We Should Have Seen It Coming

We Should Have Seen It Coming

CHAPTER 1

★★★

The Rise of the Reagan Revolution

Sunday, July 15, 1979, was a typically muggy summer day in Washington. The oppressive humidity merely added to the feeling that a hostile world was pressing in on the beleaguered capital, and the beleaguered Democratic president, Jimmy Carter.

Newspaper headlines of the weekend spoke of gas shortages, soaring inflation, global chaos spreading across the land. The Wall Street Journal’s front page summarized the feeling on the Friday heading into that weekend with a long, gloomy story headlined “Public Turns Moody, Cuts Buying in Wake of Inflation, Gas Woes.”

There was little doubt who was on the spot because of all this bleak news: Carter. Halfway through his third year as president, his job approval in the Gallup poll had dropped from 75 percent early in his first year to 28 percent—the lowest of his presidency, and just four points above the approval rating Richard Nixon scored before he resigned amid the Watergate scandal.

The president himself was, if anything, adding to that sense of doom and gloom. Carter was an unusual political figure in almost every way—a kind of natural outsider who made the dramatic leap from peanut farmer to president in a relatively short time, and without making a lot of close friends along the way. He was a devout man who taught Sunday school, and whose moralistic style some saw as a sign of his inherent decency. Others viewed it as the mark of a sanctimonious attitude. Over the previous week and a half, Carter had done something nobody in Washington had ever seen before: He canceled a widely anticipated televised speech, fled the capital, and retreated to the presidential Camp David getaway to mull over the state of affairs.

He asked dozens of prominent Americans to join him there to ponder how the country should proceed. Members of Congress were summoned, as were governors and religious and labor leaders. Walter Cronkite was there, as was Bill Clinton, the young governor of Arkansas. It went on for ten days. Carter soaked in advice and opinions and took notes with a blue felt-tip pen. The original, ostensible point of the retreat was to figure out how to deal with an international energy crisis. But soon the quest became something much bigger: how to get the country out of its funk.

When the visitors had left, Carter sat down with his vice president, Walter Mondale, and a few staff members and speechwriters and began hashing out a different kind of nationally televised address to the nation.

Finally, on the night of July 15, Carter sat at his desk in the White House and delivered one of the most remarkable speeches ever presented by an American president. It became known, universally, as the “Malaise Speech.” In fact, Carter never uttered the word “malaise,” but that term aptly captured how both the country and its president seemed to view their predicament in mid-1979.

“I want to talk to you right now about a fundamental threat to American democracy,” Carter told the nation. “The threat is nearly invisible in ordinary ways. It is a crisis of confidence. It is a crisis that strikes at the very heart and spirit of our national will.”

This loss of confidence, he declared, “is threatening to destroy the social and the political fabric of America.” Then, in a striking reversal from normal presidential rhetoric, Carter seemed to point the finger of blame not at his domestic opponents, or at bad luck, or at himself. Instead he pointed the finger of blame directly at American citizens—his countrymen—who were listening:

“In a nation that was proud of hard work, strong families, close-knit communities, and our faith in God, too many of us now tend to worship self-indulgence and consumption. Human identity is no longer defined by what one does, but by what one owns.” The nation, he said, had never fully recovered from the assassinations of Martin Luther King Jr. and John and Robert Kennedy, or from the Vietnam War, or from Watergate, much less from the more recent shocks of hyperinflation and fuel shortages. “We are at a turning point in our history,” he told the nation.

Nobody had ever heard a presidential address like it. In the end, Carter seemed to confirm for citizens that they were in a year that was shaking their world—and their confidence—to the core.

More than that, the troubled summer of 1979 marked the end of a long period of liberal dominance, as embodied by the modern Democratic Party. The story of public life in America is, in many ways, the story of the ebb and flow of great ideological movements. At the end of the nineteenth century, the Second Industrial Revolution spawned the era of progressivism, personified by Teddy Roosevelt. That phase was brought to an end by Herbert Hoover and the Great Depression. The Depression, followed by World War II, gave rise, in turn, to Franklin Roosevelt’s New Deal liberalism and the era of big government.

For half a century, Roosevelt’s brand of liberalism was the dominant force in American politics. Liberals believe in the power of government to do good; starting with Roosevelt, they had put that belief into action. Just one small example: Virtually every town in America still carries monuments to the New Deal’s belief in public works—parks, libraries, bandstands, museums. Go online to a site called livingnewdeal.org and you can see a map of America covered coast to coast with measles-like dots. Each dot represents a Roosevelt-era project still in use today.

Liberals were responsible for the two most important and beloved government programs in history, Social Security and Medicare. Under President Lyndon Johnson and his Great Society programs, liberals expanded the social safety net. They desegregated the military and championed the greatest civil rights advances since the end of slavery. They enacted minimum-wage laws, made workplaces safer, and allowed unions to grow in power.

But by the late 1970s, liberalism had become creaky. Inflation was running wild, and unemployment was soaring. High tax rates appeared to be sapping the American economy of its vitality. The American auto industry, the very symbol of American manufacturing prowess, had lost its international edge, saddled as it was by high labor costs and even higher bills for generous retirement benefits promised to two generations of workers.

The welfare programs that had saved so many Americans became the object of caricature on the right. Big cities, the epicenter of liberal politics, were a mess. Over-regulation had hobbled the American oil industry and left the nation dependent on foreign energy. As if to prove liberalism’s identity crisis, Democrats, the party that believed in the virtues of government regulation, had, in Carter, a president who tried to pivot to a new strategy of deregulation.

Abroad, to show that they weren’t soft on Communism, liberals bent over backward to show they were tough, an impulse that led Lyndon Johnson to lock the country into a bloody conflict in Vietnam. The failure there appeared to diminish international fear of American might. The gas lines that snaked around American towns and cities by the late 1970s seemed a metaphor: To many Americans, it felt as though liberalism had, like the cars in everyone’s driveways, run out of gas.

Certainly, the events that followed Carter’s speech drove home that impression of an America adrift in a world it no longer controlled. Three days later, the Sandinistas swept into power in Nicaragua. That fall, Islamic radicals launched a siege at Mecca, in Saudi Arabia. On November 4, students seized the American embassy in Tehran. And on December 24, the Soviet army invaded Afghanistan, setting off a chain of events that ultimately would lead to the demise of the entire Soviet system.

At home, meanwhile, the economy headed into dangerous, uncharted waters that signaled, among other things, the decline of the post–World War II American dominance of global economic affairs. Inflation ran at an astonishing 10.4 percent for the year. Home mortgage rates soared well above 10 percent. Global oil producers had discovered that they truly had the United States over a barrel, and the result was soaring gasoline prices and shortages.

The year’s events marked the transition of the American economy from one driven by cheap oil and heavy manufacturing into one that would come to be dominated by technology and services. U.S. manufacturing employment hit its historic peak in 1979, then began a long decline. Union membership did the same. Real hourly wages of Americans hit a peak and began a slide that continued for three decades.

In sum, powerful forces of change that had been bubbling just below the surface for years, gathering heat and power, burst to the surface in the latter half of 1979. It’s hard to overstate now just how disconcerting all this was. America was supposed to control the world; now it was being pushed around. America was supposed to make the best cars, but the cars Detroit was producing were ugly and unreliable and were now being surpassed in quality by, of all things, Japanese cars. The indignities came in forms large and small. At a little restaurant in my hometown of Hays, Kansas, inflation was pushing up costs so fast that the owner decided to order menus with no prices printed on them; instead he would simply write the prices in erasable ink, to make it easier to raise them in the weeks and months ahead.