The Reagan Revolution at Home
A generation arose in America in the midst of the identity crisis of the 1960s and
1970s that believed the United States could be a great nation again. Isolated thinkers
coalesced into small associations. These associations published magazines, held
conferences, and gained followers, among them a second-tier actor, Ronald Wilson
Reagan, who had voted four times in a row for Franklin D. Roosevelt, a man he intensely
admired. A New Deal Democrat, therefore, found himself at odds with the party of his
hero. Reagan was fond of saying that he, “. . . didn’t leave the Democratic Party; it left
me.” After a series of liberal Democratic presidents and two moderate Republicans,
America also seemed ready for a change. Thinkers like William F. Buckley, Jr.,
launched the Conservative Movement, and Ronald Reagan, who read Buckley’s
magazine National Review from cover to cover, became the figurehead that turned
conservatism into a revolution in American politics.
Reagan was from Illinois, the Land of Lincoln. Eerily, people associated him
with a film role from the 1940 film Knute Rockne, All American. The association was so
strong the Reagan was ever after referred to as the Gipper because he portrayed George
Gipp, the football star of Rockne’s Notre Dame Fighting Irish. The young player’s
death-bed line of, “Go out there and win one for the Gipper,” became a ready-made
campaign slogan. Reagan proved to be a natural leader. He organized a strike at Eureka
College while a student there, thereby becoming the only person to become president of
the United States who had once led a student protest march. He led the Screen Actors
Guild in 1947 and was therefore the only 20th-century president to have led a union.
Through the McCarthy Red Scare, Reagan worked diligently to oust communists from
Hollywood while protecting non-communists who had been unfairly targeted by the FBI.
Reagan backed Barry Goldwater for president, but at the convention he gave a
speech that convinced many Reagan would one day be president himself. First, though,
he became a two-term governor of California, a state that had spent itself into near-
bankruptcy with the nation’s most free-spending welfare system. Reagan brought the
spending under control using 900 vetoes, only one of which was ever overturned. While
his opponents branded him an extremist he cultivated a talent for compromise—he
removed 75,000 people from California’s welfare rolls but increased payments to her
poorest citizens. He also restored order to California’s volatile campuses in the 1960s
and told hippies to take baths.
Reagan had already cultivated a talent for public speaking as an actor, obviously,
but also as a spokesman for the General Electric Corporation. He was able to put ideas in
everyday language middle-class Americans could understand. In the campaign against
Carter, Reagan quipped, “A recession is when your neighbor loses his job. A depression
is when you lose yours. A recovery is when Jimmy Carter loses his.” His campaign in
1980 made three simple promises—he would cut the size of the government through tax
cuts and deregulation, he would fight the Cold War with renewed vigor, and he would
look for market-based rather than government-based solutions to the energy crisis.
Reagan loved to say, “Government is not the solution to the problem; government is the
problem.” As a compromise with moderate Republicans, however, Reagan picked
George H. W. Bush, a former CIA director, as his VP. As the campaign turned to
televised debates, Reagan used Carter’s own question about being better off than four
years ago against him, and he even used Carter’s misery index to point out that
Americans were still miserable. Whenever Carter blustered, distorted Reagan’s record,
or tried to portray Reagan as an extremist, Reagan unleashed his own five magic words.
The Gipper would smile, cock his head, and say, “Well, there you go again.” Reagan
later said those five words won him the presidency. The Electoral College vote came out
489 to 49, handing Carter the worst defeat of an incumbent president since Reagan’s
hero, FDR, had taken down Herbert Hoover.
Your own textbook, The American Pageant, says Reagan “was no intellectual.”
Democrats in Congress and the media concurred and attributed Reagan’s overwhelming
victory to his acting background. Neither group, however, took Reagan’s campaign ideas
seriously nor realized that they appealed to large majorities of Americans. Being
underestimated positioned Reagan for surprise successes even if his accomplishments
were modest, which they weren’t. When the Iranian hostages were released on the day of
Reagan’s Inauguration, Americans sensed something was about to change. Reagan’s
diary reveals he knew fixing the mismanagement of previous administrations was going
to take time and was going to be painful, but he determined to stick to conservative
principles whenever possible and to compromise whenever necessary keeping long-term
change in view. Meanwhile, he resolved to use all his extensive persuasive and
promotional powers to boost American morale after eight years of “malaise.” Did I tell
you Reagan’s father had been a shoe salesman? Perhaps it was because Reagan was the
oldest man ever to be elected president (at age 69) that in 1980 he still believed in the
American Dream.
Reagan’s humor and optimism were contagious. Even after a deranged man
named John Hinckley shot the President to impress actress Jodi Foster, Reagan was able
to joke to the surgeons as he went under anesthesia, “I hope you’re all Republicans!” He
told his wife, Nancy, “Honey, I forgot to duck.” Later records revealed Reagan had come
extremely close to dying, but at the time he seemed indestructible. The doctors
announced they had never had to cut through such tough muscle on a man his age before,
and think of it—the President took a bullet to the chest and within a few months was
delivering his State of the Union Address on television! The oldest man elected president
was evoking images of TR, the youngest man to have been president. Star Wars fans
loved the fact that their president had the temerity to call the Soviet Union the “focus of
evil in the modern world” and “the evil empire.”
At the same time Reagan was a gentlemen who stood when women entered a
room and forbid the telling of any off-color jokes in the presence of ladies. In his youth,
Reagan had been a lifeguard and personally saved over 80 lives. The “crisis of
confidence” was over. As Democratic Speaker of the House Tip O’Neil would later
lament, “Da people loved him.” His staff loved him because after hotly contested
meetings where Reagan had let everyone speak his mind, the President would rise and
say, “I’ll let you know my decision,” rather than embarrass the losing side in front of the
winners.
Reagan resolved to rebuild the American economy as his first step in winning the
Cold War. Whereas Keynesians from FDR to Nixon attempted to boost consumer
spending, Reagan gravitated toward the idea of tax cuts that had first been proposed by
Andrew Mellon. Coolidge and JFK had seen great success with supply-side economics,
the notion that tax cuts would allow the wealthy to keep more of their money which they
would then invest in building new plants and starting new businesses. The Laffer curve,
named after economist Arthur Laffer, proved that revenue would actually go up for the
government under such circumstances. Despite the historical performance of these ideas
and even the recent moderate success that Gerald Ford had experienced, Reagan’s
opponents called them “voodoo economics” and “Reaganomics.” Congress agreed to try
tax-cuts, however, even though they implemented them far more slowly than Reagan
desired. Still, the economy slowly began to recover. As the full weight of the cuts came
online, the economic recovery picked up speed. Investors pumped money into the
economy as never before. In response, their income increased sevenfold, so they were
happy. The taxes they paid rose fivefold, so the government was happy since 95% of all
the taxes paid in America are paid by the rich. Once the Federal Reserve raised interest
rates and dropped inflation from 12% to 4%, stagflation was over. After an initial slump,
the economy accelerated at a pace never before seen.
Reagan pushed to fulfill his promised deregulation and had the help of a process
Carter had set in motion, the deregulation of airlines. The government allowed airlines to
discount their prices for fares, and at the same time new competitors came along that
further drove down prices, nearly doubling the amount of passengers using the airlines by
1992 from the amount back in 1977. The growth of the United Parcel Service (UPS) and
the arrival of Federal Express broke the monopoly of the postal service in delivering
mail, especially since the costs of aviation had been reduced. Reagan was disappointed,
though, in trying to shrink Big Government. He later said the chief failure of his time in
office was an inability to eliminate more than just a few minor bureaucracies from the
government juggernaut. While his tax cuts drove up production, employment, job
creation, and entrepreneurship (as well as increasing government revenue one third over
Reagan’s eight years in office), Congress increased its spending 40%, less than half of
which can be attributed to Reagan’s defense buildup to fulfill his third campaign promise.
Sizable deficits were the result. In fact, once Reagan’s foot was off the brake pedal on
domestic spending after he left office, Congress spent nearly double the amount of money
on new domestic programs that they spent on defense.
Reaganomics did not have to be explained to Americans when they could feel
their wallets were thicker. At the end of the Reagan Administration, 14 million new jobs
had been created. This fact is all the more incredible when compared to Europe’s
condition. Since 1970 all the nations of Europe combined had not created a single new
job by the end of Reagan’s second term. Naysayers claimed manufacturing was
declining, but the share of the GDP from production during the Reagan years rose to
36.1%, the highest level in American history. Since the American steel industry had died
under Carter, the surge in manufacturing came from an entirely new source—computers.
In the 1980s the US possessed 70% of the world market for software and 80% of the
market for hardware! Thus the focus of investment and industry shifted from Detroit to
Silicon Valley, the area in California where computer chips were made. When Bill Gates
gave the world a computer language, operating system, and new interface devices,
America took the lead in making machines that were used to make machines. These
steps impacted all of life in that, for example, it took half the labor to obtain a gallon of
milk in 1980 as it did in 1950. The expenditure of labor necessary to acquire a gallon of
gasoline dropped by two thirds. Prices dropped, accordingly, for everything from food to
the little microchips that had started burgeoning productivity in the first place. There
may never again be such a boost in productivity as was experienced by Americans in the
1980s.
The tax cuts not only revived the economy but also helped restore American
productivity and purpose. Even labor unions began to break away from the dependency
attitudes in which they had been inculcated and became known as “blue-dog” Democrats
in support of Reaganomics. While not able to roll-back the threat of Big Government,
Reagan had at least destroyed the assumption that only a steadily growing government
sector could produce economic stability and prosperity. Characteristically, Reagan
optimistically reversed the indictment Carter had leveled at the American people by only
referring to the successes of his administration as feats the he and the people had
accomplished together. Domestic change, however, is only half the story, or maybe one
third of the story.