1.5

Question 1

Big Government

Answer 1

Reagan claimed that federal government had become big government which would intervene to much in peoples lives through welfare and other benefits

Question 2

Reagan’s beliefs

Answer 2

Was a strong Christian who believed in many things such as opposing abortion and homosexuality. A lot of his support came from the Christian right.

Question 3

Supply-side economics

Answer 3

Trickle down theory whereby low taxes and government regulation will allow business to make more money which will ‘trickle down’ to the rest of the people

Question 4

Initial actions reducing big government

Answer 4

• Freeze on federal hiring
• Had to cut travel expenses by 15%
• Despite making him look busy did not cause much financial savings

Question 5

Reaganomics

Answer 5

Reagan presented his plan to congress in 1981 which had 4 main points

• Cut Federal Deficit: Budget cut domestic spending and had many errors. Due to its haste had $74 billion of yet undermined cuts
• Tax Reductions: Reductions made in the 1981 ERTA
• Deregulation: Had been started by Carter
• Planned control of money supply: To hold down inflation while economy grows

Question 6

Passing bills

Answer 6

Was fairly easy for Reagan as Republicans had majority in senate and almost one in the house so only needed 26 Democrats support

Question 7

OBRA

Answer 7

Omnibus Reconciliation Act of 1981 was passed through congress fairly easily with only minor changes

Had cuts worth $35 billion of federal spending

Question 8

ERTA

Answer 8

Economic Recovery Tax Act 1981 was passed at the same time as the ORA but was fought harder in congress.

It cut taxes for higher income from 70% to 50% and for lower income 14% to 11%

Other taxes were also decreased

Question 9

TEFRA

Answer 9

Tax Equity and Financial Responsibility Act of 1982 made changes to the budget due to financial downturn in 1982 and also temporarily raised some taxes

Question 10

COBRA

Answer 10

Consolidated Omnibus Budget Reconciliation Act of 1986 further reduced federal spending on things by moving it to the state or private companies

Made the employer responsible for healthcare instead of the federal government

Question 11

Tax Reform Act

Answer 11

Tax reform Act of 1986 reduced the number of tax brackets to reduced tax evasion and supposedly help the poorest people

Further lowered high end tax rates from 50% to 28%

Question 12

Did polices stop inflation

Answer 12

Reagan put pressure on FRB to restrict money supply and didn’t ask to lift them when unemployment rose.

Inflation fell from 13.5% in 1980 to 6.2% in 1982 and remained around this figure and by 1996 it hadn’t reached double figures again

Question 13

Did polices reduced unemployment

Answer 13

Money supply restriction caused high interest rates which badly affected many business. Reagan came to power during a recession and it worsened as unemployment rose from 7,1% in 1980 to 9.6% in 1983 however it did fall after this

Question 14

Did polices increase personal wealth

Answer 14

Some say it made the rich richer and poor poorer.

However some disagree and say rich were affected most by tax cuts and the poor benefited as tax cuts on rich benefited economy.

Question 15

Did polices encourage people to save and invest

Answer 15

Deregulation meant companies offered more risky interest rates on savings and for a while people did benefit

Didn’t last as stock crash in 1987 caused government to step in and provide massive bail out fund under Bush

Question 16

Did polices reduce the deficit

Answer 16

Deficit did not decrease during Reagan’s presidency

• 1980 deficit was $59 billion
• 1983 deficit was $208 billion

big reasons include lower tax income and increased defence spending with it rising from 23% of federal spending in 1980 to 28% in 1987

Question 17

Legacy of Reagan’s economic policies

Answer 17

George H. W. Bush tried to continue these policies however they were less popular and Democrats had control of Congress

He also raised taxes despite campaigning he would never do so

Bill Clinton did no revert to old democrat polices and kept low taxes as they were popular. He did however increase welfare spending on things like medical care

Question 18

Actions reducing big government

Answer 18

• Deregulation: Removed 23,000 pages from an 87,000 page federal book of regulations
• This had brought down the price of petrol and heating
• Cut federal waste and fraud saving $2 billion in 6 months
• Replaced federal agencies with private ones

Question 19

Problems with deregulation

Answer 19

• Big companies would buy smaller ones when they were struggling
• Emergence of conglomerates which set their own lower safety standards than federal standards
• Despite initial priced drops big companies would work together to ‘fix’ a price and raise them again

Question 20

Savings and Loan Collapse

Answer 20

Through regulation S&Ls began competing with banks and would have to take more risks.

Many of them failed and government had to introduce legislation to bail them out. By 1988 S&Ls had lost $10 billion

In 1989 the property market collapsed and Bush had to sign the Financial Institutions Reform, Recover and Enforcement Act (FIRREA) which bailed out failing organisations. It cost $150 billion

Question 21

Trade

Answer 21

Imports increased as their was less government restrictions on trade allowing cheaper foreign imports to compete with American goods

US also borrowed more than it leant out for the first time

Question 22

Reasons for failure to reduce big government

Answer 22

• Congress would not pass deregulation on things such as pollution and working conditions
• State governments did not want to pay for things that the federal government was
• By the time Bush came to power people were less in favour of deregulation having seen its long term impact as companies tried to maximise their profits

Question 23

Affect on the poor

Answer 23

The situation for the poorest Americans worsened during Reagan due to:

• OBRA cut spending to many projects for the poorest and introduced a cap to payments for many welfare
• Fewer people were eligible for government benefits

Question 24

Workfare

Answer 24

• Changed welfare to workfare but requiring at least one parent to work
• Work provided pay poorly (less than minimum wage)
• Childcare was hard to get as despite government promises it was not increased

Question 25

Social Housing

Answer 25

• By 1985 there were 3.7 million families who qualified for low-income homes but there were none for them
• Funding for low-income homes decreased from $32.2 billion in 1978 to $9.2 billion in 1988 and so homelessness increased

Question 26

Homelessness

Answer 26

By mid 1980s Reagan had to address homelessness
- Increased funding for homeless from $300 million in 1984 to $1.6 billion in 1988

Question 27

Impact on minorities

Answer 27

Reagan did very little to help minorities
- Reduction in big government meant he was unwilling to extend Civil Rights legislation
- Did not support Equal Rights Act and was anti-abortion
- Did very little to help the AIDs epidemic until friend Rock Hudson died from it due to Christian opposition to gay people

Question 28

Revitalise the presidency

Answer 28

After Nixon and Carter people did not trust the presidency and felt that no matter what they did nothing would change.

Reagan was charismatic and had lots of support as he was very good a seeming like he was doing a lot even if he wasn’t and so did revitalise the presidency

Question 29

Involvement with legislation

Answer 29

Despite initial success Reagan was not able to repeat it and Congress often blocked legislation he wanted to bring in.

He was pragmatic and listed to advisors on when not to present a bill

Bush and Clinton also struggled to get legislation passed through congress and so increased presidential involvement in legislation did not last

Question 30

Iran-Contra affair

Answer 30

US government violated its neutrality on the Iran-Iraq war and provided Iran weapons to free US hostages and used the money for the sail to arm contra rebels.

Damaged presidency when discovered his involvement and lying during the affair.

Question 31

New Right

Answer 31

Rejected many assumption since New Deal in which federal government should be involved in peoples lives and wanted to reduced help given to ‘lazy’ people on welfare

Also opposed the support given by governments to gay rights and the rights of women etc.

Congress blocked many of these more extreme policies

Question 32

Republican mistakes

Answer 32

Saw their victories as people liking their policies instead of democrats failures and so beloved there was more support for their extreme policies than there were as people did want a fair society

Question 33

Democrat changes

Answer 33

After a period of disorder during the 1980s the Democrats held a convention and created a new form of policy which accepted low taxes and less federal intervention but still provided welfare.

Question 34

Business in government

Answer 34

Reagan brought big business back into government which led to increased business funding for campaigns and could buy airtime for candidates

Question 35

Christian Right

Answer 35

Reagan’s presidency allowed the Christina rights to become more outspoken and loud.