Sixteen Years That Changed America

J.T. Young Former Treasury Department and OMB Official
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From 1964 to 1980, conservatism went from American politics’ nadir to its apex. The road from Goldwater to Reagan is under-appreciated as a political journey, and even more for the ideological earthquake it was. During this decade and a half, America’s majority shifted their perception of the government’s role and efficacy, leaving an ideological dichotomy that continues to grow.

The scale of political change from Goldwater’s landslide defeat to Reagan’s landslide victory is astonishing. Republicans’ share of the popular presidential vote increased 11.8 percentage points (from 38.7% to 50.5%); Democrats’ plummeted 20.1% (as third-party candidate John Anderson attracted the rest). Republicans’ electoral vote total increased by 437.

Republicans’ Congressional gains were equally impressive. From 1964 to 1980, House Republicans’ seats increased by 52. In the Senate, they grew by 21.

The policy changes that fueled these seismic shifts are equally dramatic.

Arising from the Depression’s devastation, the New Deal created a new majority of support for activist government. Truman, Eisenhower, and Kennedy accepted that status quo.

Johnson’s 1964 landslide over Goldwater’s conservative attack on that status quo gave him the opportunity to expand the prevailing, and comparatively limited, liberalism from the left. LBJ greatly increased government’s action – launching his war on poverty and Great Society programs at home. Abroad he massively committed US ground troops in Vietnam, giving America its third major war in two decades.

The seeds of Johnson’s over-reach would grow over the 16 years. LBJ would be the first victim, as he was forced to renounce reelection. Next, would be the Democratic Party itself. Fractured in 1968, it then lurched even further left in 1972 with McGovern’s candidacy.

However the intervening 12 years, were no more than victory by default for conservatism. Conservatism’s 1964 drubbing meant politics’ prevailing aim was to implicitly return to the earlier New Deal consensus, not challenge it again from the right.

Despite benefiting from an unchanneled conservative shifting in the electorate, Nixon was no conservative, and Carter even less so. Nixon won as a return to Ike, not a return to Goldwater – a restoration of the old limited liberalism order (and law and order) – or the establishment of a new one. Carter won as the consummate “Washington outsider” – the first since Wilson in 1912 and establishing a trend that has largely prevailed since – but aiming to manage what LBJ had left behind, not undo it.

While politics led conservatism on a meandering path, economics cut a straight road for it to the American majority. Subjective arguments about the expanded welfare state raged but the state’s objective performance closed the case for most.

Although the economy grew at a seemingly impressive rate, the overall effect for Americans was one of falling behind. The culprit was inflation. Though it stoked the economy, it impoverished earners. From 1964-80, real GDP growth averaged 3.6% (though it shrank in three years from 1974-80). However inflation, as measured by CPI, averaged 6% and reached an annual rate of 13.6% in 1980.

The unemployment performance was equally telling. In November 1964, the unemployment rate was just 4.8%; by November 1980, it was 7.5%. At the same time, more were seeking to enter the workforce – the labor force participation rate jumping from 58.5% to 63.8% – as Americans tried to offset inflation-induced real wage decline.

The federal budget performed just as poorly. In 1980, receipts were 18.5% of GDP – up 1.5% from 1964 and their highest peacetime level (only 1952 with the Korean War matched it since 1945). Spending reached 21.1% of GDP – 2.1% over 1964, and the highest level since 1946. And the deficit hit 2.6% of GDP; that figure was matched or topped five other times within the period, but was unseen since 1946.

By the numbers, the economy was slowing, but inflation, unemployment, and federal taxes, spending, and deficits were all rising. At home, despite massively increased civil spending, civil unrest rose too. Abroad it was no better. Having lost 50,000 troops, America had withdrawn from Vietnam — only to see it fall just months later – while on the other side of the globe, Iran held our embassy personnel hostage.

For the majority of Americans, the expanded liberal state demonstrably no longer worked. For half a century, government had been America’s predominant answer to problems. When Goldwater dared challenge that in 1964, he had been historically rebuffed. Just 16 years later, America approved a complete reversal when Reagan stated: “Government is not the solution to our problem; government is the problem.”

Politics hardly offered a clear course for this change. The sixteen years were evenly split between Republican and Democratic presidents. Conservatism was at best only relatively represented, a contrast to those seeking to manage the liberal state in its enlarged form or expand it further. Yet politics’ inability to deliver a true conservative alternative to the dominant liberal paradigm allowed conservatism to take root in the electorate.

The current debate between liberal and conservative governing approaches is hardly new. Neither did it begin in 1964 or in 1980, but in the period between the two. It is not politicians or politics that created the ideological split that has raged ever since, but the economic evidence of 1964 to 1980, and that which continues to come.

The author served in the Treasury Department and the Office of Management and Budget from 2001 to 2004 and as a Congressional staff member from 1987 to 2000.