Transcription
Well, the trouble with our liberal friends is not that they're ignorant. It's just that they know so much that isn't so.
Now, [Applause] in 1980, America was tired. The economy was failing. Unemployment lines wrapped around city blocks. There was a hostage situation in Tran. The whole world seemed to be coming undone. And the promise of the postworld war II boom, that idea that every generation would live better than the last, was starting to crack. America was in need of a savior. Along came a man with an easy smile, a good story, and a dangerous idea.
>> The story was an American and a Russian arguing about their two countries. And the American said, "Look, in my country, I can walk into the Oval Office. I can pound the president's desk and say, "Mr. president, I don't like the way you're running our country." And the Russians said, "I can do that." The Americans said, "You can." He says, "Yes, I can go into the Kremlin to the general secretary's office, pound his desk, and say, "Mr. General Secretary, I don't like the way President Reagan's running his country."
>> His name was Ronald Reagan, and he was here to finish what Richard Nixon had started. For nearly half a century, the US had been living under the New Deal order. Strong unions, high taxes on the rich, public investment in schools, roads, and research. It wasn't perfect. It left out millions of black and brown Americans. But it gave at least some working families more stability, dignity, and opportunity than they had ever known before. It was a welcome change from the time of the robber barons that preceded the 1929 stock market crash that led to the Great Depression. By the late 1970s, corporate America wanted that era dead. Nixon and Carter had loosened the bolts, but Reagan was coming to kick the door off its hinges. He sold the country a fairy tale, that government was the problem, that the market was the solution, and that if we gave the rich more, you know, eased up on taxation and regulation, somehow everyone else would rise with them. It was the Lewis Powell memo personified and wearing cowboy boots and the people bought it big time.
What followed was not just a change in policy, but a change in the American soul. Reagan didn't just cut taxes, he cut the bonds of solidarity between the individual and the collective. He didn't just break unions, he broke the idea that working people could govern themselves. He didn't just slash public programs, he slashed the belief that government owed you anything at all. The smiling salesman had delivered the product of a generation's worth of corporate planning, culminating in the neoliberalism of the Chicago school's own Milton Freriedman. And behind his movie star grin, the middle class began its long, slow descent back into poverty and bondage. This is the story of how Ronald Reagan turned Nixon's counterrevolution into the new American order, and how we're still living in its shadow in 2025.
On November 13th, 1979, California Governor Ronald Reagan announced his candidacy for president, telling Americans, "We can go on letting the country slip over the brink of financial ruin with the disaster, which this means for the individual, or we can find the will to work together to restore confidence in ourselves and to regain the confidence of the world."
>> He presented himself not as a policy expert, but as a reassuring figure from outside Washington. That strategy worked. In November 1980, he defeated Jimmy Carter in a landslide, winning 489 electoral votes to Carter's 49. Carter even lost the traditional Democratic strongholds in the South, where the southern strategy had since shifted white conservatives dissatisfied with advances in civil rights to Reagan's GOP.
At his inaugural address on January 20th, 1981, Reagan delivered the line that defined his entire philosophy. "In this present crisis, government is not the solution to our problem. Government is the problem." The statement marked a sharp break from the political consensus of the previous 50 years. Since Franklin D. Roosevelt's New Deal, federal government programs had been understood as a stabilizing force, building social security, Medicare, interstate highways, and funding schools and housing. During the Great Depression, the government could have said, "We have no money." But instead, the government collected revenue by taxing corporations and deficit spending, boosting millions out of poverty and turning the United States into the world's premier superpower. 35 years after the war, here came Reagan, openly declaring that government itself was the obstacle in the way to national prosperity.
Reagan repeatedly framed the United States as a shining city on a hill, a phrase he borrowed from a 1630 sermon by Puritan leader and colonial slave owner John Winthrop. He used it to argue that America's destiny was unique, ordained, morally superior. The most famous expression of this optimism came during his re-election campaign. Reagan's team released a series of ads titled Morning in America. One featured images of families, homes, and weddings with the narration, >> "It's morning again in America. Today, more men and women will go to work than ever before in our country's history."
>> The ads were effective. Reagan won re-election in another landslide. 525 electoral votes to Democrat Walter Manddale's 13, the largest margin in modern US history. But these were just images and slogans, not policy details. Reagan's political strength came from his ability to present a national myth that America's best days were returning and that if government would just get out of the way, America could go back to the way they were before. Before before what? Who knows? The reality, as we will see, was very different.
Ronald Reagan's first year in office brought a sweeping policy shift. In August of 1981, he signed the Economic Recovery Tax Act, the largest tax cut in US history at the time. The law reduced the top marginal income tax rate from 70% to 50%. It cut corporate taxes, lowered capital gains taxes, and rewrote business depreciation rules to hand billions back to corporations. At the same time, Reagan's budget slashed domestic programs. The immediate results were grim. By late 1982, unemployment reached 10.8%, the highest level since the Great Depression. Nearly 12 million Americans were jobless. The farm sector collapsed. Farmers had borrowed heavily during the boom years of the 1970s, only to see interest rates climb past 20% under Federal Reserve Chair Paul Vulkar's anti-inflation policies. Land prices in Iowa and other Midwest states fell by 60% between 1981 and 1986, wiping out equity overnight. More than 250,000 farms were lost to foreclosure or forced sales. In the upper Midwest alone, more than 900 farmers committed suicide. Tractors were driven to state capitals in protest. White crosses were planted on courthouse lawns to symbolize lost farms.
In 1984, Texas Agriculture Commissioner Jim Hightower told the Democratic National Convention, "American agriculture is not in a lagging recovery as the Reagan administration claims. It is in a raging full-fledged depression. For three straight years, farmers have been paid less for their products than it cost them to grow it." Meanwhile, Wall Street prospered. The Dow Jones Industrial Average rose from around 950 points in 1981 to over 2,200 by 1987. The wages for most Americans stagnated. By 1989, the average income of the bottom 90% of Americans was lower in real terms than in 1979, while the top 1% nearly doubled their share of national income. But Reagan's optimism and communication skills, his great communicator persona, overwhelmed the opposition. Many Americans embraced his message that short-term sacrifice would lead to long-term prosperity. In reality, what Reagan delivered was not simply an economic program, but a neoliberal revolution. government reshaped to serve capital while working people bore the cost.
During the 1980 Republican primaries, George HW Bush running against Reagan dismissed the plan as voodoo economics. >> "Well, what I said back then, it's very hard to find the you actually, let me start over. One, I didn't say it. Nobody, every network's looked for it, and none can find it. It was never said. I challenge anybody to find it." >> "That it's it just isn't going to work. And it's very interesting that the man who invested this type of what I call a voodoo economic policy," >> "What was that again?" >> "What I call a voodoo economic policy. Because that's what it was, economics based on vibes and magical thinking." He argued that slashing taxes while increasing military spending would simply blow up the deficit and that there was no evidence of tax cuts for the rich magically paying for themselves. And Bush was right. Even though he would go on to serve as Reagan's vice president and carry right on with the voodoo experimentation on America's economy.
Despite Reagan's reputation as a fiscal conservative, Reagan presided over an unprecedented explosion of the national debt. In 1980, the gross federal debt stood at only $97 billion. By the time Reagan left office in 1989, it had nearly tripled to $2.6 trillion. Annual deficits, which had averaged about 2.2% 2% of GDP in 1970s swelled to over 5% of GDP in the 1980s. Even Reagan's own budget director, David Stockman, later admitted, "None of us really understand what's going on with all these numbers." He also called supply side economics what it was. Nothing more than a Trojan horse to justify tax cuts for the rich. The so-called era of small government under Reagan and Bush was in fact an era of massive borrowing to fund tax cuts for the wealthy and record military spending. This left future generations, us namely and our children and their children, saddled with structural deficits and established a pattern of massive deficit spending combined with an outright refusal to collect revenue from those who hoard all the nation's wealth. Spoiler alert, 50 years later, that wealth has still not trickled down.
On August 3rd, 1981, more than 12,000 members of the Professional Air traffic controllers organization, PATCO, walked off the job. They demanded shorter working hours, better equipment, and higher pay. Air traffic control was a grueling, high stress job with long shifts and outdated radar systems. Federal law barred government employees from striking. But PCCO had endorsed Reagan in 1980 after he wrote them a letter promising to take whatever steps are necessary to provide our air traffic controllers with the most modern equipment available and to adjust staff levels and work days so they are commenurate with achieving a maximum degree of public safety. Many controllers actually believed that Reagan would support them.
Instead, standing in the Rose Garden on August 3rd, he declared, "Let me read the solemn oath taken by each of these employees, the sworn affidavit, when they accepted their jobs. I am not participating in any strike against the government of the United States or any agency thereof and I will not so participate while an employee of the government of the United States or any agency thereof. It is for this reason that I must tell those who fail to report for duty this morning, they are in violation of the law and if they do not report for work within 48 hours, they have forfeited their jobs and will be terminated. End of statement."
When most controllers refuse to return, Reagan fired 11,345 of them. He also banned them from federal service for life. Military controllers and supervisors were brought in to keep planes moving. Though flight schedules were slashed for months, the mass firing was unprecedented. No US president had ever permanently dismissed striking federal workers on this scale. Labor leaders saw it as a declaration of war. The consequences rippled far beyond the airports. Corporations across the country took the signal. If the president could break a union with one stroke of his pen, so could they. Employers began hiring permanent replacement workers in strikes, a tactic that had once been rare. Private sector strikes plummeted from 187 in 1980 to only 54 by 1986. Union membership, which had covered over 20% of US workers in 1980, fell to 16% by 1989.
The PATCO defeat was a turning point. Historian Joseph McCarten later wrote in his book Collision Course, "The airlines didn't need Patco to lose because of costs. They needed Patco to lose because of precedent. More than any other labor dispute of the past three decades, the Patco strike and its defeat signaled an end to the era of workingclass power in the United States." This was the essence of Reagan's counterrevolution. Smiling rhetoric about freedom and prosperity on one hand, ruthless state power against workers on the other.
That's the way the system works. Richard Nixon declared a war on drugs in 1971 to plant the federal boot on the backs of black Americans and anti-war protesters who were becoming too much of a thorn in democracy's side. This was just 4 years after Reagan supported and signed into law the Mulford Act with the sole intention of depriving black Americans from their constitutional right to bear arms. But it was under Reagan's administration a decade later that Nixon's war would become a full-scale offensive.
In October of 1982, Reagan formally announced a new nationwide campaign against illegal drugs, calling them a threat to our national security. His administration nearly doubled federal spending on drug enforcement between 1981 and 1984 while simultaneously cutting funds for drug treatment and education programs, which is exactly the kind of thing you do when you prioritize cruelty over positive results. The legislative backbone came with the Anti-Drug Abuse Act of 1986, passed after the highly publicized death of basketball star Len Bias from a cocaine overdose. Even though the autopsy confirmed it was powder cocaine, not crack, media coverage deliberately blurred the distinction, citing his death as proof of a crack epidemic. The law established mandatory minimum sentences and most notoriously created a 100 to1 sentencing disparity between crack and powder cocaine. Possession of just 5 grams of crack cocaine carried the same minimum prison sentence as 500 gram of powder cocaine. The racial impact was immediate. Crack cocaine was most common in poor urban black neighborhoods, while powder cocaine was more prevalent among affluent and white users. A 1991 report from the US sentencing commission found that over 90% of those sentenced under federal crack laws were African-Amean despite surveys showing that most cocaine users were white.
Don't be surprised that the policies of the Reagan administration were racist in nature because Ronald Reagan himself was very likely a racist. In 1971, while governor of California, Reagan was recorded in a phone call with President Richard Nixon. >> "And last night, I tell you to watch that thing on television as I as I did." >> "Yeah." >> "To see those those monkeys from those African countries. Damn them. They're still uncomfortable wearing shoes. Well, and then they the tail wags the dog there, doesn't it?" >> "Yeah." >> "The tail wags the dog."
The recording was only released by the National Archives in 2019. The media amplified the panic to bolster Reagan's war on black Americans. National outlets ran stories on so-called crack babies, infants born to mothers who used crack cocaine, often claiming they would grow up permanently damaged or criminal. Later studies debunked these claims, but at the time they fueled fear and resentment toward poor black communities. The groundwork was also laid for the super predator myth of the 1990s, which cast young black men as inherently violent and irredeemable. Meanwhile, First Lady Nancy Reagan added cultural weight with her just say no campaign launched in 1982. While framed as prevention, it helped build public support for harsher penalties.
The results were staggering. Between 1980 and 1989, the number of Americans incarcerated for non-violent drug offenses rose from 50,000 to over 400,000. The overall US prison population nearly doubled in that same period from 329,000 to more than 627,000. Critics warned that the policy was less about drugs than it was about social control. "The war on drugs has become a war on minorities and the poor. It has turned into a system of mass incarceration rather than treatment."
Why this war on minorities and the poor in the 1980s and the 1970s? For one, to destroy the civil rights movement and the black power coalitions that had risen since the 1960s. De-industrialization in the 70s and early 80s wiped out millions of goodaying union jobs, especially in urban black communities. And rather than addressing unemployment with a jobs program, Reagan cut social spending and expanded policing. The welfare state became the carceral state. or according to French sociologist Loick Wakon, the neoliberal penal state where prison was the state's new way of managing poverty and unemployment. Furthermore, politicians had discovered since Nixon that being tough on crime was politically profitable. Fear of drugs and crime won elections. Clinton would carry this logic forward in 1994 with his own crime bill, and Democrats would henceforth fear being painted as soft on crime. And finally, by the late 1980s, incarceration was becoming an industry unto itself. States built prisons at record speed. Private companies began contracting prison services, laying the groundwork for today's private prison corporations. The 13th Amendment, which abolished slavery, only did so except as a punishment for crime whereof the party shall have been duly convicted. Nixon, Reagan, and Clinton were simply carrying on the proud Jim Crow tradition of holding black Americans in bondage.
Ronald Reagan framed his foreign policy as a battle for freedom against communism. In reality, it was a war to protect US corporate and strategic interests, often at the expense of democracy abroad. Nowhere was this clearer than in Central America. In El Salvador, Reagan provided billions in military aid to a right-wing government fighting a leftist guerilla movement. The El Mazote massacre of December 1981, where more than 800 civilians were executed, including women and children, was carried out by Salvador and troops trained and armed with US assistance. Despite mounting evidence, Reagan certified to Congress that El Salvador was making a concerted and significant effort to comply with internationally recognized human rights.
In Nicaragua, Reagan funded the Contras, counter-revolutionary forces seeking to overthrow the Sandinista government, which had come to power in 1979, promising land reform, literacy campaigns, and nationalization of key industries. You know, crazy leftist ideas like improving the lives of its citizens. The Contras were notorious for atrocities, assassinations, torture, and attacks on civilians. In 1986, the International Court of Justice ruled that US support for the Contras violated international law. Reagan simply ignored that ruling, insisting that the Contras were, in his words, "the moral equivalent of our founding fathers." Congress attempted to block funding through the Boland Amendment. But the Reagan administration secretly continued to arm the Contras through the Iran Contra affair, selling weapons to Iran despite an arms embargo and funneling the profits to Nicaragua. When exposed in 1986, it became the biggest scandal of Reagan's presidency, though he denied knowledge of the scheme. This is the sort of thing you save for the Friday news dump so that everyone forgets about it by the end of the weekend.
Beyond Central America, Reagan deepened US ties to authoritarian regimes that aligned with US business interests. He supported General Austo Pino in Chile, whose neoliberal dictatorship, guided by Milton Freeman's own Chicago boys, privatized pensions, healthcare, and education while crushing unions. Freriedman described what happened in Chile as an economic miracle despite high unemployment and social unrest. In Guatemala, his administration restored military aid in 1981 despite a genocide campaign against indigenous Maya communities that killed tens of thousands. For Reagan, foreign policy was class war on a global scale. Movements that sought land reform, workers rights, or socialism were branded as communist threats and met with military aid, covert operations, and economic sabotage. Support for the most brutal military and security forces to ensure that the poor remain passive and the rich remain in power. By the end of the decade, the cost was staggering. Tens of thousands dead in Central America. democratic movements crushed or derailed and neoliberal reforms forcibly imposed on vulnerable nations. Reagan called it defending freedom. In practice, it was an extension of the same counterrevolution he carried out at home, protecting elites and capital by force. If a socialist nation like Nicaragua under the Sandinistas had managed to lift its people out of poverty and create an economic system based on equality, justice, and the public good, other developing nations might be inspired to follow suit. and then the working poor of America might start getting their own ideas and we can't have that.
Ronald Reagan didn't just wage war on unions, the poor, and socialists abroad. He also rewrote the rules of the economy itself, dismantling decades of regulation that had kept corporate power in check. We talked briefly about regonomics or voodoo economics according to his vice president and how it was largely inspired by Milton Friedman's ideas. One of Reagan's earliest targets was the financial sector. The depository institutions deregulation and monetary control act of 1980 signed by Jimmy Carter but championed and expanded under Reagan began phasing out interest rate caps and loosened lending restrictions. In 1982, Reagan signed the Garn St. Germaine Depository Institutions Act, further deregulating local savings banks called savings and loans or SNL. at the signing ceremony he promised. >> "This bill is the most important legislation for financial institutions in the last 50 years. All in all, I think we hit the jackpot."
Well, that jackpot turned into one of the worst financial scandals in modern history. The savings and loan crisis of the 1980s by removing New Deal era limits on risky investments. Hundreds of these small local banks plunged into speculative real estate and junk bonds. When that bubble burst, more than 1,000 institutions failed, or roughly onethird of the industry. The crisis was followed by the Keading 5 scandal in 1989, which implicated five senators, including John McCain, for intervening with regulators on behalf of Charles Keading, a major campaign donor. Keading's Lincoln savings and loan became the most infamous case in the crisis, specifically costing taxpayers around 3.4 billion alone or 8 billion in today's money. Who knew politicians could get their hands so greasy?
Reagan also moved aggressively against environmental and labor regulations. His administration cut the budget of the Environmental Protection Agency by more than 20% in his first year, weakening clean air and clean water enforcement. He appointed industry insiders to key regulatory posts. Insiders like Anne Gorsuch Berford, who was the EPA administrator from 1981 to 1983. Berford was a lawyer with deep ties to western energy and mining interests and her tenure was so controversial she was eventually forced to resign during a scandal over mismanagement of the super fund toxic waste cleanup program. Anne Gorsuch Berford's son Neil Gorsuch would be nominated to the Supreme Court by Donald Trump in 2017.
In communications Reagan pushed deregulation that reshaped American media. The Federal Communications Commission under his appointees eliminated the fairness doctrine in 1987 which had required broadcasters to present contrasting views on public issues. The end of that rule cleared the way for the rise of partisan talk radio, most notably Rush Limbbo that would drive political polarization for decades. Deregulation also extended to airlines and trucking. The results led briefly to cutthroat competition as well as cheaper fairs and freight costs, but it also led to massive job losses and wage cuts for workers across the country as firms were then allowed to consolidate into corporate giants. These mergers would have been blocked during the progressive era, but in the 1980s, Reagan's antitrust division of the Justice Department approved each of them merily. In 1986, Northwest Airlines acquired Republic Airlines, creating one of the largest carriers in the Midwest. TWWA acquired Ozark Airlines that same year. In 1987, Delta acquired Western Airlines. Airline union density collapsed and working conditions deteriorated. Likewise, in trucking, thousands of smaller firms went under and a handful of mega carriers like JB Hunt, Schneider National, and Yellow Freight rose to dominate long haul trucking. The Teamsters Union, once one of the most powerful unions in the United States, lost tens of thousands of members as wages and benefits eroded. This is my shocked Pikachu face.
The cumulative effect of all of these mergers was to shift risk downward and profits upward. Ordinary workers lost the protections of stable employment, fair wages, and regulated industries, while corporations gained the flexibility to cut, merge, and speculate with fewer restraints. >> "Let's cut to the chase. There are two kinds of people: sheep and sharks. Anyone who's a sheep is fired. Who's a sheep?" >> "Uh, excuse me. Which is the one people like to hug?" >> "Gutsy question. You are a shark. Sharks are winners and they don't look back cuz they don't have necks. Necks are for sheep."
By the late 1980s, the consequences were visible. The SNL collapse had shattered confidence in banking. Mergers and hostile takeovers hit record highs. Media outlets grew more concentrated and overly partisan. Environmental protections lagged even as pollution and climate risks mounted. Reagan had called government the problem. But all his deregulation agenda ensured was that when problems arose in finance, in media, in the environment, the public would be left holding the bill while corporations would be protected.
[Music] Despite the fact that his policies hurt a lot of people, by the time Ronald Reagan left office in January of 1989, he was one of the most popular presidents in modern history. His approval rating stood at 63% higher even than Franklin Roosevelt's at the end of World War II. The image of the great communicator, genial, optimistic, patriotic, endured. But the legacy of Reagan isn't just a set of policies. It's the framework that we still live under in 2025. He told us government is the problem. And for 40 years, both parties have governed as if that were gospel. Democrats and Republicans alike embraced his playbook. Deregulate markets, cut taxes for the wealthy, shred social programs, criminalize poverty, and let corporate money dominate politics. What was once extreme regonomics became the bipartisan consensus.
That is why today homelessness is treated as a policing problem, not a housing problem. Reagan dismantled public housing in the 1980s. No president since has rebuilt it. Healthc care is still tied to jobs and private insurance because Reagan's mantra that government can't do it made universal coverage politically toxic. Wages have barely budged in real terms since 1980. Even as productivity has soared, that wage suppression began with Reagan's union busting of Patco, and the chilling effect of it still lingers. Mass incarceration continues to cage over 2 million people disproportionately black and brown. The crack powder disparity Reagan enshrined laid the foundation for today's carceral state. Climate change has spiraled into crisis. Reagan gutted environmental enforcement, mocked conservation, and tore Carter's solar panels off the White House roof. That lost decade of inaction still haunts us. Democracy itself has eroded under the weight of money. Reagan's judicial appointments, backed by corporate think tanks, expanded corporate speech rights and opened the floodgates for dark money in politics. Citizens United in 2010 was simply the fruit of a tree that Reagan had planted.
This is why inequality today rivals the guilded age. This is why billionaires build rockets while millions of Americans can't afford rent. This is why even modest reforms, taxing the rich, strengthening unions, universal health care are smeared as socialism. Reagan shifted the Overton window so far to the right that basic decency now looks radical. Reagan didn't just win two elections. He won the next 40 years for capital. Clinton, Bush, Obama, Trump, Biden, they all governed inside the house that Reagan built. And that's why his smile matters. It was the smile of a man who knew he had helped the rich win the class war. The counterrevolution was complete.
This series started by exploring Franklin Roosevelt's bold solution to the Great Depression. Unfortunately, the New Deal was little more than a temporary compromise that saved capitalism from collapsing in on itself. FDR himself said, "I am the best friend the profit system ever had." His goal was not to undo capitalism or replace it simply to stabilize it. Wealth ownership stayed concentrated. Corporations remained private. Banks stayed in private hands and the profit motive still ruled. Structural reforms like nationalizing key industries, creating universal health care or guaranteeing housing never happened. Civil rights for black Americans were compromised. to hold together a coalition with southern segregationists. The New Deal often excluded black workers from benefits like social security and labor protections. Because wealth and corporate power remained intact under the New Deal, capital was able to regroup. By the 1970s, business leaders guided by the Powell memo launched a coordinated campaign of lobbying, think tanks, and propaganda to undo the New Deal so that when economic crisis hit in the form of stagflation and oil shocks, they were ready with an alternative. neoliberalism. The New Deal proved that reform within capitalism can improve lives. But it also showed that as long as ownership and political power remain concentrated, capital will simply buy at its time and then take those gains back at their earliest opportunity. That's why by the time Reagan smiled in 1989, the New Deal order was gone. Not because it failed on its own, but because it didn't go far enough to prevent a counterattack. The question for us in 2025 is whether we are finally ready to finish what FDR began, what Martin Luther King Jr. dreamed, and what generations of organizers fought for. To break free of capital's shadow and build a country not for billionaires, but for every American.
[Applause] I have to interrupt right here and tell you that one of my visits, I won't name him. I don't want to embarrass him, but one of the heads of state that I met with on this visit, he gave me one while I was on the way. Told me the story about the two fellows in the Soviet Union were walking down the street, and the one of them says, "Have we really achieved full communism? Is this it? Is this now full communism?" And the other one said, "Oh, hell no. It's things are going to get a lot worse."