Changes in administrations are good for the news business and Regan stayed in the news from the day of his inauguration, when Iran released the remaining American hostages. In February 1981, he sent to Congress one of the most sweeping budget and tax policy proposal ever attempted. The centerpiece was an enormous tax cut, based on a theory called “supply-side economics,” which argued that tax cuts stimulate investment, putting more people to work and therefore actually raising tax returns in the long run.
Between 1981 and 1986, the top income tax rate was cut from 70 percent to 28 percent. Meanwhile, taxes on the bottom four-fifths of earners rose. Economic inequality, which had flatlined, began to climb.
Critics warned that Reagan revenue would fall far short of the administration’s claims and create huge budget deficits in the future. Reagan went on television and asked people to write their legislators and support the cuts. House Democrats began to bow to public pressure and added their own tax cuts. Reagan could claim victory on Capitol Hill, with the help of Democrats.
In March John Hinkley, Jr. attempted to assassinate Reagan and the president’s graceful reaction impressed everyone. He may have been a second-rate actor in his early Hollywood days, but he played the president with remarkable skill.
In August 13,000 employees of the Professional Air Traffic Controllers Organization went on strike. Ever since it was founded in 1968, air traffic controllers have demonstrated over safety and fatigue on a demanding job with life and death stakes. Federal workers are forbidden from striking, but PATCO had supported Reagan during the election and Reagan had endorsed the union.
Air Traffic Controllers asked for higher pay, improved workplace conditions and a 32-hour workweek. President Reagan said the strike was a “peril to national safety” and ordered workers to return to their jobs within 48 hours. When 11,345 failed to show up, Reagan fired them, banned them from federal service for life and fined the union enough to drive it into bankruptcy. Reagan’s firing was an emotional story. Many workers were jailed and thousands fell into poverty.
Reagan busted PATCO at an opportune time for opponents of the labor movement. U.S. manufacturing output peaked in 1979 and under Reagan began its long slide, dragging the incomes of the middle class with it. Skilled workers weren’t needed in the way they once were. Wall Street was back in power for the first time since 1929. (It still was in 2017!) Across-the-board deregulation, tentatively nurtured under Carter, was another core belief of the Reagan revolution. The third was another Carter initiative, a large military buildup.
Reagan’s most lasting legacy remains demonizing government. Those of us who grew up in the Great Depression and World War II view government as the place where ordinary people voting together have power over the greedy few who want everything for themselves. Through our government we have roads, airports, national parks, an accurate census, clean air and water, and we should have health care and a decent education. So why do most people hate government?
Using the New York Times, economist David George examined the words used to describe government over forty years. In the mid-twentieth century, words such as efficient, competent, and creative were far more likely to proceed government or public sector activities than words like inefficient and wasteful. Between 1980, when Reagan was elected, and 2009, however, the balance shifted—from seven times more positive descriptions to roughly fifty-fifty. At the same time, the number of references to government also fell sharply. As have the number of federal workers. When Eisenhower was in office in the glorious Fifties (the era conservatives apparently look back on with longing nostalgia), there was one federal worker for every 78 Americans. By 1989, the ratio was one for every 110.
Demonizing government was not a groundswell from below. Ordinary people may hate taxes and the insolence of petty bureaucrats, but most like the benefits that government give them. It was conservative think tanks, professors and corporate ownership of the media that changed the language and in doing so changed American’s way of seeing things.