On November 4, 1980, the United States chose for its leader, Ronald Reagan, who strode
into the White House promising smaller government, lower taxes, and less federal
intrusion in people’s lives. He was the oldest man ever to serve as president
of the United
Yet his smile and rugged good looks projected the youthfulness of his days in Hollywood. When he spoke, there was the sweet voice and the
familiar nod of the head that told America everything was fine. Then, he would tell a story
equipped with a moral.
It was the defining genius of Ronald Reagan to
find tales of hope and optimism to sustain his vision of a brand new America. His predecessor, Jimmy Carter, had spoken of
limits and the obligation to sacrifice. However, Reagan rejected that notion.
After two decades of troubles that included assassinations and urban riots, the
agony of Vietnam and the disgrace of Watergate, energy crises and
double-digit inflation, the nation was ready for Reagan’s exhortation to
“dream heroic dreams.”
His feel-good conservatism embodied the 1980s—the
restoration of pride and prosperity, but with little concern for pressing
social and economic problems. Reagan’s appealing surface simplicity concealed a
multitude of contradictions. He championed a return to family values, though he
was the first divorced president in U.S. history and was estranged from several of his
children. He cultivated fundamentalist Christians of the new religious right,
calling for “a spiritual revival, a return to a belief in moral absolutes,”
but seldom attended church. He preached old-fashioned habits of work and productivity
while maintaining a relaxed, hands-off management style and getting more sleep than
any president since Calvin Coolidge.
Not the least of Reagan’s
appeal was the straightforward simplicity of his political agenda. It was
highly conservative and, in domestic matters, ran directly counter to nearly
half a century of liberal policies. He declared, “We must balance the
budget, reduce tax rates, and restore our defenses.” He also advocated
“getting the government off people’s backs” by reducing federal
regulations on the environment and business.
Reagan had hated high income taxes ever since his
big-pay Hollywood days, when the top rate was 91 percent. As a
presidential candidate, he seized upon a tax-cutting scheme called supply-side
economics. According to this plan, tax reductions would stimulate the economy
by providing incentives for investment, thereby generating so much growth—and
hence new taxable income—that the government would actually gain revenue.
Critics labeled the idea “voodoo
economics,” a phrase coined, ironically, by Republican George Bush before
he joined the Reagan ticket as vice presidential candidate. But in seven years
Reagan and the Democratic Congress slashed the highest tax rate on even the
richest Americans from 70 percent to 28 percent.
At the same time Reagan, denouncing the Soviet Union as the “evil empire,” pushed for the
largest peacetime military buildup in U.S. history. Annual defense spending ballooned from
less than $200 billion under Presidents Ford and Carter to nearly $300 billion
in 1985. “America is back and standing tall,” he proudly said
of the newly strengthened armed forces.
Reaganomics sparked the biggest bull market in the
history of Wall Street. Yet much of the financial frenzy had little to do with
the kind of entrepreneurship that Reagan envisioned. Instead of investing in
research, capital development, and higher productivity, many businesspeople
chose to devote their energy to mergers and takeovers. Using huge sums of
borrowed money, corporate raiders bought out sound companies and then sold them
off piece-by-piece to pay creditors and squeeze out a quick profit—typically at
the cost of laid-off workers.
In the movie Wall
Street, the character named Gordon Gekko captured the new morality when he
said, “Greed is good. Greed is right.” Those who had it were expected
to flaunt it. When Nancy Reagan decided the White House needed new china, she
bought $200,000 worth, with private donations. Sales of stretch limousines
doubled every year during Reagan’s first term. Demographers identified a new
class of society infatuated with wealth and material possessions. These were mostly
the yuppies, which was a word used to identify “young urban professionals”.
Yuppies of both sexes ate “power lunches” and “dressed for
success” by “wearing power suits”. Hard-driving overachievers,
they worked out in trendy health clubs while working on their MBA degree, which
ostensibly stood for master of business administration, but was widely held to
mean “Making It Big in America.”
Shopping malls became the symbol for American
materialism, and they shopped for new technology like microwaves, VCRs, and cordless
phones that relied on the fingernail-size microprocessor chips that transformed
American life. Transcending all of these new developments was the personal computer,
which in the 1980s became a staple in homes and standard in every office.