The Working Class Republican

by Henry Olsen

  From coast to coast, on the job and in the classrooms and laboratories, at new construction sites and in churches and community groups, neighbors are helping neighbors. And they’ve already begun the building, the research, the work, and the giving that will make our country great again.

  I believe this, because I believe in them.

  In the final analysis, Reagan’s political success came down to this. Americans loved him because they knew he loved them.

  Reagan’s reelection was nearly assured by the time of the Republican Convention in August. Mondale had been seriously challenged by an outsider, Colorado senator Gary Hart, and this battle hurt him deeply. Mondale trailed Reagan by 17 percent in the Gallup poll taken before the Democratic Convention, and even with the customary postconvention bounce was able to cut his deficit only to 12 percent.60 The Summer Olympics then took place in Los Angeles, and for two weeks the nation went through a display of patriotic pride I hadn’t seen in my lifetime. Night after night Americans won gold, and the chant “USA, USA” spontaneously roared through stadiums and homes alike. Reagan had been America’s cheerleader for years, so it was no surprise when this era of national good feeling worked to his benefit. He was ahead by 19 percent as the Olympics closed and the Republican Convention started.61 He wasn’t looking at just a reelection; he was looking at a historic landslide.

  Reagan’s acceptance speech did not need to break new ground, and it didn’t.62 His speech recited his long-standing theme of a virtuous people fighting against a party that wanted to control their lives through overregulation and overtaxation, and he drew on the renewed pride in America to whip the crowd into a patriotic frenzy. The crowd spontaneously burst into the “USA, USA” chant that was sweeping the nation; Reagan clearly enjoyed every minute of this lovefest.

  Reagan had always focused his attention on the forgotten American, that New Deal supporter who had grown disenchanted as the Democratic Party seemed to become more like Henry Wallace’s party and less like Harry Truman’s. His acceptance speech was again devoted to wooing that person, with a clear depiction of the current Democratic leadership as out of step with traditional Democratic values. He noted that some Democrats had likened the Grenada invasion to the Soviet invasion of Afghanistan or “the crushing of human rights in Poland.” “Could you imagine Harry Truman, John Kennedy, Hubert Humphrey, or Scoop Jackson making such a shocking comparison?” He went on to close his speech by again noting he had cast his first ballot for FDR, asking the crowd, “Did I leave the Democratic Party, or did the leadership of that party leave not just me but millions of patriotic Democrats who believed in the principles and philosophy of that platform?” Since the Democratic Party leadership had left behind their voters, Reagan said, “it’s no surprise that so many responsible Democrats feel our platform is closer to their views, and we welcome them to our side.”

  There was a glaring omission in Reagan’s argument: the word “Republican.” He mentioned that word only once, when he referred to an anticrime bill that had “passed the Republican Senate” but was being held up by the Democratic House. As in his first acceptance speech, Reagan mentioned only one former Republican president by name, Abraham Lincoln. Reagan was clearly a partisan Republican by this point in his political career, but he would take no chances as he tried to woo the voter for whom “Republican” still meant “Hoover” or “uncaring boss.”

  Reagan also returned to the theme he had mentioned so long ago in his TV speech for Goldwater, the argument that there is no such thing as left or right but only up or down. He elaborated on this theme, explaining what he meant by “down” and “up”:

  Isn’t our choice really not one of left or right, but of up or down? Down through the welfare state to statism, to more and more government largesse accompanied by more government authority, less individual liberty, and, ultimately, totalitarianism, always advanced as for our own good. The alternative is the dream conceived by our Founding Fathers, up to the ultimate in individual freedom consistent with an orderly society.

  Libertarians and Goldwaterites could jump on his inclusion of “the welfare state” in the category of “down” to argue that in his heart Reagan was as far right as they. But that just doesn’t hold water.

  Reagan’s “down” category has three stages; “welfare state,” “statism,” and “totalitarianism.” One of his early speeches that attacked collectivism also broke down the enemy into three stages; “liberalism,” “socialism,” and “communism.” Just as in 1984 Reagan said the “welfare state” can lead to “statism” and “totalitarianism,” in 1962 Reagan said “liberalism” could lead to “socialism” and then “communism.”63 The pure symmetry between the two arguments strongly suggests that Reagan’s 1984 statement was simply a truncated version of the argument he made so many years ago, so it is to that speech we turn to help us understand what Reagan meant.

  That speech to the Conservative League of Minneapolis, “Losing Freedom by Installments,” made a simple argument. Liberalism was a cousin to socialism and communism because each ideology saw solutions to society’s problems through government. But this did not mean that Reagan thought government should do little or nothing. In the same speech he endorsed the idea of public housing. He also specifically endorsed federal government aid for medical insurance for needy seniors, saying, “As one conservative, let me say any person in the United States who requires medical attention and cannot provide it for himself should have it provided for him.” He made clear he opposed only a “compulsory government insurance program regardless of need.”

  This distinction between government help for the needy, which was good, and government direction of society, which was bad, is crucial to understanding Reagan’s thought. This is why he could support the basic innovation FDR introduced, the legitimization of direct government assistance to help the truly needy advance in American life, while opposing the interpretation of that innovation that placed government at the center of everything and gave aid to people who neither needed it nor deserved it. Thus he would famously write in his diary that

  the press is dying to paint me as now trying to undo the New Deal. I remind them I voted for F.D.R. 4 times. I’m trying to undo the “Great Society.” It was L.B.J.’s war on poverty that led to our present mess.64

  The “welfare state” for Reagan was always the Great Society and its attempt to transform American society in accordance with the ideas of Henry Wallace. It never included legitimate help for deserving people, the principle that underlay many of the major programs the federal and state governments funded.

  The rest of the campaign was a cakewalk. Reagan’s overpreparation for the first debate caused him to stumble, raising fears he was showing signs of age, but he bounced right back in the next debate with his characteristic poise and humor.65 I watched eagerly with millions of other worried Reaganites as the moderator asked Reagan if he thought he could bear up under the strain of office at his age. After saying he could, Reagan quipped, “I am not going to exploit for political purposes my opponent’s youth and inexperience.”66 Millions of us, including Mondale, laughed out loud. We all knew that the campaign had just ended.67

  Reagan won his reelection in a massive landslide. Reagan beat Mondale by over 18 percent, and Mondale received a lower share of the popular vote than Carter had four years before. The Electoral College margin was even greater, 525–13. Mondale had carried only the heavily Democratic Washington, DC, and his home state of Minnesota, the latter by less than four thousand votes out of 2.1 million cast. To this day only one person has bested Reagan’s Electoral College vote margin: Franklin Roosevelt in his first reelection in 1936.

  Reagan again won large shares of the working-class Democratic vote he had long courted. His share of the vote skyrocketed throughout the South, increasing over his 1980 showing by a high of 19.2 percent in Carter’s home state of Georgia to a low of 8.3 percent in more metropolitan Texas. Throughout the rural South, Reagan’s vote leaped up by 10 to 20 pe
rcent. Reagan’s blend of a muscular foreign policy and a compassionate yet restrained government was just what these voters wanted.

  He also bested his total among working-class whites in the Midwest, although by smaller margins. Auto-dependent Michigan, probably benefiting from the respite the industry received from Japan’s export restraints, was Reagan’s best state in the region. He received 59.2 percent of the vote there, 10.2 percent higher than in 1980 and a larger share than in traditionally more Republican Ohio. Reagan also did over 7 percent better in Ohio than in 1980, and between 2 and 6 percent better in the other states in the region.

  Reagan’s vote share increased almost everywhere, but it jumped the most in suburban areas where families had benefited a lot from the dramatic decline in inflation. His vote share jumped by nine and thirteen points in predominantly suburban counties in Ohio and by six to nine points in Pennsylvania’s suburbs. It rose by a more modest three to four points in working-class northeastern Pennsylvania and by one to eight points in most working-class Ohio counties. In both states, the heavily unionized steel regions barely budged—their industry remained in decline. More prosperous Michigan saw the greatest increases, with increases between 7 and 15 percent in the Detroit region and 7 to 9 percent in more working-class counties.

  Democratic partisans saw what Reagan had done and despaired. The core of the New Deal coalition had been shattered, drawn over to a man most of them still considered coldhearted and bellicose. But their voters had disagreed: Reagan’s view of FDR’s legacy was just fine by them.

  Had the seventy-three-year-old Reagan died suddenly right then, his presidency would have been considered a success. Instead, he went on to conquer new heights in his second term. He ushered in a comprehensive tax reform that eliminated many tax shelters, gave families tax relief, and lowered the top income tax rate to a mere 28 percent, the lowest it had been since before the Great Depression. He continued to spar with Japan over trade, slapping penalties and quotas on Japanese imports as he strove to make free trade fair trade. He even went on to survive the Iran-Contra scandal to forge an unprecedented and wholly unexpected partnership with a new Soviet leader, the young Mikhail Gorbachev.

  That effort scared many of his strongest supporters and made many wonder if the Gipper truly had moved left in his dotage. But the old man won again, as the trust he had forged with Gorbachev gave the Communist the political room to begin his programs of glasnost and perestroika. Just as Reagan had predicted in the Westminster speech, once the bayonet was removed, the subject peoples of the Soviet empire wanted nothing to do with communism.

  Reagan’s push for tax reform started with his second inaugural address. Saying that “freedom and incentives unleash the drive and entrepreneurial genius that are the core of human progress,”68 he called for tax simplification to make the tax code “more fair and bring the rates down for all who work and earn.” He followed up that brief call with a more detailed call in his State of the Union address.69 Speaking for “the American farmer, the entrepreneur, and every worker in industries fighting to modernize and compete,” he asked Congress to reduce tax rates by removing tax preferences. He proposed reducing the top marginal tax rate, which had been 70 percent when he took office, to “no more than 35 percent, and possibly lower.” He also urged that “individuals living at or near the poverty line be totally exempt from Federal income tax.” “To restore fairness to families, we will also propose increasing significantly the personal exemption.”

  These simple principles might seem to be supply-side inspired, with their discussion of the top rate and the mention of entrepreneurs. But they are in fact simply the same ideas Reagan promoted in the 1950s and 1960s, when the supply-side godfather Arthur Laffer had been a college undergraduate. Reagan had attacked any progressive taxation as immoral, arguing instead for what he called proportionate taxation and what we today call a flat tax.70 He had long believed the best way to fight poverty was to stop taxing the poor and the working poor who needed that money to raise their families.71 He had always said that the floor Americans were building to ensure all people could live with comfort and dignity should also not create a ceiling above which people with energy and inspiration could not rise.72 The words and details may have been new, but the ideas themselves, like their author, were quite old indeed.

  It took nearly two years for Congress to hash out a bipartisan tax reform bill, but when it did the results looked very similar to Reagan’s principles. The number of tax brackets was reduced from fifteen to effectively two, lowering the top rate from 50 percent to 28 percent.73 The standard deduction and personal exemption amounts were raised, removing over six million poor families from the income tax rolls and giving substantial tax relief to most middle-class households. Many tax shelters, especially with regard to real estate ownership and speculation, were eliminated, as were deductions for state and local sales taxes and consumer interest payments on credit cards and nonmortgage loans.

  Interestingly, the capital gains tax was raised from 20 to 28 percent. The predominantly wealthy people who earn a large share of their income from selling stocks and collecting dividends saw a very significant tax hike thanks to Reagan’s bill.

  Reagan’s remarks on signing his landmark achievement reflect the different goals he had. He praised the reform for encouraging “risk-taking, innovation, and that old American spirit of enterprise” and removing the “steeply progressive nature” of the old code, which punished “that special effort and extra hard work that has always been the driving force of our economy.”74 He gave equal weight to the bill’s increasing the “freedom of expression of the entrepreneur” as to “fairness for families” and to the restoration of “America’s promise of hope and opportunity, that with hard work even the poorest among us can gain the security and happiness that is the due of all Americans.” He praised the facts that “millions of working poor will be dropped from the tax rolls altogether, and families will get a long-overdue break with lower rates and an almost doubled personal exemption” as well as the fact that “flatter rates will mean more reward for that extra effort.”

  For Reagan, tax reform was not primarily or even significantly an exercise in lowering the top rate to empower entrepreneurs and job creators. Instead, it was the culmination of a long dream to help people of all backgrounds and from all walks of life be economically free to live dignified and secure lives of their own choosing.

  Other second-term initiatives were less successful, but were no less equally intended to prune government so that it helped the people who needed it but only the people who needed it. Reagan laid out those plans in a televised address to the nation in early 1985. Arguing that “Government began to take over America . . . in the name of the Great Society,” he urged Congress to adopt a series of spending cuts that would “bring spending down into line with tax revenues.”75 These cuts would not touch “the safety net for needy Americans.” Instead, they would target the programs that went “not to individuals needing help, but to thousands and thousands of bureaucrats, researchers, planners, managers, and professional advocates who earn their living from the great growth industry of government.” He advocated eliminating Amtrak passenger railroad subsidies, loans to business through the Export-Import Bank and the Small Business Administration, and farm subsidies.76

  He expanded on this in his 1986 State of the Union speech.77 Budget balancing, he said, should not be accomplished “by taking from those in need. As families take care of their own, government should provide shelter and nourishment for those who cannot provide for themselves.” But that did not mean that welfare should not be reformed to help people to “escape the spider’s web of dependency.” Quoting Franklin Roosevelt that “welfare is a narcotic, a subtle destroyer of the human spirit,” Reagan proposed reforming welfare to increase the number of people who became independent of it. But he also went further than that.

  Reagan had long believed that people should not be denied needed medical care because of a
lack of funds, and that government had a role to play to help ensure people got the care they needed. Even with the massive budget deficits facing the country, he believed it was time to start to fulfill this dream. He announced that he was directing his secretary of Health and Human Services to work to see “how the private sector and government can work together to address the problems of affordable insurance for those whose life savings would otherwise be threatened when catastrophic illness strikes.”

  Most conservatives supported or at least tolerated these initiatives. But one man could hold his tongue no longer. David Stockman finally left the Reagan administration in August 1985 and started work on a book that would prove to be his parting shot against the president he had served.

  The Triumph of Politics, published in the summer of 1986, was Stockman’s effort at biting the hand that fed him. It followed the path of the time-honored Washington tell-all insider book explaining why all the people you served with in government were fools and incompetents. But it offered two things that were different that make it essential reading even today for any libertarian or libertarian-conservative. First, Stockman proclaimed that he was the biggest fool and incompetent of them all. Second, he was foolish precisely because he tried to push an ideological anti–New Deal revolution that nobody else really wanted.