Bruce Bartlett’s book “Imposter – How George W. Bush bankrupted America and betrayed the Reagan legacy” met with an enthusiastic reception at the Cato Institute Tuesday, as well as with predictable derision from Bush-supporting commentators elsewhere. However, Bartlett’s scathing criticisms of Bush didn’t include much on what a “good” President might have done instead. I therefore thought it time to rub the crystal ball, and explore the alternative universe where President Calvin Ronald Reagidge was elected by a narrow majority in November 2000.

“Reagidge,” intended to be the ideal of a libertarian-conservative Republican President, is an amalgam of the sunny optimism and can-do spirit of Ronald Reagan with the visceral distrust of government activity, foreign and domestic, of Calvin Coolidge, the last conservative president before Reagan. In areas where Reagan and Coolidge agreed, such as small government, Reagidge is their faithful follower; in areas where they disagreed, such as tariffs, immigration and foreign policy, where Reagan was free trading, open-borders and activist while Coolidge was protectionist, nativist and isolationist Reagidge splits the difference. Reagidge, being human, does not have perfect judgment or foresight, he merely follows Conservative-principled policies and reacts to events as they occur.

Reagidge’s first action once the disputed election of 2000 had been settled was to meet with Federal Reserve Chairman Alan Greenspan. A keen believer in tight money and the monetarist approach, indeed with a preference ceteris paribus for a Gold Standard monetary system, Reagidge believed that Greenspan had been far too lax in his control of the money supply since at least 1995, allowing M3 money to grow at a rate of more than 9 percent per annum, much faster than the economy. This had caused a stock market bubble to inflate, the deflation of which must be allowed to occur as quickly as possible, in spite of the inevitable painful recession that would result.

Reagidge was aware of the painful recession that Reagan endured in 1980-82, and the equally painful recession that Coolidge’s predecessor Warren Harding endured in 1921-22, and of the soundly based prosperity, among the happiest of periods for the U.S. economy, that followed both previous episodes of presidential courage. He wanted to repeat the courage, and if possible the results. Being a good politician, he was also aware that a harsh recession that began immediately after he entered office would be blamed by the public largely on his predecessor Bill Clinton.

Accordingly Greenspan raised the Federal Funds rate to 8 percent in January 2001, and maintained M3 money supply growth around zero in nominal terms for the whole of 2001 and the first half of 2002. The result was a collapse in the stock market, with the Dow Jones index dropping by April 2002 to 5,000, the Standard and Poors Index to 600 and the NASDAQ index to 1,000, more than 80 percent below its 2000 peak. There was a mild downturn in the U.S. housing market which had become somewhat overheated in 2000, as mortgage rates of just over 8 percent restored the previous equilibrium.

More spectacular was the bankruptcy of Argentina, which occurred in March 2001 as the International Monetary Fund refused to provide any more money to support the corrupt Argentine power structure. A military coup was followed by free elections in fall 2001, resulting in the election of President Ricardo Lopez Murphy on a Reagidge-ite ticket, an amicable restructuring of Argentine debt, and a lengthy period of dour cutbacks in the size of national and provincial Argentine governments, accompanied by corruption trials of pretty well every Argentine politician active in 1989-2001. By 2005, Argentina was restored to stable economic growth, with low inflation and a foreign debt that was no longer a problem. Latin America had become a stably growing region and a substantial source of support for U.S. policy.

Domestically, Reagidge realized that the U.S. budget surplus he inherited was the result of the overextended economy and the stock market bubble, so that a large income tax cut such as many had proposed would cause large deficits to appear in the impending recession, as well as allowing the strong Democrat minority in Congress to play class war games. Further, he saw that the replacement of Newt Gingrich as House Speaker by Dennis Hastert in December 1998 had resulted in a dangerous slackening in spending control by Congress. Thus the final 2000 and 2001 budgets (which had passed through Congress in 1999 and 2000) were substantially larger than those proposed by the Clinton administration, instead of smaller than the Administration proposal as had been the case under Gingrich in 1996-99. Accordingly, Reagidge lobbied for the replacement of Hastert and Tom Delay, the Majority Whip, by Dick Armey and John Shadegg, so that the House of Representatives once more had a leadership committed to tight spending control.

Reagidge’s 2001 tax bill, while modest in overall tax cuts, corrected a number of anomalies in the U.S. tax system, and did so permanently, with no 10-year “sunset” provisions. It reduced the top rate of estate tax from 50 percent to 15 percent, helping small business, it made corporate dividends deductible from corporate income for tax purposes, removing the double taxation of dividends, and it limited the tax deductibility of home mortgage interest to $10,000 per annum. In revenue terms, this was close to neutral. It was passed by bipartisan majorities in the House and Senate against opposition from a coalition between aggressive tax cutters and leftist social engineers.

Having passed the tax bill, Reagidge addressed himself to spending. He reinstated the line item veto, tweaked to avoid the constitutional problems that the Supreme Court had found with it in 1998, and ostentatiously vetoed several pork barrel spending bills. He also followed up on a pledge in the 1994 “Contract with America;” his “No Child Harassed by Federal Bureaucrats Act” abolished the Education Department, saving $35 billion per annum immediately and more going forward.

Like Bush, Reagidge had run in 2000 on a platform of a “humble” foreign policy; unlike Bush he believed it. In July 2001, Reagidge undertook his first significant foreign policy activity; he vetoed the renewal of the Iran/Libya Sanctions Act of 1996. In his veto message, Reagidge pointed out that Iran had elected a moderate, Mohammad Khatami in 1997 and re-elected him in 2001; the United States needed to respond to this softening of tensions, to ensure that the extremists weren’t strengthened by a hardline approach. Accordingly, Khatami was invited to make a state visit to the United States, which took place in 2002, and strategic discussions were entered into with Iran over the two countries’ mutual problem of Saddam Hussein’s regime in Iraq.

As in Bush’s world, the 9/11 attacks took Reagidge by surprise. His invasion of Afghanistan differed from Bush’s only in that U.S. forces took full responsibility for operations at Tora Bora and hence captured Osama bin Laden, who was promptly executed by firing squad (Reagidge opposed show trials, as vehicles for leftist posturing that give spurious credibility to the International Criminal Court.) In the post-9/11 world, Reagidge established no new Federal bureaucracies, but contented himself with removing the “wall” between domestic and international intelligence operations, ensuring that intelligence information was properly shared.

Reagidge realized that high legal and illegal immigration was now an important strategic vulnerability for the United States; in addition, in the rapidly deepening recession it had become a massive economic vulnerability. It increased economic inequality and impoverished working Americans, producing an economy in which growth in Gross Domestic Product almost completely failed to translate into growth in median personal incomes. Consequently, in early 2002 he presented to Congress a new version of the 1924 Immigration Act, changing its provisions only for immigration quotas to reflect the national origins of the 1990 U.S. population instead of the 1890 population, with the reference date for quotas to change every ten years, one census in arrears. In addition, he imposed stiff penalties, including prison sentences, on the top management of companies employing illegal aliens. The Chamber of Commerce screamed, but they could hardly claim that domestic labor was not available, since unemployment was climbing rapidly towards its eventual high of 8 percent. Buoyed by massive opinion poll support, the new Act passed Congress on a bipartisan basis, over strenuous opposition from the Republican business lobby and the Democrat left.

The U.S. economy was still in deep recession in November 2002, and the stock market collapse had produced many bankruptcies and cases of corporate malfeasance, so the midterm elections were poor for the Republicans, with the Democrats picking up 2 Senate seats and barely recapturing control of the House. In the new Congress, Reagidge wielded his veto pen with vigor over spending proposals, but after considerable negotiation signed the Sarbanes-Frank bill on corporate governance, which banned stock option compensation and provided for auditors of public companies to be appointed directly by stockholders.

In March 2003, Iranian forces invaded Iraq, with the support of U.S. airpower, logistics and Special Forces. After the capture and execution of Saddam Hussein a moderate Shiite interim government was set up and elections were held in December 2003. Iraq’s oil revenues were placed in a trust fund for the benefit of the Iraqi people, administered by the Singapore Provident Fund, which provided every Iraqi with education, healthcare and a small old age pension.

The new Iraq held together and was relatively peaceful. With the oil revenues segregated from government, there was very little for the different factions to fight about, and Al Qaeda was able to make little headway against the combined forces of Iran and the United States. Khatami’s political position in Iran was so strengthened by the Iraq triumph and his U.S. alliance that he was triumphantly reelected in 2005, and Iran began a period of rapid economic growth and moderate secularization.

The U.S. economy began to recover in 2003, and by the 2004 election was healthy, with low inflation, unemployment declining from its peak, the trade deficit below $200 billion per annum and a reorientation from tech and housing towards the traditional manufacturing sectors that had been neglected during the 1990s bubble. With oil prices stable at about $30 per barrel, General Motors and Ford had good years; with interest rates high, their pension problems remained under control. Reagidge was re-elected with 55 percent of the vote against the Democrat Howard Dean, and the Republicans recaptured control of both Houses of Congress.

With the Republicans back in control of Congress, Reagidge’s domestic priority in 2005-06 was to remove the actuarial nightmares inherent in Social Security and Medicare. After multiple battles with Congress, he raised the age of eligibility for both programs to 70, and instituted private accounts, similar to those in Singapore, that could be used for healthcare and old age security purposes. Naturally, the Medisave accounts included prescription drugs, while Medicare coverage was restricted to the catastrophic expenses that were not covered by Medisave. Raising the age of eligibility and privatizing much of the payments removed the deficits in both Social Security and Medicare trust funds, which thereafter were actuarially sound.

Internationally, Reagidge withdrew from U.S. membership of the International Monetary Fund and the World Bank, which consequently became EU-dominated institutions and quickly faded into insignificance. International economic development became the function of private sector banks, as it had been before 1914. U.S. bilateral aid continued, but was redirected towards the priorities established by the Copenhagen Consensus of development economists. In addition, in a number of African countries where the government was stable and acceptable to the United States, Reagidge began a program of funding old age pensions, at a rate of around $2 a day, payable from the age of 70 (the total cost of this for all Africa was estimated at about $15 billion per annum.) This provided a measure of old age security to Africa’s people and so began reducing Africa’s excessive fertility rates, which severely hampered economic growth and threatened to bring enormous ecological problems for the continent in the long term.

In early 2006, the U.S. and world economies seemed to have embarked on a period of stable non-inflationary growth. The U.S. budget deficit was under $100 billion and heading towards surplus with economic recovery, as federal spending declined moderately as a percentage of GDP, while the trade deficit was below $200 billion and showing no tendency to increase. As Larry Lindsey replaced Greenspan as Fed Chairman in January 2006, Treasury bonds yielded just over 6 percent, and the U.S. savings rate was stable at 5 percent of GDP. Oil prices were creeping up, at $35 per barrel, and gold had risen from its 2000 low to $350, but tight money internationally and economic recovery in Japan had produced a world economy that was free from the imbalances that endanger that of George W. Bush’s parallel world.

Fantasy? Yes of course, and particularly in the political arena, domestic and international, it’s likely that something, perhaps with no parallel in our world, would have happened to throw things into confusion. Iran is the obvious unknown factor. We will never know what might have resulted from an overture to Iran between the election of Khatami in 1997 and the deterioration of Iran/U.S. relations with the Iraq invasion of March 2003. However, there was very little downside risk to an attempt to improve relations, and the experiment should have been tried. Certainly the hard line “axis of evil” approach to Iran hasn’t worked.

The lesson to be learned is that policies make a difference, that our fate is not predetermined, and that politicians should be held accountable for poorly planned invasions, uncontrolled government spending and the creation of damaging bubbles.

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(The Bear’s Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of “sell” recommendations put out by Wall Street houses remains far below that of “buy” recommendations. Accordingly, investors have an excess of positive information and very little negative information. The column thus takes the ursine view of life and the market, in the hope that it may be usefully different from what investors see elsewhere.)

This article originally appeared on United Press International.