagan's championing of deregulation that weakened the American dream. While Reaganism has often been portrayed as the antithesis of the New Deal, it was more profoundly a repudiation of a long epoch of reform that, with some brief but notable interruptions, extended from the Populist era through the early 1970s. At the turn of the century, Progressivism brought about a political and cultural awakening whose reform impulses reached into every sector of American life: law, philosophy, economics, art, literature, education, the social sciences. The period brought about the creation of the Federal Trade Commission to protect the public from the most avaricious tendencies of big business, the enactment of important laws like the Pure Food and Drug Act of 1906, and the establishment of new rights like woman suffrage. Through an explosion of good government groups, the average citizen began playing a greater role in public policy. Progressivism also spawned the concepts of business ethics and labor relations, the recognition that tending to the morale and working conditions of employees was smart management.