Home
Paul Craig Roberts
Institute for Political Economy
America: A Lost Nation
America: A Lost Nation
Paul Craig Roberts
I have explained on many occasions in writing, interviews, and podcasts that an American president has little more than nominal control over the policies of his administration.
Partly this is due to the vast size of the US government that the liberals have created, far different from what the Founders intended. The government is far too large for anyone to keep up with no matter the AI tools in his possession.
But the main reason the President has no effective control is the incentive faced by his political appointees.
The government is in the hands of several hundred presidential appointees–Assistant Secretaries, Undersecretaries, and Secretaries–who must be confirmed in office by the Senate and, thereby, are knighted for life with the title of “Honorable.” We are properly addresses as “Mr. Secretary.”
An Assistant Secretary is not an assistant to the Secretary. Assistant Secretaries are presidential appointees. They are the most powerful members of an administration because the federal departments report to them. Thus, Assistant Secretaries control the flow of information in the government.
The US government is involved in everything–health care, education, justice, pensions, retirement, work conditions, emissions, transportation, communication, broadcasting, agriculture, you name it. Laws are passed and regulations written that benefit some at the expense of others. Some industries and corporations are bailed out of their difficulties, and others are not.
The incentive of a presidential appointee is to serve the interest group that can best serve his career. The administration might have a foreign policy, a health policy, and so forth, but the real policies will be the ones preferred by the lobbies that the presidential appointees decide to support. The lobby and the presidential appointee then push that policy in the media, and it becomes the administration’s policy.
It does happen that on occassion–I haven’t studied how often–a president is elected to office who has ambition beyond being elected president. He might want to reform something or to introduce something new. If his agenda is not threatening to powerful interests, he might succeed with his agenda. However, avoiding war is not an agenda that knows much success, and even less so today. President Eisenhower warned Americans in 1961 that the US military/industrial complex had become sufficiently powerful and entrenched as to pose a threat to American democracy. He did not mean a military coup. He meant that American foreign policy was moving out of the hands of the voters and their representatives.
In the Reagan administration I was President Reagan’s choice as Assistant Secretary of the Treasury. Reagan had adopted the Supply-side policy as a cure to stagflation, a policy that I had developed for Rep. Kemp and Senator Roth–the Kemp-Roth Bill–and had taught the Republicans how to offer the Supply-side approach as an alternative fiscal policy while serving in the Congressional staff. Reagan figured that as it was my policy, I would be less likely to sell it out than some campaign contributor from Wall Street.
The pressures to sell out Reagan’s economic policy were intense. If I had not served with distinction in the Congressional staff and had not come into the administration from the Wall Street Journal from which I could fire back at my opponents who were using other media against me, Reagan’s tax bill never would have gotten out of his administration.
The way presidential appointees accommodate private interests without appearing to sell out the president’s policy is to adjust the president’s policy to the lobby’s policy as a successful compromise that serves both interests. The media helps by dressing the sell-out as a compromise that benefits all, even though it fails to correct the policy problem.
I think it was president Reagan’s chief-of-staff, Jim Baker, Vice-president George H. W. Bush’s main operative, who explained how easy it was for all of us to be successful if we accommodated the fear of the economically ignorant imbeciles on Wall Street that Reagan’s tax cut would widen the deficit, cause inflation, send up interest rates, and destroy the values of their bond and stock portfolios. All we had to do was to reduce the 30% cut in marginal tax rates to a 5% cut. That would give us a “victory” without upsetting Wall Street. Someone suggested that the last thing an Assistant Secretary of the Treasury should do is to upset Wall Street, or there goes his career and million dollar income. I explained that a 5% reduction in tax rates would be wiped out by inflation and have no policy effect. Jim Baker did not see the importance of my comment as he was interested in appearance, not result. Framing the issue as tax cut vs. no tax cut, a 5% cut would be a victory, one that Wall Street could live with.
In meetings I would explain that our job was to cure stagflation, not to appease the ignorant on Wall Street. But it didn’t go over well with those who saw “saving Wall Street from voodoo economics” as their path to riches. I didn’t give in. I described the resulting fight here: https://www.paulcraigroberts.org/2025/03/23/my-time-in-the-reagan-administration/
Reagan’s plan was that once the economy was fixed, which was the reason he began his first term with getting his economic policy passed, the second of his two agenda items–the end of the Cold War–could be undertaken by challenging the broken Soviet economy with an arms race. Reagan did not really intend an arms race any more than Trump seems to intend his threatened high tariffs. It was a threat to achieve a result. Reagan reasoned that as the Soviets lacked the economic ability to compete in an arms race, the threat would bring them to the bargaining table and the Cold War could be ended.
This time the problem was the US military/security complex which did not want to lose its highly profitable Soviet enemy. The CIA told President Reagan that it would be a mistake to start an arms race with the Soviets, because they would win. Reagan asked how a smaller broken economy could win over a larger well-functioning one. The CIA said that the Soviet Union had a planned economy and could put all the resources of the economy into the military, whereas Reagan would have trouble increasing military spending beyond 6% of GDP.
Generally speaking, presidents cannot ignore the CIA’s positions when those positions serve the military/security complex. If the president does, the military/security complex has a Congressional committee chairman flush with military/security complex campaign funds to call a hearing. In the hearing the CIA, pressed by Congress, “admits” that the president’s policy would endanger the US, exposing us to nuclear attack and all that.
Reagan, allegedly senile according to the whore liberal media, understood all this. He created a secret presidential committee with the authority and power to interrogate the CIA as to how it had come to its conclusion. Having read my book on the Soviet economy and remembering my service to him in the Treasury, he put me on the committee.
It became apparent even to the anti-Reagan members of the committee that the Soviet economy was in serious trouble. Indeed, it was apparent to Soviet economists themselves who were beginning to write about it. As the anti-Reagan members (from the elite universities, of course), were not in favor of nuclear war, they agreed that the CIA was protecting its budget and power by opposing the end of the Cold War. Reagan said when he received the report: “I knew this, but I had to have a report.”
What I am telling you is how things really are. The real story is not the official narrative that you read in the whore media or in the histories written by court historians who pander to advance their careers.
What I am telling you is that Americans do not know anything about how and what really happens, what the truth really is. They sit lazily in front of the indoctrination machine and are brainwashed about reality. The total incomprehensibility of the insouciant American public is why they have lost their country.