Reagan’s Domestic Legacy

Reagan left office in 1988 with the Cold War waning and the economy booming. Unemployment had dipped to 5 percent by 1988. Between 1981 and 1986, gas prices fell from $1.38 per gallon to 95¢. The stock market recovered from the crash, and the Dow Jones Industrial Average—which stood at 950 in 1981—reached 2,239 by the end of Reagan’s second term. Yet the economic gains of the decade were unequally distributed. The top fifth of households enjoyed rising incomes while the rest stagnated or declined. In constant dollars, annual chief executive officer (CEO) pay rose from $3 million in 1980 to roughly $12 million during Reagan’s last year in the White House. Between 1985 and 1989 the number of Americans living in poverty remained steady at thirty-three million. Real per capita money income grew at only 2 percent per year, a rate roughly equal to the Carter years. The American economy saw more jobs created than lost during the 1980s, but half of the jobs eliminated were in high-paying industries. Furthermore, half of the new jobs failed to pay wages above the poverty line. The economic divide was most acute for African Americans and Latinos, one-third of whom qualified as poor.

The triumph of the right proved incomplete. The number of government employees actually increased under Reagan. With more than 80 percent of the federal budget committed to defense, entitlement programs, and interest on the national debt, the political right’s goal of deficit elimination floundered for lack of substantial areas to cut. Between 1980 and 1989 the national debt rose from $914 billion to $2.7 trillion. Despite steep tax cuts for corporations and the wealthy, the overall tax burden of the American public basically remained unchanged. Moreover, so-called regressive taxes favored by Reagan’s economic advisors actually increased the tax burden on low- and middle-income Americans; for example, sales tax on groceries meant that the poorest Americans were paying the same percentage of tax as the wealthy, but that extra tax more dearly impacted their struggle to feed themselves and their families. Finally, Reagan slowed but failed to vanquish the five-decade legacy of liberal economic policies. Most New Deal and Great Society programs proved durable. The government still offered its neediest citizens a safety net, if a now continually shrinking one.

Election of George H.W. Bush

The conservative Reagan Revolution lingered over the presidential election of 1988. At stake was the legacy of a newly empowered conservative movement, a movement that would move forward with Reagan’s vice president, George H. W. Bush, who triumphed over Massachusetts Governor Michael Dukakis with a promise to continue the conservative work that had commenced in the 1980s.

The son of a U.S. senator from Connecticut, George H. W. Bush was a World War II veteran, president of a successful oil company, chair of the Republican National Committee, director of the CIA, and member of the House of Representatives from Texas. After failing to best Reagan in the 1980 Republican primaries, he was elected as his vice president in 1980 and again in 1984.

In 1988, Michael Dukakis, a proud liberal from Massachusetts, challenged Bush for the White House. Dukakis ran a weak campaign. Bush, a Connecticut aristocrat who had never been fully embraced by movement conservatism, particularly the newly animated religious right, nevertheless hammered Dukakis with moral and cultural issues. Bush said Dukakis had blocked recitation of the Pledge of Allegiance in Massachusetts schools and that he was a “card-carrying member” of the ACLU. Bush meanwhile dispatched his eldest son, George W. Bush, as his ambassador to the religious right. Bush won a large victory and entered the White House.

Bush’s election signaled Americans’ continued embrace of Reagan’s conservative program and further evidenced the utter disarray of the Democratic Party. American liberalism, so stunningly triumphant in the 1960s, was now in full retreat. It was still, as one historian put it, the “Age of Reagan.”^[1]

Bush’s Presidency

Although he promised to carry on Reagan’s economic legacy, the problems Bush inherited made it difficult to do so. Reagan’s policies of cutting taxes and increasing defense spending had exploded the federal budget deficit, making it three times larger in 1989 than when Reagan took office in 1980. Bush was further constrained by the emphatic pledge he had made at the 1988 Republican Convention—“read my lips: no new taxes”—and found himself in the difficult position of trying to balance the budget and reduce the deficit without breaking his promise. However, he also faced a Congress controlled by the Democrats, who wanted to raise taxes on the rich, while Republicans thought the government should drastically cut domestic spending.

In October, after a brief government shutdown when Bush vetoed the budget Congress delivered, he and Congress reached a compromise with the Omnibus Budget Reconciliation Act of 1990. The budget included measures to reduce the deficit by both cutting government expenditures and raising taxes, effectively reneging on the “no new taxes” pledge. These economic constraints are one reason why Bush supported a limited domestic agenda of education reform and anti-drug efforts, relying on private volunteers and community organizations, which he referred to as “a thousand points of light,” to address most social problems.

Bush’s Domestic Policy

Affirmative Action

Affirmative action, the practice of implementing policies to correct or redress discrimination against a certain group; for example, making workplaces more diverse by requiring that efforts are made to hire women or minorities. Debate and discussion about affirmative actin has ebbed and flowed since the civil rights movements, particularly when specific quotas have been set requiring that a certain number or percentage of a group come from a specific background, or when controversies arise about affirmative action giving minority applicants an advantage over others in college admissions.  

Reagan was particularly known for his opposition to affirmative action programs. He reduced funding for the Equal Employment Opportunity Commission, arguing that “reverse discrimination” resulted from these policies. However, the courts reaffirmed affirmative action policies such as quotas during his presidency. In 1986, the Supreme Court ruled that courts could order race-based quotas to fight discrimination in worker unions in Sheet Metal Workers’ International Association v. EEOC. In 1987, in Johnson v. Transportation Agency, Santa Clara County, California, 480 U.S. 616, the Supreme Court ruled that sex or race was a factor that could be considered in a pool of qualified candidates by employers.

Affirmative action also returned as an issue due to a 1989 Supreme Court decision and subsequent discussion about another Civil Rights Act. The first Act, introduced in 1990, was criticized by Bush for pushing quotas so he did not sign it and eventually a revised Bill, the Civil Rights Act of 1991, was passed to ensure that workers’ rights were protected if suing their employers for discrimination.

Justice Clarence Thomas

President Bush’s weaknesses as a culture warrior were on full display during the controversy that erupted following his nomination of a new Supreme Court judge. In 1991, Justice Thurgood Marshall, the first Black American ever to sit on the Supreme Court, opted to retire, thus opening a position on the court. Thinking he was doing the prudent thing by appealing to multiple interests, Bush nominated Clarence Thomas, another Black American but also a strong social conservative. The decision to nominate Thomas, however, proved to be anything but prudent. During Thomas’ confirmation hearings before the Senate Judiciary Committee, Anita Hill, a lawyer who had worked for Thomas when he was chairman of the Equal Employment Opportunity Commission (EEOC), came forward with allegations that he had sexually harassed her when he was her supervisor. Thomas denied the accusations and referred to the televised hearings as a “high tech lynching.” He survived the controversy and was appointed to the Supreme Court by a narrow Senate vote of fifty-two to forty- eight. Hill, also African American, noted later in frustration: “I had a gender, he had a race.” In the aftermath, however, sexual harassment of women in the workplace gained public attention, and harassment complaints made to the EEOC increased by 50 percent by the fall of 1992. The controversy also reflected poorly on President Bush and may have hurt him with female voters in 1992.

By 1992, many had come to doubt that President George H. W. Bush could solve America’s problems. He had alienated conservative Republicans by breaking his pledge not to raise taxes. Furthermore, despite living much of his adult life in Texas, he could not overcome the stereotypes associated with his privileged New England and Ivy League background, which hurt him among working-class Reagan Democrats.