Remember the Reagan revolution? ‘Government is not the solution to our problems. Government is the problem.’ Another favorite from the conservative 80s was ‘we had a war on poverty and poverty won.’ Beyond the clever bon mots, we had a visible shift in the dominant political perspective and in governing ideological norms. Suddenly, it seemed, we shifted from aggressive public interventions to remedy social problems to something like the following:

Supply-side economics, market-based strategies, privatization and related laissey-faire approaches, and the glorification of minimal government.

A pronounced shift from ending poverty to minimizing welfare dependency; and

The devolution revolution … the abandonment of federal solutions to the promotion of local solutions to social problems through block grants and turning social issues back to the states.

The revolution promised by the new crowd in Washington would fundamentally transform America. In the end, though, Reagan imposed more tax cuts than anything else while failing to cut social spending as he had promised his base. When the so-called ‘great communicator’ (a nickname that always puzzled me) took office, the top marginal tax rate was 70 percent. He cut that to 50 percent by 1982 and to 28 percent by the end of his administration. Other taxes were slashed or revised as well. In 1980, the rich paid half of their income in taxes, a rate that fell to 35 percent by the end of the 80s. Progressivism in our tax system took a big hit.

Reagan, however, did bring about a real neo-liberal revolution in many respects. He limited anti-monolopy actions, loosened the rules on banks and Wall Street, and attacked unions when he could. Union membership plummeted to less than 17 percent of the workforce. Power increasingly was centered in the financial sector and the corporate elite. The gains accruing to the moneyed class skyrocketed, as well as the dangers associated with letting them run amok.

Where Reagan disappointed his conservative base was in cutting spending, especially social spending. There is a very telling vignette told by David Stockman, Reagan’s budget director during the early 1980s. He presented the President with a list of social programs along with three possible actions … spend at current levels, take a modest cut from this program, or take a ‘big whack’ out of it. When confronted with specific decisions, Reagan balked. He had hard rhetoric but soft instincts. Stockman was appalled, knowing what this meant to future budget deficits.

The net result was that social problems did not disappear, nor did the costs associated with them. The Laffer hypothesis, that government revenues would increase with sharp tax cuts because of the growth associated with lower taxes, proved to be a laugh as most impartial economists predicted. Slowly, poverty rates began to creep back up while inequality began to rise more rapidly. Most of all, the Reagan revolution resulted in alarming federal debt levels, a consequence of the Republican Party abandoning balanced budgets as a policy objective. (Note: only Clinton and Obama would make a serious dent in budget deficits since the 80s.) If the Democrats had been the ‘tax and spend’ party, the Republicans were now the ‘borrow and spend‘ alternative, especially where weapons were involved. You simply cannot have enough toys that kill people. But their wealthy supporters would do well indeed.

The intellectual tide was also turning. Charles Murray wrote a very popular book titled Losing Ground in which he argued that public interventions for the poor from the New Deal on exacerbated the problems being addressed rather than alleviating them. This was followed up by a book by Lawrence Mead called Beyond Entitlement. Larry’s argument was that welfare type entitlements corroded personal responsibility which provided theoretical support for Murray’s pessimistic views on the efficacy of social investments to society. The two works supported the views that poverty pretty much was a personal failure (the ‘unworthy poor’ thesis) with serious consequences for society.

A cultural and normative shift was under way, which had been a goal of those underwriting a neoconservative revolution that became quite serious by the early 1970s. Poverty was no longer a salient policy concern; welfare costs and welfare dependency dominated the discussion. More than welfare writ large, it was the Aid to Families with Dependent Children (AFDC) program that stoked public indignation the most, even though it was relatively small in terms of both caseload and expenditures. AFDC, it seems, proved a convenient proxy for a broad array of contentious public battles involving normative disputes concerning family, sex, work, personal responsibility, government over reach, compassion or the lack thereof, and so much more. It was the new front on which cultural battles would be fought politically and, as many would say, would become the ‘Mideast of domestic policy making.’

In the meantime, income and wealth inequality began to worsen. From a low of 9 percent of total income at the end of the 1970s, the top 1 percent saw their share grow to 12 percent by 1984 and to 20 percent in 1994. After slowing during the Clinton years, this unequal division of the economic pie continued to worsen. Just before the housing bubble crash of 2007-8, inequality equaled what it had been at the onset of the Great Depression in 1929. These inequality changes can be considered tectonic shifts that fundamentally altered the face of opportunity in the U.S.

America, however, remained distracted by other issues like Clinton’s failed effort to extend health care to all … something that every other advanced nation managed to do. Rather, we continued to spend way more per-capia than anyone else on health care for outcomes that were disappointing at best. We have often struggled to beat out Romania in basic health outcomes while other key measures, like infant mortality, are shockingly bad when compared to our peers. But our public discourse focused on the welfare crisis rather than doing anything about our embarrassing health financing system.

Soon, much of the world again watched Wisconsin as Governor Tommy Thompson, later Secretary of Health and Human Services under George W. Bush, launched a host of welfare reform initiatives. The first to grab national attention was Learnfare, an initiative that linked children’s school behaviors to their parent’s welfare benefits. It was to be the first of many that introduced what might be termed a ‘social contract’ notion to public assistance, an approach where help was conditioned on an increasing number personal behaviors. This was, in reality, a very old conception that dated back to the Elizabethan Poor Laws but now was touted as something innovative and exciting. Moreover, Thompson was able to get his ideas implemented where so many others had failed given the political minefield welfare had become. Buoyed by the notoriety of his initial reforms, the Governor proposed more dramatic changes, including a so-called welfare replacement concept known as Wisconsin Work’s or W-2.

While Thompson’s rhetoric was tough, the reality of his reforms was more tempered. He expanded child care help and access to health care and workforce services for struggling families, initiatives that greatly helped the working poor. He was quite willing to help those he felt were playing by society’s rules and expected norms. Through all these changes, the University (especially IRP), played no role. The Wisconsin Idea had hit what night be termed a ‘rough patch.’

I can’t do justice to the kerfuffle between the Governor and IRP during this period but the rupture was serious. Mostly, it was a matter of misinterpretation. For the Governor (any politician really), you were either on his side or against him. There was no such thing as objectivity. I was called by the media to comment all the time and would try to be a real academic … giving both sides on controversial issues. The press, I found, often would choose only those comments that would rattle the Governor. I realized just how badly he saw me (and IRP) when he attacked me personally at a public event in Chicago while I sat in the audience. Welfare reform took no prisoners.

As a final note on the nadir of the Wisconsin Idea, I did start working with Jennifer Noyes, Thompson’s policy aide and eventually the head of W-2. Tentatively, we put the IRP-State relationship back together again. Jennifer eventually came to the University (something for which I lobbied hard) became Associate Director of IRP and now works directly for the UW Chancellor. Sometimes you get things right.