Study Guide

The Reagan Era Analysis

  • War

    A Broken Military in a Renewed Cold War

    When Ronald Reagan took his oath of office as commander-in-chief in January 1981, he inherited a military that was still struggling to overcome the severe damage inflicted by the Vietnam War, which had ended in defeat in 1975. 

    For 15 long years leading up that date, American soldiers had borne the brunt of a demoralizing and ultimately fruitless campaign to prop up our country's anticommunist allies in Vietnam's civil war. More than 57,000 American servicemen ultimately died in the jungles of Southeast Asia, and much of the American military's fighting spirit and effectiveness died with them. Billions of dollars worth of equipment and munitions were destroyed in the fighting, while an unpopular draft filled the ranks with soldiers who didn't want to be there, sapping morale. 

    Many of the best and brightest men of the junior officer corps left the force in disgust and exhaustion, robbing the military brass of a generation of promising young leaders. Prolonged inability to conquer a seemingly overmatched enemy left many in the military doubting—perhaps for the first time—their own capabilities. 

    In effect, the U.S. Army that left Vietnam in defeat in 1975 was but a shell of the formidable force that had entered the conflict with such confidence a decade and a half earlier.

    Things didn't get much better in the late 1970s, either, as the United States found itself virtually impotent in the face of rapidly proliferating threats to its security. President Jimmy Carter took office in 1977 promising to pursue a foreign policy built around universal human rights rather than the narrow interests of Cold War realpolitik

    Nixon and Ford's policy of détente had succeeded in opening up friendly relations with communist China and lessening tensions with the Soviet Union. The prospect of the Cold War exploding into World War III seemed less threatening than at any time since 1948. Carter hoped to use this moment of opportunity to shift America's foreign policy further away from confrontation with foreign enemies and toward a more proactive pursuit of positive aims. 

    Instead, by 1979, the Cold War came roaring back with a vengeance, alongside new threats from Islamic fundamentalists in the Middle East. These new foreign challenges overwhelmed and undermined the Carter presidency.

    A Disastrous Year

    1979 was a terrible year for Jimmy Carter and for America's interests in the world.

    January brought the fall of the Shah of Iran, a pro-American dictator who'd long served as an anticommunist ally in the Middle East. The Iranian people, however, had come to despise the Shah for his autocratic rule, and many blamed the United States for propping up his antidemocratic regime. The Shah's government ultimately fell to fundamentalist Islamic revolutionaries, who built an uncompromising new political and social structure upon the principles of sharia law and denounced America as "the Great Satan."

    In March, Marxist revolutionaries staged a successful revolution in the tiny Caribbean island of Grenada, which had been a British colony until 1974. Though Grenada—just 20 miles wide and home to only 100,000 people—was hardly a nation of great strategic significance, the unexpected success of a communist revolution in an English-speaking country so close to the United States came as a shock to American policy-makers.

    The impression that communism was suddenly on the march in the Western Hemisphere only grew stronger in July, when the Marxist Sandinista insurgents overthrew the long-established Somoza dictatorship in Nicaragua. The Carter Administration had been critical of Somoza's human-rights abuses, but it was far from happy to see Somoza replaced by Cuban-backed communist militants.

    In November, the situation in Iran grew infinitely more dire. Young Islamic revolutionaries—infuriated by the Carter Administration's decision to admit the exiled Shah, who'd been sentenced in absentia to death by an Iranian court, into the United States to receive medical treatment for cancer—stormed the American Embassy in Tehran, seizing 52 American citizens as hostages and demanding that the United States extradite the Shah to their custody in exchange for the hostages' freedom.

    Finally, just when it seemed that things couldn't get any worse, late December brought a full-fledged Soviet military invasion of Afghanistan. Though the government in Moscow claimed that its forces had been sent into Afghanistan only at the request of Afghanistan's own communist government, the images of Red Army tanks streaming into the sovereign territory of a neighboring country to stamp out anticommunist opposition brought back bad memories of the darkest days of the early Cold War.

    Carter's Weakness

    From Afghanistan to Iran, Grenada to Nicaragua, it suddenly seemed that communism and anti-Americanism were on the march all around the globe—and neither the Carter Administration nor the enfeebled U.S. military seemed capable of doing anything about it. 

    The Sandinistas quickly consolidated their power in Nicaragua while the Carter Administration struggled to formulate a proper diplomatic response. The only retaliation Carter could mount against the Soviets for their invasion of Afghanistan was a toothless verbal condemnation in the United Nations and a boycott of the 1980 Summer Olympics in Moscow. Though many Americans felt that the main victims of the boycott weren't the Russians, but instead innocent American athletes, who lost a once-in-a-lifetime chance to compete for gold medals.

    Even tiny Grenada was able to thumb its nose at its powerful American neighbor with seeming impunity. 

    "No country has the right to tell us what to do or how to run our country or who to be friendly with," Grenadian Prime Minister Maurice Bishop declared after defying American orders by establishing an alliance with Fidel Castro's Cuba. "We are not in anybody's backyard, and we are definitely not for sale. Anybody who thinks they can bully us or threaten us has no understanding, idea, or clue as to what material we are made of."blank">worst terrorist attack against the United States in American history, destroying New York's World Trade Center towers, damaging the Pentagon in Washington, and killing nearly 3,000 people in the process.

    The enemy of our enemy, it turned out, wasn't really our friend. 

    While it's surely unfair to blame Ronald Reagan for unanticipated consequences of his policies that were 20 years in the making, there can be little question that the narrow Cold War worldview that led him to classify Osama Bin Laden as a "freedom fighter" and Nelson Mandela as a "terrorist" had some serious drawbacks.

  • Race

    Reagan and Racism

    Perhaps the least noble element of the "Reagan Revolution" was the strategic decision made by the president and his advisers to mobilize long-simmering racial controversies to build up his own base of political support. 

    By all accounts, racial concerns weren't central to Ronald Reagan's own political worldview. Fighting communism, shrinking government, cutting taxes—these were the issues that Reagan cared about most deeply. But Reagan's top political strategists realized that many Americans, by 1980, felt a passionate anger about government racial policies like school busing and affirmative action, and that the president could use that passion to build support for his own broader objectives.

    A generation after the Civil Rights Movement ended Jim Crow-style segregation in the United States, Reagan perfected a sophisticated and subtle appeal to the prejudices and resentments that motivated some whites in both the South and the North. In doing so, Reagan bolstered the electoral prospects of his Republican Party. More importantly, he managed to channel anti-Black prejudice into broader anti-government politics. By cultivating the impression that federal social welfare programs were mostly wasted on "undeserving" Black people, Reagan built support for his own anti-government ideology.

    To acknowledge that this happened is not to argue that Ronald Reagan was himself a racist. Racism wasn't a central pillar of Reaganism, and the vast majority of Reagan's supporters weren't racists either. But—as top Reagan advisers later frankly acknowledged—the president did make a deliberate decision to reach out to the minority of white American voters who were motivated by anti-Black sentiment. 

    And that decision had significant political and social consequences.

    The Solid South and the New Deal Coalition

    The significance of Reagan's racial politics only becomes clear with an understanding of the long-term role of race in American partisan politics. 

    The story begins nearly 150 years ago, with the Civil War. In that terrible conflict, the Republican Party of Abraham Lincoln led the North to victory, ending the Southern system of Black slavery in the process. Many embittered Southern whites didn't forgive the Republicans for more than a century. 

    After Reconstruction ended in 1876, Southerners rebuilt a white supremacist caste society under the virtual one-party rule of the Democratic Party. Southern Democrats, backed by the Ku Klux Klan—which functioned, in its early years, as the paramilitary wing of the Democratic Party in the South-imposed the Jim Crow system of legal segregation late in the 19th century, and enforced it into the middle of the 20th. As long as Democrats at the national level supported segregation, they could count on the electoral support of the "Solid South" to anchor their congressional delegations and presidential campaigns.

    In the 1930s, Democratic President Franklin D. Roosevelt built a lasting governing majority—the "New Deal Coalition"—that included Southern whites, Northern urbanites (including both Blacks and ethnic whites), union workers, and intellectuals. Roosevelt's New Deal Coalition—which maintained its uneasy truce between Southerners and Northerners by trying to avoid politicizing the issue of segregation in the South altogether—allowed the Democratic Party to dominate American politics through the middle decades of the 20th century.

    Civil Rights: "We've Just Lost the South for a Generation"

    Everything changed with the Civil Rights Movement of the 1950s and '60s. 

    When Southern Blacks mounted a sustained challenge to the racial subjugation of segregation, national Democratic leaders chose—after considerable hesitation—to abandon the "Solid South" by throwing the weight of their party behind the freedom struggle. In 1964, Democratic President Lyndon B. Johnson signed the Civil Rights Act of 1964 into law, pledging to use all powers of the federal government to end Jim Crow in America. As he signed that momentous bill into law, Johnson remarked with some regret that his party had "just lost the South for a generation." 

    In fact, there was no "Chicago welfare queen." Like many of Reagan's anecdotes, this one might charitably be called apocryphal. The story's accuracy—or lack thereof—notwithstanding, Reagan's "welfare queen" anecdote indulged the prejudice of many Northern whites, who came to see welfare as a government-funded scam that allowed lazy, undeserving Black people to prosper at the expense of hardworking white taxpayers.

    From Anti-Black to Anti-Government

    The politics of racism were certainly nothing new in American history, and Reagan was no more guilty than any number of other major political figures in our past for appealing to the least noble sentiments of the American character. 

    What made Reagan's brand of racial politics uniquely powerful, however, was Reagan's success in channeling prejudice against Black people into scorn for the government. Implicit in Reagan's multitude of "Chicago welfare queen"-style anecdotes was the notion that federal government spending on social programs was mostly wasted on pointless handouts to Black recipients. 

    In fact, during the 1980s, more than 85% of the federal budget was allocated to defense spending, Social Security, Medicare, and payments on the national debt—all utterly colorblind expenditures. Even welfare, which Reagan often implied was a program for Black people, benefited far more whites than African-Americans. But Reagan carefully cultivated the impression that "government spending" meant "free money for Black people," and happily watched as some whites' resentment of Blacks morphed into loathing of the government that supposedly coddled them.

    Of course, the Reagan Revolution was about much, much more than racism. Most Americans weren't racists, and most Reagan voters weren't racists. Race was clearly only a peripheral issue in the president's own worldview, and millions of Reagan voters were undoubtedly oblivious to their candidate's coded racial appeals. There were plenty of other political and ideological reasons to support Reagan's movement. But racism was still an undeniable factor in American life in the 1980s, and the Reagan campaign did pursue a deliberate strategy to win the votes of the significant minority of the American population motivated by racial resentment.

    So, while it's clearly not fair to say that racism alone can explain the Reagan phenomenon, neither is it fair to say that racism played no role.

  • Culture

    "Morning in America"

    1984 was a year of flag-waving patriotism in America. That summer, the Olympics were held on home soil for the first time in half a century, and American athletes at the Los Angeles Games dominated their international competitors. 

    Team U.S.A. won four times as many gold medals as second-place Romania, and the exploits of charismatic athletes like gymnast Mary Lou Retton, sprinter Carl Lewis, and high-diver Greg Louganis inspired a new nationalistic fervor among adoring fans. A boycott of the games by the Soviet Union, in retaliation for the Americans' own boycott of the 1980 Moscow Olympics, admittedly weakened the competition, though.

    At the same time, Ronald Reagan's reelection campaign rolled out a series of über-patriotic television ads that displayed idealized scenes of everyday American life while a soothing voice-over explained, "It's morning again in America, and under the leadership of President Reagan, our country is prouder and stronger and better."

    "Born in the U.S.A."

    The red, white, and blue summer of 1984 found its perfect soundtrack in Born in the U.S.A., a chart-topping new album from Bruce Springsteen and the E Street Band. Released a month before the Olympics convened in Los Angeles, the record soon became an unavoidable presence on American radio. Seven of the album's 12 tracks eventually became Top 10 singles. The title track, in particular, seemed to capture the nationalistic spirit of the moment in it spar-spangled imagery of its cover art and its anthemic chorus:

    Born in the U.S.A.!
    I was born in the U.S.A.!

    Many listeners heard in the music a rock and roll echo of Ronald Reagan's "Morning in America." The program director of a major New York radio station called Springsteen "a spokesman for patriotism...the Ronald Reagan of rock and roll."

    Perhaps the iconic pop-culture representation of that cohort was Alex P. Keaton, the character played by Michael J. Fox on the hit '80s sitcom Family Ties. Alex P. Keaton was the perfect embodiment of the Reagan generation. The teenage son of aging hippie parents, he idolized Milton Friedman, kept a portrait of Richard Nixon at his bedside, subscribed to the Wall Street Journal, and never went anywhere without his briefcase. 

    The huge generation gap between the ultra-capitalistic Alex and his parents provided Family Ties with comedy gold through seven primetime seasons on NBC. President Reagan himself once named the show as his favorite television program.

    "Greed Is Good"

    Moving from television to the big screen, we can find perhaps the most enduring cinematic invocation of the principles of Reaganism in Oliver Stone's Wall Street (1987), a movie that intended to satirize the free-market philosophies that dominated the 1980s but ended up, for many viewers, glorifying them instead. 

    The film's most magnetic character is Gordon Gekko (played by Michael Douglas), a monumentally successful if sometimes unscrupulous financier who makes hundreds of millions of dollars by buying up undervalued companies, dismembering them, and selling off the parts for profit. 

    While Stone—an outspoken liberal who loathed Reagan and Reaganism—wrote a script that meant to cast Gekko as the film's villain, Douglas' riveting performance, which won him an Oscar, stole the show, transforming the character into a flawed but compelling hero.

    In the film's most memorable scene, Gekko appears at a shareholder's meeting to justify his actions by invoking, unapologetically, the moral principle of self-interest:

    GEKKO: The new law of evolution in corporate America seems to be the survival of the unfittest. Well, in my book, you either do it right or you get eliminated. [...] I am not a destroyer of companies, I am a liberator of them! The point is, ladies and gentlemen, that greed—for lack of a better word—is good. Greed is right. Greed works. Greed clarifies, cuts through and captures the essence of the evolutionary spirit. Greed, in all its forms—greed for life, for money, for love, knowledge—has marked the upward surge of mankind. And greed—you mark my words—will not only save [this company], but that other malfunctioning corporation called the U.S.A.!

    The monologue, which Oliver Stone intended as satire of what he saw as ruling-class selfishness in the Reagan Era, instead frequently won raucous cheers and applause from cinema audiences. Much to Oliver Stone's dismay, Ronald Reagan had convinced most Americans that the principle of considered self-interest could, indeed, empower individuals, liberate companies, and restore the faded luster of the United States. 

    While Reagan himself never would have used Gordon Gekko's overheated rhetoric—or the loaded word "greed"—the fictional financier's spirited defense of free-market principles found a receptive audience in the Reagan Era. "Greed is good" became a sort of de facto motto for America in the 1980s.

    Just as Bruce Springsteen intended "Born in the U.S.A." to be an ironic critique of a fading American Dream, Oliver Stone intended Wall Street to be a satirical skewering of free-market excess. But the two artists' audiences—who, by and large, held much more positive views of Reagan and Reaganism than did either Springsteen or Stone—mostly missed the irony and satire. They transformed "Born in the U.S.A." into a nationalistic anthem by screaming along with Springsteen's proud chorus without hearing his tragic verses. They transformed Wall Street into a celebration of no-holds-barred capitalism by cheering for Stone's intended villain, Gordon Gekko. 

    So powerful was the Reagan Revolution that many Americans interpreted cultural attacks against it to be exaltations of it. Bruce Springsteen is one of modern America's greatest songwriters, and Oliver Stone one of its most talented filmmakers. As a cultural powerhouse, Ronald Reagan easily trumped them both.

  • Economy

    The Miseries of Stagflation

    When Ronald Reagan took over the leadership of the United States in 1981, he inherited an economy that was in terrible shape—the worst American economy, in fact, since the Great Depression of the 1930s. 

    Americans had enjoyed a prolonged period of widespread prosperity from the beginning of World War II through the end of the 1960s, but that long boom—built largely on the absolute supremacy of American industrial production, a temporary consequence of the destruction wrought on every other major industrial power (Germany, Britain, France, Italy, Russia, Japan) during World War II—had run out of steam by the early 1970s. 

    The economy began to sag under the weight of a multitude of new structural challenges.

    As Europe and Japan finished rebuilding from the Second World War, American manufacturers lost their effective global monopoly and soon found themselves struggling to compete with foreign goods, cutting sharply into corporate profits and stock-market values. At the same time, a huge new cohort of young people—the Baby Boom generation—entered the labor force en masse, requiring the economy to create several million new jobs each year just to keep pace with the rapidly growing workforce. Rising immigration rates added even more jobseekers to the strained labor market.

    Meanwhile, unsustainably high levels of government spending—the cost of the long Vietnam War and the expensive social programs of Lyndon Johnson's Great Society—began exerting greater and greater inflationary pressures on the economy, even as turmoil in the Middle East produced oil price shocks in 1973 and again in 1979 that brought record-high prices and shortages in supply of the world's most indispensable commodity.

    The entire package added up to a decade of economic misery as Americans endured a new and seemingly intractable problem dubbed "stagflation"—stagnation in growth and employment, combined with inflation in consumer prices. 

    According to the Keynesian economic doctrines that had dominated American thinking about the economy since the time of Franklin Roosevelt, stagflation wasn't even supposed to be possible. Most liberal economists before the 1970s believed that inflation would only occur in times of rapid economic growth. Sky-high inflation in a time of slow growth and rising unemployment was unprecedented, and incredibly painful for ordinary Americans whose standard of living began dropping precipitously. 

    The Nixon, Ford, and Carter Administrations all intervened clumsily in the economy to try to rectify the situation by applying heavy-handed measures such as Nixon's wage and price controls, but none came close to finding success. The deep economic malaise of the 1970s seemed to prove that the liberal economic order established in the 1930s had run out of fresh ideas. 

    The government no longer had any answers for the economic challenges facing the country. It was time for something different.

    An Alternative Vision

    Something different was exactly what Ronald Reagan promised to provide. 

    Reagan argued that half a century of misguided liberal policies had sapped the free market of much of its natural vitality by burdening it with too many government taxes, too much government spending, and too heavy government regulation. Reagan promised to restore prosperity by getting "the government off the backs of the American people" by cutting taxes, slashing spending, and deregulating the economy. 

    And so, the great bull market of the 1980s created more wealth, for more American families, than any previous boom in history.

    Not-Quite-So-Good Times Off Wall Street

    But the expansion of stockownership to nearly 30% of American households still left more than two-thirds of the country shut out of direct benefits from the great bull market of the Age of Reagan. 

    For the 70% of American households that still lacked any stake at all in the stock market, the Reagan economy wasn't quite so lustrous as it seemed to those enjoying the fruits of rising equity values. Real wages, which had increased steadily from 1945 to 1972 but then stalled through the stagflation era, remained flat through the 1980s as well. Unemployment declined from the atrocious highs of the late 1970s and early 1980s, but the high-paying blue-collar industrial jobs that had been the mainstay of the midcentury economy continued to disappear. It's important to note that this process began long before Reagan came into office, however.

    In short, the economic outlook for middle and working-class families who depended on wages for their incomes was somewhat better than it had been during the bleak 1970s, but still significantly worse than it had been during the 1950s and '60s.

    The uneven distribution of benefits from the Reagan boom reflected a growing trend toward what has been called the "financialization" of the American economy. As the financial sector displaced industrial manufacturing as the dominant economic force in American society, the gains from growth came to accrue almost entirely to those with major investments in the market, while individuals dependent solely upon wages and salaries found it harder and harder to get ahead. 

    During Ronald Reagan's presidency, the wealthiest one-fifth of American households—those who naturally owned the most stock—saw their incomes increase by 14%. Meanwhile, the poorest one-fifth—who presumably owned no stock—endured an income decline of 24%, while the incomes of the middle three-fifths of American families stayed more or less flat. 

    This uneven pattern represented a marked departure from the earlier economic expansions of the 1940s, '50s, and '60s, which had generated smaller returns for investors but raised income levels across all classes of society.

    Reaganomics in Principle and Practice

    Uneven distribution of wealth notwithstanding, the performance of the economy in general—and the stock market in particular—was strong enough under Reagan's watch to convince most Americans that the president's basic economic outlook was correct. It was that free-market outlook—a set of clear and powerful ideals—that probably ought to be considered Ronald Reagan's most enduring legacy to modern American society.

    Reagan wasn't called "The Great Communicator" for nothing. He was as adept as any politician in American history at distilling complex political issues down to simple ideological principles: 

    • Economic freedom and political freedom are inseparable.
    • Capitalism is democracy.
    • Heavy government intervention into the market, through taxes or regulation, limits economic growth and threatens individual freedom. Tax cuts and deregulation create economic growth and liberate individual initiative.

    These ideas—which a majority of the American people did not share for most of the 20th century—were the core tenets of Reagan's conservative economic worldview. Reagan was so successful at selling them that they've since become accepted as conventional wisdom, shaping the policies of all subsequent American governments, Republican and Democratic alike.

    Reagan's undeniable success as a prophet of faith in free markets may obscure, however, his administration's more ambiguous record when it came to actually implementing policy. Reagan had a clear and compelling set of core economic principles, but they didn't necessarily translate automatically into specific government programs or policies. Reaganism in practice only partially fulfilled the ideological vision of Reaganism in principle.

    Arthur Laffer and the Reagan Tax Cuts

    Tax cuts lay at the heart of the Reagan Revolution. Reagan believed that high taxes threatened individual freedom, suppressed overall economic growth, and encouraged wasteful government spending. 

    So, the tax reform bill passed in July 1981 was the single most important piece of legislation to emerge from Reagan's first term. That sweeping tax cut slashed federal income tax rates, for taxpayers in every income bracket, by 25% over a three-year period.

    Even while he pursued his substantial tax cut, Reagan continued to insist that he favored a balanced federal budget. He bridged the seeming discrepancy by seizing on the unorthodox theories of an economist named Arthur Laffer to insist that lowering tax rates would actually increase the government's overall tax revenue. 

    Laffer's premise: At a certain point, taxes could become so high that many people would decide it simply wasn't worth it to do any more work, since the government was taking such a large portion of the proceeds. (Reagan had witnessed this phenomenon at work back in his Hollywood days, observing that many big studio stars found it wasn't worth their while to make more than one film a year.) Lower tax rates would encourage those people to engage in economic activity, which—when multiplied by millions of people—would lead to growth throughout the national economy, generating higher tax revenues for the government, even as it charged a lower tax rate.

    According to a friendly journalist who sat in on the first meeting between Reagan and Laffer, the economist's theory "set off a symphony" in Reagan's ears. The future president—still just a candidate at the time of that 1980 meeting—believed "instantly that it was true and would never have a doubt thereafter."blank" rel="nofollow">Great Depression.

    Deregulation: Getting Government "Off the Backs of the People"

    While Reagan struggled to make his ideological vision real in the realms of taxes and spending, he found more success in the field of deregulation. Reagan's premise was that government regulation of private enterprise boiled down to meddlesome interference that burdened businesses with unnecessary "red tape" and suppressed the economy at large. 

    There was more than a grain of truth to Reagan's critique. A full century of federal regulatory action had, by the 1980s, indeed created many convoluted limitations on business freedoms. Reagan promised to "get the government off the backs of the people" by dismantling the federal regulatory apparatus. In some cases, Reagan pursued de facto deregulation by appointing anti-government activists to key government positions, where they could block agencies under their control from exercising their regulatory powers. In other cases, Reagan pursued changes to the law, lifting decades-old restrictions against certain types of economic activity. 

    The net result was a significant relaxation of the rules that bound the conduct of business in America. 

    The results of Reagan's deregulatory push were mixed. On the one hand, poorly designed deregulatory efforts could lead to disaster. To cite the most notorious example, the careless dismantling of the rules that had long governed the American savings and loan industry led to the collapse of hundreds of the savings institutions, ultimately requiring a taxpayer bailout costing nearly $150 billion.

    On the other hand, smart deregulation could lead to substantial benefits for consumers, investors, and society at large. The breakup of AT&T's regulated monopoly over America's telephone communications, for example, led to ferocious competition in the long-distance market, producing both lower rates for customers and significant new investments in the fiber-optic technologies that helped make possible the internet revolution of the 1990s. And financial deregulation allowed for the creation of more sophisticated financial instruments that made it much easier for entrepreneurs to attract capital and played a huge role in fueling the booming stock market. 

    If the price of deregulation was somewhat greater instability and occasional outbreaks of fraud, the benefits included accelerated growth and higher returns on investment. Most Americans thought that was a decent trade-off.

    The question of deregulation has re-emerged as a matter of major political controversy in recent years, in response to the 2008 collapse of the subprime mortgage industry and subsequent financial meltdown on Wall Street. Some observers blamed the 21st-century crisis on insufficient regulation of the financial industry. If this sentiment becomes widespread, leading the government to impose a robust new regulatory regime on Wall Street, then perhaps the Reagan Era will have truly come to its end. 

    Either way, the powerful arguments Reagan made in favor of deregulation dominated American thinking on the issue for at least three decades.

    Reaganomics in Context

    Politics is a messy business. When it came to deregulation, like taxation and spending, Ronald Reagan's clear and simple ideological principles could be translated only imperfectly into concrete administration policies. 

    Those policies, imperfect as they were, augmented a normal upswing in the business cycle to help restore confidence in the economy among the American people, generating a prolonged economic expansion that lasted, nearly unbroken, from 1982 through 1999. 

    And while that expansion had its flaws—uneven wealth distribution foremost among them—there's little question that it represented a dramatic improvement over the dark days of stagflation in the 1970s.

  • Ideology

    "Government Is the Problem"

    "Government is not the solution to our problem. Government is the problem." 

    That applause line, delivered halfway through Ronald Reagan's first inaugural address in 1980, embodied the distilled essence of Reagan's greatest lasting contribution to American life. For nearly 50 years before Reagan, most Americans assumed that their government could and should be expected to solve the country's pressing social and economic problems. 

    In the decades that have passed since Reagan, however, most Americans have come to believe that the free market, not the government, can best solve the nation's ills. That fundamental shift in Americans' basic worldview, more than anything else, defines the conservative Reagan Era—which continues to effect our country's policies to this day—and differentiates it from the liberal New Deal Era that preceded it.

    Ronald Reagan's Political Evolution

    Interestingly, Ronald Reagan himself didn't always espouse the firm anti-government beliefs that eventually came to define Reaganism. 

    As a young man, Reagan was actually a Roosevelt Democrat. The Reagan family only survived the Great Depression because Jack Reagan, young Ronnie's unemployed father, was able to find a job in one of the New Deal's work-relief programs. A few years later, Ronald Reagan found himself admiring Roosevelt's leadership of America's World War II effort to defeat Nazi Germany and Imperial Japan. Reagan joined the military but performed his wartime service in Hollywood, acting in American propaganda films.

    In the years that followed the Second World War, however, Reagan drifted away from Roosevelt's Democratic Party and its liberal policies. Or perhaps, as Reagan himself put it, the party drifted away from him. 

    In the late 1940s, Reagan served as the president of the Screen Actors Guild, Hollywood's actors' union, a role in which he said he discovered communist plots to infiltrate and undermine the union and the film industry. Frustrated by what he considered to be the Democrats' softness on communism, Reagan found himself drawn to the more militant anticommunist stance of the Republicans.

    At the same time, Reagan—who made a very good salary from 1954 to 1962 as a corporate "ambassador of goodwill" for the General Electric company—came to oppose the high tax rates that Roosevelt and subsequent Democrats had imposed upon the rich. For much of the middle part of the 20th century, the highest marginal tax rate imposed on the wealthiest Americans exceeded 90%. By contrast, the highest tax rates today hover around 35 to 40%.

    By the early 1960s, Reagan's political evolution was complete. The onetime Democrat had become an anti-Red, anti-tax, anti-government Republican.

    From Goldwater Republicans to Reagan Democrats

    In his personal journey from Roosevelt Democrat to Reagan Republican, Ronald Reagan cut a path that would later be followed by millions of ordinary Americans. 

    One of the most remarkable features of the Reagan Revolution of the 1980s was the "Reagan Democrat" phenomenon, which saw countless members of the old Democratic New Deal Coalition—blue-collar workers, urban Catholics, and Douthern Protestants foremost among them—abandon their traditional party allegiances to support Reagan's conservative vision. These lapsed Democrats had lost their faith in the central promise of the old New Deal Order, that government programs could improve their lives. Reagan's celebration of the virtues of the untrammeled free market gave them something new to believe in.

    In truth, the new ideology of Reaganism that swept the nation in the 1980s wasn't very new at all. There wasn't really much to distinguish Reagan's programs and politics from those of Barry Goldwater, the conservative Republican who'd been crushed in the 1964 presidential election by the liberal Democrat Lyndon Johnson. Why did voters who'd repudiated Goldwater in 1964 flock to Reagan 16 years later?

    In part, it was a matter of timing. In the decade and a half that passed between the fall of Goldwater and the rise of Reagan, American liberals led the country through a brutal series of setbacks: Vietnam. Race riots. Culture wars. Energy crisis. Economic stagnation. By 1980, many Americans were more than ready to try something different.

    But good timing alone can't explain the lasting power of the Reagan Revolution. Ronald Reagan was a politician with rare talents, and he used those talents not just to win elections, but to transform the prevailing currents of American politics.

    Starring Role: The Presidency

    As a politician, Reagan used the skills he'd developed in his earlier career as an actor to great effect. The persona Reagan cultivated as president—genial and patriotic, simple and optimistic—wasn't much different from many of the inspirational roles he'd played in his younger days. 

    Reagan certainly knew how to deliver a line. Throughout his long political career, he rarely uttered a word that didn't sound utterly sincere—even if, on more than one occasion, the words he spoke were demonstrably false. 

    In a sense, Reagan approached the presidency as if it were his greatest acting job, portraying himself as an extremely likeable commander-in-chief. At the end of his presidency, Reagan even confided to an interviewer that "there have been times in this office when I've wondered how you could do the job if you hadn't been an actor."blank">Reaganite speech. "The era of big government," he said, "is over."

  • Diplomacy

    Fighting the "Evil Empire"

    Ronald Reagan was one of 20th-century America's most enthusiastic Cold Warriors. 

    In his Hollywood days, he even served as a secret FBI informant, testifying against communists in the film industry while serving as head of the Screen Actors Guild and supporting the blacklist against subversives in Hollywood. In his political career, Reagan always toed a hard line against the Soviet Union, which—apparently influenced by Star Wars—he famously denounced as an "Evil Empire."

    Many of Reagan's greatest admirers today celebrate his strong anti-Soviet stance, arguing that Reagan's firmness in waging the Cold War led directly to the Soviet Union's collapse in 1991. Reagan's aggressive policy toward the Soviets, they say, ended up winning the Cold War for the United States. Reagan's detractors, by contrast, argue that he was recklessly and unnecessarily militant, and that only the good fortune of sane leadership in Moscow saved us all from nuclear apocalypse.

    Both groups are mostly wrong.

    In fact, Reagan's diplomatic legacy was more complicated than either his admirers or critics are likely to admit. Reagan did lead the United States to victory in the Cold War. But his greatest successes came during his second term, when he abandoned his earlier steadfastness to take a much more flexible stance in his relations with reformist Soviet leader Mikhail Gorbachev. 

    Reagan found victory when he found the courage to compromise. By acting as Gorbachev's partner as much as his enemy, Reagan helped the Soviet leader to dismantle the erstwhile "Evil Empire" peacefully, from within.

    Fighting the "Evil Empire"

    Such a happy outcome scarcely seemed possible in the early years of the Reagan presidency. 

    When Reagan took office, the Soviet Union was still ruled by Leonid Brezhnev, a ruthless Stalinist hardliner who was determined to hold together the Soviet Empire by force, if necessary. Reagan matched Brezhnev's indisposition to compromise. Elaborating on the memorable sloganeering of the "Evil Empire" speech, Reagan publicly declared the Soviet Union to be the unique "focus of evil in the modern world," an inherently menacing power that could never be trusted in international affairs.blank">dismantling of the Soviet Empire in Eastern Europe between 1989 and 1991. 

    Ronald Reagan's role in that great victory should never be denied, but it has often been misunderstood.