More on Reagan
Krugman reminds us that Reagan was much more pragmatic and responsible about tax policy than the ideological nuts currently in the White House.
It is repeatedly said in the media that Reagan's massive defense budget increases won the Cold War by forcing the Soviet Union to keep up, which hastened its downfall.
Juan Cole contradicts that view in the post mentioned below:
In foreign policy, Reagan abandoned containment of the Soviet Union as a goal and adopted a policy of active roll-back. Since the Soviet Union was already on its last legs and was not a system that could have survived long, Reagan's global aggressiveness was simply unnecessary. The argument that Reagan's increases in military funding bankrupted the Soviets by forcing them to try to keep up is simply wrong. Soviet defense spending was flat in the 1980s.
I still wondered about that opinion, since I had heard conflicting claims from substantive sources. For example, Gennady Gerasimov, the former spokesman for the Soviet Foreign Ministry, said in a CNN article, "Reagan bolstered the U.S. military might to ruin the Soviet economy, and he achieved his goal."
I asked Professor Cole to elaborate on his claim, and he was kind enough to respond:
The Soviet Union did not spend more money on its defense budget as a result of anything Reagan did. The budget was flat every year 1980-1988. It is therefore hard to see how he "bankrupted" the Soviets. I suppose you could argue that the budget was already unsustainble in the late 1970s and that Reagan made them try to keep it up. But that is a more nuanced and subtle argument, and would suggest that mainly the Soviets did it to themselves in the 70s and set an untenable budgetary precedent.
I don't trust the ex-Soviet politicians on all this because it is after
all nobler to admit that a stronger power outspent you than to acknowledge
that you ran a corrupt and unsustainable system that collapsed of its own
weight. A team of Soviet mathematicians ran a computer simulation in the
1980s, as I remember, on how many decisions bureaucrats would have to
make to run a command economy relatively efficiently, and basically
concluded that it was impossible.
In a Google search, I found this 1994 Atlantic Monthly article which comes to the same conclusion:
Neither the strong nor the weak version of the proposition that American defense spending bankrupted the Soviet economy and forced an end to the Cold War is sustained by the evidence.
The Soviet Union's defense spending did not rise or fall in response to American military expenditures. Revised estimates by the Central Intelligence Agency indicate that Soviet expenditures on defense remained more or less constant throughout the 1980s. Neither the military buildup under Jimmy Carter and Reagan nor SDI had any real impact on gross spending levels in the USSR. At most SDI shifted the marginal allocation of defense rubles as some funds were allotted for developing countermeasures to ballistic defense.
If American defense spending had bankrupted the Soviet economy, forcing an end to the Cold War, Soviet defense spending should have declined as East-West relations improved. CIA estimates show that it remained relatively constant as a proportion of the Soviet gross national product during the 1980s, including Gorbachev's first four years in office. Soviet defense spending was not reduced until 1989 and did not decline nearly as rapidly as the overall economy.
The article notes later that Russia's 1994 defense budget consumed as high a percentage of GNP as it did in the Brezhnev years.
1:22:31 AM 
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