Under Carter, Americans had been battered by double-digit inflation, stagnant growth and a fuel shortage that caused long lines at gasoline stations. They had been humiliated by the imprisonment of 52 Americans who were being held hostage in Iran and by Carter's unsuccessful efforts to free them, including an aborted military rescue that cost the lives of eight American servicemen.
Reagan preached optimism. If he were elected, America would stand tall again, he said, and competence would return to Washington.
"Are you better off now than you were four years ago?" he asked voters.
Absolutely not, they responded, and gave him a resounding victory: 51% of the vote to Carter's 41%. Independent John Anderson won nearly 7%.
Reagan won the electoral vote 489 to 44.
Tumultuous First Term
When Reagan took office at the age of 69, he was better positioned than any Republican since Eisenhower to lay a firm hand on government. He froze hiring and new regulations. He swept even low-level Democrats out of their jobs and replaced them with Republicans. He won a 25% cut in personal income taxes and big tax breaks for businesses. He called for deep cuts in social programs, and he increased Pentagon spending by more than 9% per year between fiscal 1981 and 1984.
To presidents with programs, their first 100 days in office are important. Reagan did not have that long. On his 70th day, he was shot by John W. Hinckley Jr., a 25-year-old drifter who had hidden in a crowd of reporters outside the Washington Hilton, where Reagan had just spoken to labor leaders. A .22-caliber bullet entered his chest under his left shoulder. It careened off a rib and lodged in his left lung — within an inch of his heart. The bullet was removed during a two-hour operation, but not before he had lost nearly half his blood and edged close to death.
Reagan had been in far graver danger than he let on. He had walked into the hospital and did not collapse until he was out of sight. "Honey, I forgot to duck," he told Nancy, borrowing a line from boxer Jack Dempsey.
Hinckley, who had a history of psychiatric problems, was trying to impress actress Jodie Foster, whom he idolized. He had fired six shots, wounding four people. Press secretary James Brady was hit in the head and has been in a wheelchair since. Hinckley was committed to a mental institution.
Twelve days after the shooting, Reagan was back at the White House. His strength and gallant demeanor touched the public. Characteristically, however, he did not change his long-standing opposition to gun control. Brady, on the other hand, became a national leader in the fight to curb handguns.
Despite the interruption, Reagan lost little momentum. In the middle of his first summer as president, more than 11,000 federal air traffic controllers, members of one of the few unions to support him, walked off their jobs — and he fired them. It was a blow to organized labor, already in decline. But it showed that Reagan meant what he said, especially about guarding the economy against inflation. Before the end of his first summer as president, Congress had enacted his historic tax cut and his budget legislation largely intact.
To justify increasing defense spending while slashing taxes, Reagan had embraced supply-side economics — a theory that enjoyed little standing among many economists. Supply-siders held that higher spending and lower taxes would not increase the deficit. Instead, the theory held, tax cuts would unleash such a wave of economic growth that government income would actually rise.
It did not happen. As defense spending rose and the tax cuts kicked in, the predicted surge in economic growth did not materialize. The deficit soared toward record levels. Eventually, the national debt nearly tripled. Before Reagan's first year was up, the nation's economy plunged into the worst downturn in years. By March of 1982, Reagan, who had acknowledged "a slight and, I hope, a short recession," was reduced to denying that the nation was in a depression. Unemployment reached a 41-year record of 10.8% that November, and the global effects of the slowdown did severe damage to Third World debtor nations and the world's banking system.
Reagan's budget director, David Stockman, was among the disillusioned. He granted a series of devastating interviews to William Greider, who published them in the Atlantic Monthly, quoting Stockman as saying, "None of us really understands what's going on with all these numbers."
"Stay the course!" Reagan urged the nation, insisting that supply side simply needed more time. But even Republicans feared that without additional revenue, the deficit would reach uncontrollable proportions. Republican senators forced him to accept a three-year, $100-billion tax increase.
Reagan sought to pass it off as closing loopholes.