Evil Geniuses: The Unmaking of America: A Recent History (15 page)

During Reagan’s second year in office, the recession ended, and the stock market started booming, beginning its 254 percent rise by the end of the decade—like back in the
good
1960s. And inflation kept gliding down toward irrelevance—like it too used to be in the early 1960s, before everything went nuts. Thus the lucky Reaganites had the wherewithal to create for the reelection campaign one of the great political advertisements of all time. It managed to make Americans feel something like nostalgia for the
present,
to believe for sixty seconds at least that the president had in three years returned America to the relaxed, neighborly, wonderful way it used to be.

“It’s morning again in America,” the soothing baritone narrator matter-of-factly explained at the beginning, because interest rates on borrowing and inflation were half what they were four years earlier, and just
look
at all these contented Americans in splendid Sonoma County—a farmer plowing his field, men going to work, other men raising American flags, a wedding, a family moving into a house, a kid on his bike tossing a newspaper onto an old-fashioned porch, everybody happy, just about everybody white, not a single black person, so “it’s morning again in America,” the narrator repeated at the end.

The ad was a perfectly masterful distillation of the story the right told so successfully all through the 1980s. They understood and managed to harness what had happened over the last decade in American culture, the sweeping nostalgification, to their depiction of the American economy and the reasons it seemed to be humming again. Everything old was new again, yes, but to really work, the message had to seem simultaneously old
and
new, like Bruce Springsteen and brand-new-old-fashioned postmodern buildings. Morning in America was the revival of the nice familiar past, but it was happening
right now,
the way supply-side economics was abracadabra cutting-edge but drawn from ancient wisdom about wealth creation.

The narrator of the Morning in America ad, the bona fide San Francisco ad genius Hal Riney, was also its author and producer, making the gorgeous facsimile of sincerity seem so authentic, like a singer-songwriter performing his own schmaltzy song. The whole Reagan A-team, such as the inventors and promoters of the supply-side policy pitch, were also perfectly cast for this show—the tough financial newspaper opinion editor (Bartley), the fast-and-loose Washington columnist out of Vegas (Wanniski), the ambitious B economist with D.C. experience and something to prove (Laffer), the New York intellectual gadfly (Kristol), and of course, the charming old former Hollywood star.

Reagan, who’d climbed from the lower middle class to a special celebrity-super-upper-middle class and positively radiated fantastical American cheerfulness and confidence, was a perfect salesman for the supply-side fantasy. It was a cousin of the preexisting American economic fable, that we were a society where practically everybody was middle class, a fantasy that still felt plausible, just barely. And Americans’ founding attraction to the excitingly untrue had been growing like mad since the 1960s. The early 1980s were thus an ideal moment for selling this new fantasy of
painless
big change in the political economy—that the experts had finally figured out a way to have
no losers at all
and no fights over deciding who gets how much.
^*2

So much was accomplished so quickly! With a right-wing president elected and then reelected, success encouraged the billionaire zealots and the more cautious corporate funders who’d embarked on the long march in the early 1970s to keep giving and doing more and more for the cause. The new counter-Establishment was full-fledged—the nonprofit think tanks, lobbyists, institutes, law firms, and foundations all devoted to increasing the profits and wealth and power of business and the wealthy—and during the 1980s it grew faster and extended further.

Richard Mellon Scaife and Joe Coors were still handing out tens of millions a year. Although the ammo-and-DDT heir John Olin died in 1982, management of his foundation was taken over by William Simon, a rich summer pal of his from East Hampton, Long Island. Simon had been Ford’s button-down Republican treasury secretary, but in the 1980s he let his Mr. Moneybags freak flag fly, returning to Wall Street as a new-style greedhound
and
bumptious right-wing propagandist. In 1985 the counter-Establishment got yet another major financial fountainhead in the Midwest, the suddenly megarich Bradley Foundation of Wisconsin, which joined the Amway founders, the DeVoses of Michigan, in the new right-wing campaign to discredit public education.

In ways that would’ve been unimaginable a generation earlier, the libertarian right continued to be fully mainstreamed. Nobel Prizes kept being awarded to free-market, antigovernment economists such as James Buchanan, a University of Chicago contemporary of Friedman. Another new think tank funded by usual suspects among the right-wing foundations, the Manhattan Institute, incubated two widely read, very influential books. With Olin money, the institute funded an unknown political scientist named Charles Murray to write
Losing Ground: American Social Policy, 1950–1980,
which argued that federal antipoverty programs actually
caused
poverty by encouraging recipients to be lazy and irresponsible, and that such programs should be scrapped. The other book was written by one of the institute’s staff, George Gilder, a well-born New York liberal anti-Goldwater Republican in the 1960s who in the 1970s became a kooky right-winger. His book
Wealth and Poverty,
published just as Reagan took office, is a strange, breezy religious-faith-based sermon in defense of U.S. capitalism, including its supposed prehistoric roots in the customs of indigenous cultures. “The official poor in America have higher incomes and purchasing power than the middle class” had in the 1950s, Gilder wrote. In fact, America’s “so-called ‘poor’ are ruined by the overflow of American prosperity,” and instead of more money, “what they need is Christian teaching from the churches.” It became a big bestseller and made the economic right-wingers who read it, in business and otherwise, feel
good
about their beliefs and, if they were rich, their riches.

As never before, very conservative politicians and commentators now had a large and rapidly growing body of fresh scholarly argument and research to which they could point to justify and rationalize pro-big-business, antiregulation, antitax, anti-social-welfare instincts and desires. The staff of AEI, the older conservative Washington think tank, having quintupled during the 1970s, grew by another 50 percent between 1980 and 1986—now with as many full-time scholars on staff as a college. During the 1980s the new, further-right Heritage Foundation caught up in size and influence. At the first meeting of his cabinet secretaries, Reagan handed out to each one the Heritage “Mandate for Leadership,” a massive programmatic wish list, more than a thousand pages long with more than a thousand detailed proposals. According to one of the two Heritage cofounders, 775 of the proposals were adopted by the administration. By the beginning of the second term, several dozen Heritage people and several dozen more from AEI and the Hoover Institution were serving under Reagan.

In addition to its freestanding think tanks, the economic right established important new outposts within existing academic institutions. The dream and prototype were what the right-wing director and funders of the Hoover Institution had pulled off at Stanford over the previous decade. By then AEI also had hundreds of paid and unpaid affiliated professors on college faculties around the country. And then there was George Mason. In the early 1970s, George Mason College had been a nothing University of Virginia satellite campus in the Washington suburbs. By the 1980s, it was a well-funded research university, still funded by the state of Virginia, now with a specialty in libertarian political economics featuring Buchanan, the new Nobelist. Charles Koch funded two libertarian nonprofits, a think tank that became the Mercatus Center and an academic networking outfit called the Institute for Humane Studies, and transplanted them to George Mason. They’ve both been influential, Mercatus particularly aggressive and effective in working to hold back federal environmental regulation.

The founder of Mercatus was a libertarian economics Ph.D. student at NYU who first pitched himself to Charles Koch in the late 1970s. His actual name is Rich Fink
.
In 1980 Rich Fink was installed on the economics faculty of George Mason, and for most of the next four decades, he served as Koch’s chief ideological officer, helping to build and oversee his far-flung and constantly expanding propaganda and political enterprises, as well as managing Koch Industries’ Washington lobbying operation.

The Kochs and their man Fink also started creating explicitly political organizations, a great variety of them over the years. Some were pop-ups and some endured, some were lobbying groups and some posed as citizen start-ups. They nimbly evolved and built alliances as necessary. In the 1980s the Koch groups started producing papers and articles and advertisements arguing the Koch line—against labor unions, against expanded Medicare and Medicaid, against the findings of climate science about global warming.

And actually writing laws. They helped underwrite and build the American Legislative Exchange Council, a very effective organization that drafts right-wing bills in Washington for right-wing state legislators to introduce and get their states to enact. Although ALEC is ostensibly an association of elected officials, its operations have been funded almost entirely by members of the Business Roundtable and other big corporations. It camouflaged itself well for decades—in the ’90s
The New York Times
called it “a bipartisan organization of state legislators.”

In 1985, the Kochs created Citizens for a Sound Economy. Which was exactly…what? In the press it was seldom to never identified as an entity founded and run by the owners of an oil and coal company. When various
New York Times
articles quoted experts from the group during the 1980s and early ’90s, it was described as “a public interest group based in Washington,” “a public-interest lobby” with “250,000 members,” “a conservative public interest group,” and “a Washington research group.” Its first chairman was the extreme libertarian Texas congressman Ron Paul, whose ideas were at the time still considered freaky by the Republican mainstream, but Citizens for a Sound Economy was against antitrust enforcement so they got Microsoft, facing serious antitrust scrutiny in the 1990s, to kick in a six-figure donation. The first great victory of this “public interest lobby” was to crush a proposed federal energy tax that Fink said “may have destroyed our [Koch Industries] business.” The group kept the Senate from even voting on the bill, despite the Democrats’ fifty-seven-seat majority.

Starting in the 1980s as well, the right’s project expanded beyond the
Wall Street Journal
editorial pages to genuinely mass media. The Reagan administration did away with the federal Fairness Doctrine, which had been in place since the early broadcast era to prevent radio and TV news programs from having distinct ideological or partisan tilts. With fairness and balance no longer required, Rush Limbaugh led the way, making talk radio practically synonymous with right-wing prosleytizing. Rupert Murdoch had started buying U.S. newspapers and magazines in the 1970s, including the
New York Post,
which he turned overnight from politically liberal to right-wing. Jack Kemp said in 1981 that “Rupert Murdoch used the editorial page, the front page and every other page necessary” in the
Post
“to elect Ronald Reagan President.” In 1985 Murdoch moved into television, spending the equivalent of $5 billion to buy TV stations in seven of the ten biggest cities. Reagan helped: he fast-tracked Murdoch for U.S. citizenship so that his company could get around the federal law forbidding foreigners from owning stations, then waived the federal rule forbidding anyone from owning a TV station and a newspaper in the same city, as Murdoch suddenly did in New York and Boston. The footings were now in place to build the important final piece of the right’s counter-Establishment.

*1
The one right-wing fanatic in Reagan’s first cabinet was Interior Secretary James Watt, a Pentecostal Christian who’d run the new anti-environmental-regulation law firm funded by Joseph Coors. Watt was forced out after two years for what he said about a federal commission he oversaw, a remark I doubt would have cost him his job in a current Republican administration: “We have every kind of mix you can have. I have a black, I have a woman, two Jews and a cripple.”

*2
Painless victory was also a new principle in geopolitics: less than a decade after we’d slunk and then rushed out of Vietnam in defeat, the Reagan administration managed a restoration of America’s sense of military supremacy by invading the tiny Caribbean nation of Grenada (pop. 95,985) and brushing its Communist regime out of existence at the cost of just eighteen U.S. service members’ lives.

When I first began thinking about this book, before I researched it, my sense of the story both overemphasized and underemphasized 1980, the definitive pivot point of Reagan's election. The overemphasis was because I really hadn't known about all the crucial advance work done by big business and the economic right during the 1970s—the decade of strategizing, funding, propagandizing, mobilizing, lobbying, and institution-building. My initial underemphasis was due to a different kind of ignorance. Because I'd lived through the 1980s and definitely noticed in real time, plain as day, the rapid and widespread uptick in deference to business and the rich and profits and
the market,
I'd neglected afterward to take a close, careful look at the various pieces of that shift. During the 1980s and '90s, my focus as a writer and editor was really on the
cultural
effects of this new America revealing itself—the primacy of selling and celebrity, the mixing of fact and fiction, the shameless ostentation, this ridiculous character Donald Trump. I wasn't thinking hard about the political economy at the time. In fact, after the Cold War ended, it seemed to me, as it did to many people, that what happened in Washington had become a sideshow to the main American action in the private sector.

So many of the impacts of the economic right's crusade to stop and roll back the New Deal and its Great Society extensions showed themselves only gradually, like steadily compounding interest, becoming formidable over a generation. Before and after David Stockman, OMB directors were mostly obscure because the OMB is typical of the guts of government and governance—bureaucratic, abstruse, unexciting. Indeed, that general public obscurity was how most of the transformation of the political economy happened during the 1980s and afterward. For all the back-to-the-good-old-days rhetoric and professions of faith in the free market—Reagan's department—so much of the monumental shift was the result of countless nuts-and-bolts changes so dweeby and tedious, and so often bipartisan, that they appeared inconsequential and were uncontroversial. It's in the nature of tax codes and federal regulations, complicated and esoteric, to permit big change to occur quietly.

Furthermore, an important and even stealthier part of the restructuring were acts of omission, declining to update codes and regulations so that more money and power flowed to businesses and the well-to-do gradually. In their excellent 2010 book
Winner-Take-All Politics,
the political scientists Jacob Hacker of Yale and Paul Pierson of UC Berkeley call this
drift,
the “systematic, prolonged failures of government to respond to the shifting realities of the dynamic economy” that “is a huge and growing part of how policy is actually made.” This includes all sorts of essentially invisible but important policies-by-omission, from the willful failure to go after violations of labor and antitrust laws to letting corporations pretend that executives' stock options aren't actually salary to declining to regulate (or even understand) esoteric new financial contrivances. Citizens don't notice this kind of malign neglect, so they don't get angry about it.

Social Security taxes are a prime example of this kind of unnoticeable drift effect, a way that the richest have made out better than everyone else for the last four decades. People's incomes over a certain level aren't taxed to pay for Social Security at all. But from the beginning of the system, Congress regularly and significantly raised that income threshold where that tax-free level begins, so that as the twentieth century rolled on, more and more affluent people were paying more Social Security taxes. But then around 1980 Congress
stopped
raising it—instead, the tax-free threshold has increased according to an automatic formula, pegged to increases not in the cost of living but in average wages. As a result, since average wages haven't increased much since 1980, people with higher incomes have just kept getting more and more of their money shielded from taxation. Today a fifth of all income earned by Americans is free from any Social Security tax, twice as much as in the early 1980s—and that tax break is going only to the richest 6 percent of us, those who earn more than $138,000. Meanwhile, the revenue stream automatically flowing in to fund Social Security has shrunk.

After finishing most of my research, as I looked through my thousands of notes, a pattern showed itself:
this
trend line took off in the 1980s, and this
other
one plummeted;
this
norm began crumbling in the 1980s, and
that
stigma started evaporating;
this
strike was crushed, and
this
financial rule was tweaked in the 1980s; and look over
there
at
that
huge change in the 1980s that hadn't even seemed connected to politics or economics. When I boldfaced all the 1980s dates, it was like a eureka-moment scene from
Good Will Hunting
or
A Beautiful Mind
. The before-and-after changes were so numerous and stark, I realized that the paradigm shift of the 1980s really was equivalent in scale and scope to those of the 1960s and the 1930s. Almost everything changed.

Key intellectual foundations of our legal system were changed. Our long-standing consensus about acceptable and unacceptable conduct by big business was changed. Ideas about selfishness and fairness were changed. The financial industry simultaneously became reckless and more powerful than ever. The liberal establishment began habitually apologizing for and distancing itself from much of what had defined liberal progress. What made America great for centuries, a taste and knack for the culturally new, started to atrophy. Plus much more. And all of what happened in the 1980s definitely didn't stay in the 1980s.

The digital revolution also started in the 1980s, including the invention of PowerPoint, so in that spirit I present this introductory data-point chronicle as a preface to the next several chapters.