Reagan era crashes to halt with bailout of Wall Street

So this is how the Reagan Era ends, not with a bang but with the whimpering and whining of Wall Street executives begging for a bailout from an American public they long treated like unsophisticated rubes.

In less sobering times, there might be some entertainment value in that scene. But not now. To make matters worse, we have no real choice but to give them the help they seek, although with a lot more strings than they claim are possible. It’s either that, or risk letting the whole country go down the tubes.

With this bailout, we mark not just the end of an era but the demise of the ideology that created it. Events have made it crushingly obvious that greed is a poor foundation on which to build a nation and a culture. It turns out that enforcing the rules is actually a good idea, and that debts both personal and public really do come due eventually, just like daddy said they would.

In that kind of environment, it’s no wonder that John McCain has beat a retreat from the campaign trail, declining to debate. The Republican talking points make no sense anymore; the Republican worldview lies exposed and empty.

But if we’re going to be honest, we need to acknowledge that the excesses of corporate America that are now so roundly ridiculed —- the grotesque bonuses, the heedless risktaking, the disdain for rules —- existed because the cultural values of this country allowed them to exist and in fact helped to create them.

Most of what’s been going on with Wall Street comes as no surprise. In recent years, it was almost as if we Americans took a perverse pride in the fact that we could pay our CEOs half a billion dollars to fail, as if that bloated excess was itself proof of our great prosperity and strength. We acted as if we were one of those tribes out of mythology that celebrated its prosperity by boasting how fat its kings and princes were.

And they weren’t the only ones getting fat. Go to Realtytrac.com and plug in your ZIP code. You’ll see a map showing hundreds of houses under foreclosure or facing auction in your area. Then start poking around into other neighborhoods —- rich, poor, middle-class. The problem may be more concentrated in poorer areas, but it is significant almost everywhere, crossing class lines, racial lines, state lines and political lines.

As those maps demonstrate, Americans of every description succumbed to the temptation of living beyond their means, of accepting more risk than they could really handle. Much as we might like to toss tomatoes at Wall Street, they are merely the high-end exemplars of a mindset that became endemic in our culture.

How did we come to this? On the political side of the equation, it happened because the modern Republican Party sold its soul. A quarter century ago, the fiscally conservative, tight-fisted GOP, a party that championed a balanced budget amendment, suddenly convinced itself that deficits no longer mattered.

The reasoning behind that change of heart was obvious. When the much-beloved Reagan tax cuts inevitably produced massive Reagan deficits, conservatives faced a choice. They could abandon the tax cuts that had brought them great political success and power, or they could abandon their opposition to deficits. They chose to embrace deficits.

But that in turn created a bigger problem. If deficits don’t matter, then the rationale for small government disappears. If deficits don’t matter, we can cut merrily cut taxes year after year while also doubling defense spending and creating expensive new social programs. If deficits don’t matter, it’s all carrots, no stick.

In a culture that seldom worried about tomorrow, personal debt built up. Corporate debt built up. The national debt soared, and we financed our lifestyles by sending IOUs to places such as China and Japan and Saudi Arabia, IOUs that our children and grandchildren will have to redeem.

So while the most egregious mistakes of the era can indeed be traced to Wall Street and Washington, the rest of us shouldn’t feign innocence. We all grabbed a share of the pie.

> Jay Bookman is the deputy editorial page editor. His column appears Mondays and Thursdays.

jbookman@ajc.com