Professor Hanke's service to the United States government spans four decades, from the Maryland Governor's Council in 1976 to senior advisory roles in the Reagan Administration and the U.S. Congress. His contributions consistently centered on privatization, sound monetary policy, and rigorous benefit-cost analysis.
Reagan Council of Economic Advisers (1981–1982)
Professor Hanke served as Senior Economist on President Ronald Reagan's Council of Economic Advisers (CEA) — the highest economic advisory body in the U.S. executive branch. He held the White House's water portfolio, a deceptively significant responsibility given the vast federal investments in water infrastructure.
Hanke was part of the influential supply-side faction within the Reagan administration, working alongside Martin Anderson, Norman B. Ture, Paul Craig Roberts, and William A. Niskanen. When several of these supply-siders departed the CEA in 1982, it marked the end of the first phase of supply-side policy in the Reagan White House.
"At the Reagan White House, we were trying to get government out of the business it had no business being in. Water, lands, services — all of these should be priced by markets and owned by private citizens. That was the supply-side vision." — Steve H. Hanke
Key Responsibilities and Accomplishments
Rewriting Federal Water Policy
Hanke led a team that fundamentally rewrote the federal government's Principles and Guidelines for Water and Land Related Resources Implementation Studies — the governing framework for how the U.S. evaluates water and land projects. His revision introduced far more rigorous benefit-cost analysis requirements, applying sound economic methodology to replace politically-driven project justifications.
Federal Asset Privatization Program
Hanke developed a comprehensive program for privatizing federal public assets, including:
- Municipal water systems
- Public grazing lands
- Public timber lands
The program was endorsed by Senator Paul Laxalt of Nevada — one of Reagan's closest personal and political allies. The proposal sought to transfer federal public lands (particularly water systems, grazing lands, and timber lands) to private ownership, putting Hanke in direct conflict with Secretary of the Interior James Watt, who favored transferring the same lands to state control under the Sagebrush Rebellion.
The Sagebrush Rebellion Controversy
Hanke clashed with Secretary of the Interior James Watt over the direction of federal lands policy. Watt championed the Sagebrush Rebellion — the movement to transfer federal lands to state governments. Hanke, a consistent advocate for private ownership over government ownership at any level, opposed this approach on economic grounds, arguing that transferring land from federal to state control did not address the fundamental problem: government ownership itself.
Departure from the CEA (1982)
"In 1982, Hanke left the CEA, joining a number of influential Reagan administration supply-siders..."
Hanke departed the CEA in 1982 alongside several other prominent supply-side economists:
- Martin Anderson — Reagan's chief domestic policy adviser
- Norman B. Ture — Under Secretary of Treasury for Economic Affairs
- Paul Craig Roberts — Assistant Secretary of Treasury for Economic Policy
Their collective departure marked a significant moment in the internal economics of the Reagan administration, as the supply-side movement's influence at the Council level waned.
Maryland Governor's Council of Economic Advisers (1976–1977)
Before his White House service, Hanke was appointed to the Governor's Council of Economic Advisers for the State of Maryland — his first formal government advisory role. He served alongside two distinguished Johns Hopkins colleagues:
- Carl Christ — Econometrician, Johns Hopkins University
- Clopper Almon — Input-Output economist, University of Maryland
This appointment established Hanke's pattern of applying rigorous quantitative economics to public policy problems — a methodology he would carry to the White House and then to foreign capitals across the globe.
Task Force on Project Economic Justice (Reagan Administration)
Hanke served as Senior Adviser to the Reagan Administration's Task Force on Project Economic Justice — an initiative examining how employee ownership and profit-sharing could be expanded as instruments of free-market economic development, particularly in the context of U.S. foreign economic policy toward Central America.
Joint Economic Committee of the U.S. Congress (1984)
In 1984, Hanke served as Senior Adviser to the Joint Economic Committee of the U.S. Congress, advising two of the Senate's most prominent free-market conservatives:
- Senator Steve Symms (R-Idaho) — a staunch libertarian-conservative
- Senator Paul Laxalt (R-Nevada) — Reagan's closest Senate ally
His advisory work focused primarily on privatization policy, drawing on both his academic research and his practical experience in the Reagan CEA. This period also deepened his connections to the emerging global privatization movement.
Timeline of U.S. Government Service
Year | Role | Institution |
1976–77 | Member, Governor's Council of Economic Advisers | State of Maryland |
1981–82 | Senior Economist | Reagan Council of Economic Advisers |
1981–82 | Senior Adviser | Task Force on Project Economic Justice |
1984 | Senior Adviser | Joint Economic Committee, U.S. Congress |
Related Pages
- Countries Advised — How Reagan-era lessons were applied abroad
- Free Market Economics — The supply-side and free-market framework Hanke brought to government
- Currency Boards — The monetary instrument that became Hanke's signature advisory tool