Phonics versus whole language
Phonics and whole language are two different approaches to teaching reading. Phonics breaks down words into constituent components, or building blocks, and emphasizes teaching the correct pronunciation of each component first, then proceeding from there to teach the meanings of words. Whole language, or the "look-say" method, teaches new words as whole words, without considering their individual components, and relies on their context for children to derive their meaning.
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The debate between proponents of the two approaches is a legitimate and ongoing debate among educators.
Arguments from the religious right
Unfortunately, some religious right-wingers have, for reasons unknown, latched onto a conspiracy theory that whole language is part of a conspiracy by liberals to teach moral relativism and deny objective reality. Proponents of this conspiracy theory include Phyllis Schlafly, the John Birch Society, the Constitution Party, Marlin Maddoux's religious right radio program Point of View, and Capitalism magazine, an Objectivist publication.
Phyllis Schlafly is the author of several books on phonics instruction, her most prominent being Turbo Reader (add exclamation points at will).
How this conspiracy theory came to be held by these people is a big mystery (it could be a conspiracy). Nobody knows why (this could be a conspiracy, too). It is possibly because the most recent period of popularity of the whole language approach, in the late 1980s and 1990s, coincided with a push to add multiculturalism to the educational curriculum — so it is seen as part of a political correctness agenda. In this sense, whole language is regarded as "touchy-feely", dependent on context and feelings rather than definite pronunciations and meanings, and therefore part of a broader promotion of concepts such as moral relativism or that language, science, and mathematics are social constructs. This is also sometimes seen as part of a push to promote postmodernism in the educational system.
The conspiracy theory has unfortunately muddied the legitimate debate and made it difficult to advocate for phonics instruction without being lumped in with the nutters.
The legitimate debate
Educators have gone back and forth over which method they favor. Phonics was popular in the late 1800s (the McGuffey Eclectic Readers, for example, are based on phonics). The whole language approach was popular after World War II (the Dick and Jane books in the U.S., remembered for "See Spot run!", and the similar Janet and John in the U.K., are based on the whole language approach). Phonics came back into vogue in the 1960s and early 1970s, coinciding with other post-Sputnik trends like "New Math" which came about because of the space race with the Soviets and the newfound emphasis on teaching math, science, and a more systematized approach to learning in general. Whole language made a comeback in the late 1980s and 1990s, coinciding with the newfound interest in multiculturalizing the educational curriculum. Since 2000, phonics have again come into broader favor. Some educational systems, such as New York City, have settled on using a combination of both.
An early criticism of the whole language approach was Why Johnny Can't Read by Rudolf Flesch (1955). Flesch criticizes look-say for requiring students to learn the pronunciation of each new word they learn separately, without providing them with a framework of phonic components making up each word. He compares this to having to learn the thousands of logograms (word symbols) in the Chinese writing system. Flesch's book remains a popular criticism of look-say and is still in print, but much of the content is archaic and more relevant to educational trends in the 1950s than today, and also gets bogged down by quoting from look-say advocates as if they were self-evidently ridiculous without making much of an effort to refute them other than rhetorically.
Some academics consider whole language and look-say to be two different things although related: look-say narrowly defined as the method of teaching each individual word, and whole language being a broader teaching method incorporating look-say in which words are not assigned definite meanings but derive their (often unclear) meanings from context and placement; it is this latter aspect which is more often the target of criticism by those who view it as connected to critical theory, deconstruction, and postmodernism.
Effective for the homeschooling market
Because of the conspiracy theory, many homeschoolers, at least those whose motivation for homeschooling is based on Christian conservative views, exclusively use the phonics approach.
Hooked on Phonics and several knock-off products are on the popular market for both homeschoolers, and parents who want to supplement their kids' public school education. They are sort of like self help books in that they were made with commercial viability in mind, as opposed to peer review or effectiveness.