Reagan Notes

Prime Time with Ronald Reagan 

• The recession of the 1970s and inflation started a political realignment, which was the 3^rd since the Civil War. 

• The Republican Party established a conservative majority that would last for at least 3 decades. 

• The cornerstone of Reagan’s administration would include the fight against inflation and high taxes. 

The Conservative Tide Worldwide 

• The US was not the only country to experience a resurgence of political conservatism and nationalism. In Great Britain, Margaret Thatcher was elected as its first woman prime minister. She cut social programs, downsized the government, and privatized state-controlled industries. 

• In the Soviet Union, more people began to turn to religion after being disillusioned with the communist system. 

• Fundamentalist religious revivals questioned the liberal values that emerged from the 18^th-century Enlightenment. That era’s faith in science and tech dominated Western thought for almost 200 years. 

• The students who seized the American embassy were scared that Western ideas would destroy their Islamic faith. 

• Leadership of the Roman Catholic Church fell to Pope John Paul II, who refused to liberalize doctrine on issues like birth control, abortion, and the acceptance of female priests. 

Reagan “Revolution” 

• Liberals feared the “Reagan Revolution” because they thought that the revolution meant a harder line on cold war issues and an assault on social programs at home. 

• Reagan at times increased both spending and taxes. He gave ideas to his administration advisors about how to fix the economy and build American prestige. 

Hands-Off Leadership 

• At the time Reagan was elected president, he was the oldest at 69 years of age. 

• People liked his “hands-off” style after 4 years after Jimmy Carter, whose obsession with policy details led critics to say that he missed the forest for trees. 

• Reagan set the tone and direction of his administration, leaving the rest to his advisors. Sometimes, this left him in the dark, specifically when it came to major programs. 

• Reagan honored his public speaking skills as an actor, as a spokesperson for General Electric, and as a politician. He knew how to use communication to convince people and create a hopeful message. 

Hostages Freed 

• The day Reagan took office, Iran announced it would release the American hostages it kept for 444 days. Problems like this eased for Reagan. 

• At the time of the release, Leonid Brezhnev died in 1982. This reduced the influence of the Soviet Union. 

• 2 months after his inauguration, someone attempted to assassinate Reagan. He shot 2 bullets into Reagan’s chest, but Reagan survived. 

Supply-Side Economies 

• A cornerstone of Reagan’s administration was supply-side economics. Those who advocated for it argued that high taxes and government regulation stifled business. 

• Lower tax revenues would not increase federal budget deficits, according to Arthur Laffer. He said lower tax rates would stimulate the economy so much that tax revenues would grow. 

Tax Cuts 

• Congress cut most of the stuff that Reagan wanted. 

• The Economic Recovery Tax Act (ERTA) lowered income tax rates over 3 years by 25%, capital gains by 40%, and investment income rates by 28%. 

• Reagan also signed the Omnibus Budget Reconciliation Act, which saved about $35 billion in spending from government programs. 

• News outlets said that Reagan had ended 50 years of liberal government. 

• In 1981, members of PATCO (air traffic controllers union) struck against what they claimed were dangerous working conditions. They were highly paid public service employees. Reagan ended up firing them and declaring their strike illegal. 

Deregulating the Environment 

• Many conservatives viewed environmental policies as a strategy to regulate business. 

• The National Climate Program Office, created by Jimmy Carter, was viewed as an output in enemy territory. 

• For the EPA, Reagan told Anne Gorsuch to dismantle it. During that year, the EPA made no new enforcement cases against hazardous waste sites. 

• The Occupational Safety and Health Administration was scaled back, ending efforts to set new health and safety standards. 

• Workers were at risk in plants that produced polyvinyl chloride and similar chemicals, which are used to make consumer products. 

• Members of the Oil, Chemical, and Atomic Workers union documented chemical wastes dumped into the Mississippi River. 

• When OCAW called a strike to gain improved wages and working conditions, the company locked them out for 5 years. 

• Other conservative activists lobbied to allow private enterprise to develop more of the wilderness land and forests managed by the government. 

• The Sagebrush rebels led a campaign to open land for logging, cattle grazing, and real estate development. 

• Reagan appointed James Watt to head the Department of the Interior. His abrasive style forced him to resign in 1983. 

“Revenue Enhancements” 

• Despite Reagan’s tax victories, recession continued, and interest rates increased. Federal deficits sent the stock market into a tailspin. 

• Initially, Reagan refused to lower taxes. He eventually signed the Tax Equity and Fiscal Responsibility Act of 1982, which included $98 billion in tax increases. 

• 1 year later, Social Security reform led to further tax increases. 

• After the reversal of tax cuts, the economy began a strong upturn. Labor productivity increased, inflation reduced to 4.3%, unemployment fell, and the stock market rose sharply. 

• Crude prices fell from $30 per barrel to $10. 

Economic Inequality 

• The benefits of an improved economy were distributed unevenly across economic classes and regions. For the wealthiest Americans, the 1980s were the best of times. 

• The top 1%’s earnings per year were 25 times greater than the 40% of Americans at the bottom of the economic ladder. 

• Over 14.5 million new jobs were created. 3 million were concentrated in unskilled, minimum-wage areas such as hotels, fast-food restaurants, and retail stores. 

• High-paying jobs went to white males. 

Outsourcing 

• The 1980s also saw an acceleration of the trend towards outsourcing high wage industrial jobs and polluting industries to areas like Mexico and Asia. 

• The Reagan administration resisted proposals to keep jobs at home. 

• Even when the economy grew and inflation dropped below 2%, unemployment hovered above 5%, and poverty levels ranged from 11 to 15%. 

• Cuts in programs like food stamps, Medicaid, and school lunches increased the burden on the poor. 

The PC Revolution 

• Modern technologies and an increasingly global economy accounted for changes in Americans’ work and wealth distribution. 

• During the 1980s, sales for new electronic goods such as VCRs, cell phones, fax machines, compact disc players, and computers increased. 

• In the 1970s, Steve Jobs and Steve Wozniak founded Apple Computer and introduced an affordable and user-friendly home computer. 

• IBM entered the market with the PC and adopted a rival operating system, MS-DOS, created by Paul Allen and Bill Gates. 

Medical Technologies 

• The CAT scan generated 3D images of the body from flat X-ray pictures. Magnetic resonance imaging and proton emission tomography used different techniques to probe the human body. 

• Biogenetic engineering was another dynamic technology. 

• In 1977, Genentech Corporation used recombinant DNA research to produce a synthetic protein. 5 years later, a synthetic version of insulin was created. The healthcare industry would create new jobs. 

• These modern technologies not only changed lives, but they changed the landscape. 

• For example, high-tech companies did not depend on transportation networks to move raw materials. They could set up shops where the quality of life was high, and office rents were low. 

• The 1980s saw an explosion of edge cities along interstate highways where office and industrial parks housed tech companies, pharmaceutical concerns, professionals, and providers of financial services. 

Yuppies 

• Several characteristics distinguished workers in the new tech industries from those in older industrial sectors. They were younger and better educated. 

• Casual clothing replaced the gray flannel suits. Individualism and creativity marked the road to success. 

• The media began referring to the young as Yuppies. 

• Access to computers marked a generational divide. To Gen X, computers were second nature. 

• Computerization increased productivity, which reduced the demand for low-skill workers. 

• Demand for workers with education and technical skills rose, which increased the income gap between those at the top and bottom of the labor market. 

Women: High-wage vs. Low-Wage Jobs 

• Educated women were very important in an economy in which brains displaced brawn. They found more jobs in high-tech areas, and they increased their presence in law, medicine, business, and other professions. 

• Well-educated women gained more economic independence and a more substantial political voice. Single mothers and children were the most impoverished group. 

• Job displacement in the 1980s had a devastating impact on African American men and organized labor. 

• The decline in manufacturing industries struck hardest at the older industrial cities where blacks gained a foothold in the economy. Black men had difficulty finding jobs because of their lack of education in the tech sector. 

Union Decline 

• As manufacturing declined, membership in unions also declined. 

• Labor organized 27% of all workers in 1953, 20% in 1980, and 16% in 1990. 

• A 2-tier system approached where younger workers received lower pay and hence had less incentive to join unions. 

Deficits 

• Reagan described the USSR as an evil empire. His plan to defeat the USSR was to build up the American army. 

• Reagan pushed for enough force to fight 3.5 wars around the globe. That would require $1.6 trillion in the first 5 years. 

• The combination of mass defense spending and tax cuts created huge deficits. It drove up interest rates and the value of the American dollar. 

• From the end of WWI until the Reagan years, the US had become the world’s leading creditor nation. 

• Debt was only one of the liabilities of the massive military buildup. Huge cost overruns and wasteful spending became widespread. 

• What was more costly were the multibillion-dollar weapons systems that were unneeded or cost far more than planned. 

• The air force persuaded Congress to fund the B-2 bomber, at a cost of $2 billion each and designed to penetrate Soviet air defenses. Investigators later found out that those Soviet air defenses never existed. 

• Regan and his tough-talking defense planners spoke out about winning any nuclear exchange with the Soviet Union. 

• In Nuclear Winter, Jonathan Schell described a war where no one would win, in which debris would create conditions fatal to everyone. 

• Schell’s book revived the antinuclear movement across East Asia, Europe, and America. 

Lebanon 

• The Middle East continued to be a flashpoint for US-Soviet tensions. 

• In 1982, Israel invaded Lebanon to destroy missiles supplied by Syria. Israeli general Ariel Sharon used the invasion to strike a decisive blow against forces of the Palestine Liberation Organization that were camped in Lebanon. 

• Reagan decided to send American troops to Beirut to protect the Palestinians and keep the peace between Christian and Muslim factions. 

• The Americans were drawn into supporting Christian militias because they were unfamiliar with the terrain. 

• Muslim radicals responded by bombing the American Embassy and then a US marine barracks. Some 239 troops died. 

• Reagan was forced to withdraw the troops. 

Terrorist Attacks 

• Reagan searched with little success for a way to respond to terrorist attacks by Islamic fundamentalists. 

• In 1982, agents of Libya’s Muammar Al-Qadhafi exploded a bomb on an American airliner flying over Scotland. 3 years later, terrorists took hostages in Lebanon, hijacked American airline flights, killed an American hostage on a Mediterranean cruise ship, and bombed a West German night club. 

• The US didn’t know whom they should seek retribution. Intelligence agencies only had sketchy profiles of many terrorist factions and their political allies. 

Frustrations in Central America 

• At first Reagan found he could stand tall closer to home. 

• American troops crushed a band of pro-Cuban rebels and evacuated the students, who weren’t at risk. The action in Grenada was symbolic. 

• More challenging for Reagan was overthrowing the left-wing Sandinista government in Nicaragua. He justified arming the “Contras” as “freedom fighters.” 

• Most of the Contras had served in the brutal and corrupt dictatorship of Anastasio Somoza. 

Contras 

• Reagan had no desire to broker a settlement between the opposing forces. He allowed the CIA to help the Contras, in hopes of destabilizing the Sandinistas. 

• Congress adopted the Boland Amendment, which forbade the CA or any other agency to spend money to support the Contras. Reagan signed the measure, but he remained determined to overthrow the Sandinistas. 

• The booming economy kept Reagan’s ratings high. In the 1984 election, he won a second term, winning 59% of the popular vote against Walter Mondale. 

• Reagan and his advisors entered his second term determined to force solutions to some of his most stubborn foreign policy problems. 

Arms for Hostages Deal 

• The president made it clear that he wanted to free the hostages. 

• Robert McFarlane suggested selling some weapons to Iran because Iran might be grateful to free the hostages. However, it would violate the president’s vow never to pay ransom to terrorists. 

• Over the following year, 4 secret arms shipments went to Iran. One of the hostages was set free. Because of this, Reagan signed a secret intelligence finding that allowed him to pursue the mission without informing anyone. 

• By doing so, Reagan and his advisors were violating the amendment they had agreed to. 

Oliver North 

• The man most often pulling the strings was Oliver North, a junior officer under McFarland and Poindexter. 

• In January 1986, North hit on the idea that the profits made selling arms to Iran could be siphoned off to buy weapons for the Contras. The Iranian arms dealer thought it was a good idea. 

• Smuggling drugs into the US from Central America provided North with more funds. 

Cover Blown, Irangate, and From Cold War to Glasnost 

• The secret operation was exposed when reports of the Iranian arms deal surfaced in a Lebanese newspaper. 

• Reporters demanded to know how secret arms sales to a terrorist regime benefitted Reagan’s antiterrorist campaign. 

• The press nicknamed the scandal “Irangate”. 

• During Watergate, Nixon led the cover-up to save himself. During the Iran-Contra congressional hearings, Poindexter said that he kept Reagan in ignorance. It revealed a presidency out of control. 

• The hearings came to an end because few members of Congress wanted to impeach a popular president. 

• By the 1980s, the USSR was far weaker than American experts predicted. The economy stagnated, and the Communist Party was mired in corruption. 

Mikhail Gorbachev 

• Mikhail Gorbachev was young and saw the need for reform within the USSR. His fundamental restructuring set about improving relations with the US. 

• Gorbachev reduced military size and adopted a policy of openness about problems in the USSR. 

• Reagan seemed receptive to the idea of abolishing all nuclear weapons, but in the end, he and his advisors backed away. 

• 2 years later, a summit in Moscow eliminated an entire class of nuclear missiles with ranges of 600 to 3,400 miles. 

• As the election of 1988 approached, the president could claim credit for improved relations with the USSR. 

• Ronald Reagan made George H.W. Bush the Republican heir apparent. Michael Dukakis of Massachusetts was his opponent. 

• With the economy reasonably robust, Bush won by a comfortable margin. 

REFLECTION: The Reagan presidency was marked by a transformation of American politics, economics, and global influence. His conservative revolution remade the Republican Party and promoted supply-side economics, cutting taxes and regulations and eradicating social programs and the environment. As the economy expanded, inequality soared—wealthy Americans prospered while low-income workers and minorities lagged behind. Reagan's hands-off style allowed his advisors to assert control, and at times left him in ignorance, notably during controversies like Irangate. He proved toughness abroad, but U.S. interventions often backfired in the face of the United States, e.g., in Lebanon and against the Contras in Nicaragua. The 1980s technological explosion created new jobs and a "yuppie" culture but also replaced low-skilled labor. Women gained jobs in high-tech and professional fields, but poverty hit hardest on single mothers and Black men. Reagan's military spending drove the deficit up and financed unnecessary weapons systems, an administration obsessed with military power to the detriment of domestic equilibrium. In the end, détente with Gorbachev and the easing of Cold War tensions gave Reagan a political triumph—but at enormous cost. His legacy? More economically divided, militarily powerful, and irrevocably transformed country.