Wasn't it Rush Limbaugh who once said of Ronald Reagan: "We as a nation owe Reagan a debt that can never be repaid" or something like that?

Well, Nobel Prize in Economics award winner Paul Krugman points out the ironic truth of that tribute:

“This bill is the most important legislation for financial institutions in the last 50 years. It provides a long-term solution for troubled thrift institutions. … All in all, I think we hit the jackpot.” So declared Ronald Reagan in 1982, as he signed the Garn-St. Germain Depository Institutions Act.

He was, as it happened, wrong about solving the problems of the thrifts. On the contrary, the bill turned the modest-sized troubles of savings-and-loan institutions into an utter catastrophe. But he was right about the legislation’s significance. And as for that jackpot — well, it finally came more than 25 years later, in the form of the worst economic crisis since the Great Depression.

For the more one looks into the origins of the current disaster, the clearer it becomes that the key wrong turn — the turn that made crisis inevitable — took place in the early 1980s, during the Reagan years.

Attacks on Reaganomics usually focus on rising inequality and fiscal irresponsibility. Indeed, Reagan ushered in an era in which a small minority grew vastly rich, while working families saw only meager gains. He also broke with longstanding rules of fiscal prudence.

To be sure, the current economic crisis has many fathers, and Democrats are among them, if only because they acquiesced in bad fiscal legislation.  As Krugman writes:

There’s plenty of blame to go around these days. But the prime villains behind the mess we’re in were Reagan and his circle of advisers — men who forgot the lessons of America’s last great financial crisis, and condemned the rest of us to repeat it.

For the entire history of our nation, up until the Reagan presidency of the early 1980's, we were not a debtor nation.  Household debt was only 60 percent of income when Reagan took office, about the same as it was during the Kennedy administration. By 2007 it was up to 119 percent.  Our great wealth as a country rested on debt, rather than labor.  That's Reagan's legacy.

And yet, one wonders why Republicans still have the image of being the fiscally responsible party.  Maybe no longer….