11.3 The New Right and Reaganomics

The New Right that carried Ronald Reagan to the White House in 1980 was not only a tax cut. It fused evangelical organizing, a California property-tax revolt, Sunbelt growth, and a long argument against New Deal and Great Society liberalism. Reaganomics then tried to shrink the domestic federal role through supply-side tax cuts, deregulation, and a confrontation with organized labor, even as defense spending and budget deficits grew. Items in this cluster ask you to name the coalition, the statutes, and the gap between small-government claims and fiscal results. They are party-system and federal-role questions as much as personality questions about Reagan.

Moral Majority, Gender Politics, and the Religious Right

Jerry Falwell, a Baptist pastor and televangelist, founded the Moral Majority in 1979 to register conservative Christians, oppose legal abortion after Roe v. Wade (1973), fight gay-rights ordinances, restore school prayer, and support a hard anti-Soviet line. The organization claimed to speak for a silent moral majority in vocabulary Nixon had already used politically. Phyllis Schlafly's STOP ERA campaign had already shown that conservative women could block the Equal Rights Amendment short of ratification. Together with Catholic anti-abortion networks, the evangelical surge turned cultural issues into Republican organizational muscle rather than a cross-party "moral" constituency.

This was a party story as much as a cultural one. Many white evangelicals in the South had been Democrats; civil-rights realignment, Supreme Court school-prayer decisions, IRS pressure on segregated Christian academies, and Roe pushed them toward the GOP. The New Right also included neoconservatives—often former liberals who rejected 1960s cultural radicalism and détente—and business conservatives who wanted lower taxes and weaker unions. Do not reduce 1980 to "evangelicals only"; do not omit them. A matching item that lists Falwell should land on Moral Majority, not PATCO or CREEP.

Proposition 13 and the Tax Revolt

California's Proposition 13 (June 1978), led by Howard Jarvis and Paul Gann, slashed and capped local property taxes and required supermajority votes for many new local tax increases. It was a state ballot initiative, not a federal statute, but it advertised a national tax revolt: homeowners squeezed by inflation-driven assessments, and a theory that starving government of revenue would force spending cuts. Similar measures and candidate rhetoric spread. When Reagan ran in 1980, he did not need to invent anti-tax politics; he needed to nationalize a revolt already visible in California. A trap is to call Proposition 13 a federal law that capped the income-tax top rate; the federal rate cut is ERTA, discussed below.

The 1980 Election Coalition

Reagan, a former Screen Actors Guild president, General Electric spokesman, and two-term California governor, had been a conservative-movement hero since his 1964 speech for Barry Goldwater. In 1980 he defeated Carter and independent John Anderson. The coalition combined:

• Economic conservatives, corporate PACs, and supply-side intellectuals
• The Religious Right and social-issue voters organized by groups such as the Moral Majority
• Reagan Democrats—often white ethnic and union-household voters in industrial states who disliked inflation, crime, and cultural liberalism more than they loved Republican economic theory
• Sunbelt and suburban voters already moving right at the presidential level
• Hawks who blamed Carter for Iran, Afghanistan, and a supposed decline of American power

George H. W. Bush, who had mocked supply-side as "voodoo economics" in the primaries, joined the ticket—useful evidence that the coalition contained skeptics who still wanted to win. Republicans also captured the Senate. The campaign's test question—"Are you better off than you were four years ago?"—tied stagflation and hostages to a mandate for a different federal philosophy. Reagan's inaugural line that "government is not the solution to our problem; government is the problem" is the liberalism-versus-conservatism contrast in one sentence.

Supply-Side Theory, Kemp-Roth, and ERTA 1981

Supply-side economics argued that high marginal tax rates discouraged work, saving, and investment; cutting those rates would expand the tax base and might even raise revenue (the Laffer curve as popularized on talk shows and cocktail napkins). Representative Jack Kemp and Senator William Roth had pushed a large across-the-board cut (the Kemp-Roth bill). Reagan's first major legislative win was the Economic Recovery Tax Act (ERTA) of 1981: roughly a 25 percent cut in individual income-tax rates over three years, a drop in the top statutory rate from 70 percent to 50 percent, accelerated depreciation for business investment, and—phased in—indexing of brackets so that inflation would not silently push people into higher rates (bracket creep).

A deep recession in 1981–82, inherited in large part from Volcker's anti-inflation campaign, sent unemployment into double digits before recovery and disinflation in the mid-1980s. Budget director David Stockman later described overly optimistic forecasts as a "magic asterisk." The Tax Reform Act of 1986 later lowered the top rate further (to 28 percent in its two-bracket design) while closing many loopholes—a second act of 1980s tax politics, not the 1981 ERTA itself. Keep the statutes straight: 1981 is the big rate cut from 70 to 50; 1986 is the loophole-closing, lower-rate rewrite. The bar chart in this section tracks that top-rate path as a visual for federal tax politics, not as a claim that take-home pay for every household moved in lockstep.

Deregulation, PATCO, and Labor

Reagan's team relaxed enforcement of many environmental, consumer, and workplace rules and continued a deregulatory current that had already produced the Airline Deregulation Act of 1978 under Carter. Savings-and-loan deregulation in this era set up a later cleanup. The labor confrontation that textbooks isolate is the Professional Air Traffic Controllers Organization (PATCO) strike of August 1981. Controllers, legally barred from striking as federal employees, walked out. Reagan gave them 48 hours to return and then fired more than 11,000 who did not. The Federal Aviation Administration rebuilt staffing with supervisors, military controllers, and new hires. The message to private-sector unions was that the White House would not treat strikes as a veto over policy. PATCO had endorsed Reagan in 1980; the firing still became the symbol of the administration's labor stance. If an item asks how Reagan treated federal unions, start with PATCO, not with a fictional nationalization of the airlines.

Reagan also appointed Sandra Day O'Connor in 1981 as the first woman on the Supreme Court—a coalition-management move that pleased some moderates without converting the New Right's legal project into a liberal Court. The appointment is a federal-institutions detail, not a contradiction of conservative judicial politics as a whole.

Shrink the Government? Deficits and the Liberal-Conservative Contrast

Reagan promised to cut domestic spending, devolve functions, and restore federalism. Some means-tested programs were trimmed; rhetoric about welfare fraud framed liberalism as failed. Defense spending rose as the Cold War heated rhetorically (the next section). Social Security was repaired, not abolished, in the 1983 bipartisan amendments following the Greenspan Commission. General revenue sharing, Nixon's New Federalism tool, was ended during the Reagan years. The federal budget deficit widened sharply in the early 1980s as tax cuts, recession, and military outlays combined; the publicly held debt accumulated rapidly across the decade. Supply-siders blamed recession and congressional spending; critics called the program tax cuts without a matching domestic shrinkage.

That gap is the point of many compare-and-contrast questions. Conservatism in this period meant markets, traditional social norms, anti-communism, and suspicion of national welfare bureaucracies. Liberalism, in the New Deal/Great Society frame still used on survey exams, meant using Washington to manage economic risk, expand rights, and fund national programs. Reagan won the electoral argument in 1980 and 1984; he did not produce a small federal budget. When an option says deficits vanished because the Laffer curve "worked" as a literal forecast, treat it as a claim the ledgers did not bear.