4 New Directions on Economic Policy

Question 1

\New Directions on Economic Policy

What was Reagan’s reputation? What, in part, formed his policy thinking?

Answer 1

• Hollywood career lasted 1937-1964
• at the height of his populairty, federa/state taxes took 91% of his income
• his resentment of high taxation caused him to become a committed Republican

Question 2

New Directions on Economic Policy

when was reagan elected governor of California?

Answer 2

• 1967-1974

Question 3

New Directions on Economic Policy

what did he call for cuts in whilst Governor?

Answer 3

• taxation
• ‘big government’
• crime
• welfare payments

Question 4

New Directions on Economic Policy

what did reagan believe in?

Answer 4

• supply side economics (low taxation and less government regulation
• reaganomics

Question 5

the impact of reagan’s policies on workers and their families

what was Regan’s new direction in economic policy? At the same time, what did he recognise?

-

Answer 5

• cut taxes and public spending
• reduce the federal government
• Reagan also knew it would be political suicide to cut programmes such as social security/meidcare because the elderly were high voters. Same with dismantling the great society

Question 6

family incomes

what did Reagan persuade Congress to cut?

Answer 6

• Spring 1981 congress agreed to reducde the budget of 212 federal programms
• among these were food stamps, student loans and child nutrition programmes.

Question 7

family incomes

what did Reagan’s reducing of AFDC do?

Answer 7

• Aid to Families with Dependnet Children
• children of single mothers were heavily dependent on AFDC
• and there were 13m children libing below the povrety line in 1984
• majority of these women were black americans
• conservatives believed the AFDC encouraged promiscuity

Question 8

family incomes

what was the effect of Reagan’s cuts in individual and coorporate taxes on the differnet classes?

Answer 8

• benefitted the rich rather than the poor
• subsequent tax rises Reagan called ‘revenue enhancements’ hit the less wealthy hardest
• tax and social programme policies increased the gap between the rich adn the poor during the 1980s

Question 9

family incomes

how did his tax and social programme policies increase the class gap?

Answer 9

• share of national income of the wealthiest 1% roese from 8-15%
• average income of the poorest decreased by $1300 per annum
• no. of homeless increased from 200-400,000

Question 10

family incomes

how was Nancy Reagan heavily criticised?

Answer 10

• her $25,000 wardrobe for the first inaugeration was compared with the 500,000 names Reagan deleted from the list of the registered disabled.

Question 11

family incomes

1981-1983 - effect on families? inflation? unemployment? average family income?

Answer 11

• double digit inflation
• 10% unemployment - even higher on the rust belt
• average family income plummeted under Reagan
• only half of America’s families maintained their standard of living in the 1980s

Question 12

reagan and education

what wsa the state of education under Reagan? how did it worsen under his administration?

Answer 12

• declining test scores highlighted by A Nation at Risk 1983
• Reagan considerd the Department of Education an unsuccessful example of big government
• he tried but failed to abolish it (he did manage to reduce its staff by 25%)
• decreased ecducation block grants to the states by 63% as he felt state managed education was better

Question 13

Employment rights and deregulation

what were Reagan’s policies?

-

Answer 13

pro buisiness and anti labour

Question 14

employment rights and deregulation

what did he oppose? ($$$)

Answer 14

minimum wage
he obstructed congress’ attempts to increase it

Question 15

employment rights and deregulation

what was his attitude towards the unions? what did he do to strikers in 1981?

Answer 15

• hostile
• 1981: 12,000 air traffic controllers ignored the ‘no strike for federal employees’ clause in their contracts and striked for higher wages
• the president fired them all and called in the military to do their jobs while new controllers were trained
• cons liked this though..

Question 16

employment rights and deregulation

how many conservatives did he appoint to the judiciary? What did this make it harder for minorities to do?

Answer 16

400
- made it harder for women, minorities, elderly and disabeld to sue their employers over discrimination

Question 17

employment rights and deregulation

what did he cut? what was his philosophy behind this? what did he fail to differentiate?

Answer 17

• the economy would benefit from lightening the regulatory burdens on industry
• issued a 25% cut of staff of regulatory agencies
• failed to differentiate stifling economic regulations and regulations that protected the environment

Question 18

employment rights and deregulation

what was their a 50% fall in? (environment)

Answer 18

• 50% fall in prosecutions for illegal disposal of harzardous waste

Question 19

employment rights and deregulation

how did he ensure workers had decreased protection?

Answer 19

• regulatory agency appointees ensured bodies such as the Occupational Safety and Health Administration made decisions in favour of buisiness and against labour
• workers therefore had decreased protection against accidents/working conditions

Question 20

employment rights and deregulation

% of peolple cut in the Consumer Product Safety Commission

Answer 20

38%

Question 21

congressional and public resistance

congressional outcry over social security

Answer 21

• Reagan was informed that the fund social security benefits came from would be bankrupt by 2000
• he suggested immediate benefit cuts to early retirees
• backed down after congressional pushback

Question 22

employment rights and deregulation

congress and reagans budget: 1981? Clean Water Act?

Answer 22

• 1981 budget was accepted, but later budgets substantially rewritten
• Reagan vetoed $18b Clean Water Act, congresso verrode his veto of the virtually identical 1987 Water Quality Control Act

Question 23

employment rights and deregulation

public opposition and results: what did Americans value? Department of Agriculture example?

Answer 23

• most americans valued school lunches, Medicare, and veterans benefits, along with Head Start (free breakfast for poor school cchildren)
• reagan left these virtually in tact
• Department of Agriculture’s attempt to save money by having ketchup and pickle relish substitute part of the vegetable portion in federal-subsidised school lunches was ridiculed then dropped

Question 24

Economic success in Reagan’s years

Defence spending?

Answer 24

• massive defence spending brought prosperity to regions with defence industries such as the west coast

Question 25

# Economic success in Reagan's years tax reform bill **1986**: what did it increase tax on? how did it lower the top rate? how did it raise the bottom rate?

Answer 25

- coorporations and capital gains - lowered the top rate from 50%-28% - increased the bottom rate from 11-15%

Question 26

# Economic success in Reagan's years period of economic growth? **1980-1988** infaltion/unemployment? new jobs? why was this the case, who took credit?

Answer 26

- inflation fell from 13.5%-4.7% - unemployment fell 7%-5.2% - 16m new jobs created - tight money policies of Carter appointee Paul Volcker at the Federal Reserve Board + fall in oil prices

Question 27

# the budget and trade deficits what did he fail to do?

Answer 27

- failed to balance the budget - tax cuts decreased federal income - defence spending skyrocketed

Question 28

# the budget and trade deficits national debt increase under Reagan

Answer 28

- $1 trillion **1980-1981** - $2.6 trillion under his presidency

Question 29

# the budget and trade deficits federal spending increase?

Answer 29

- **1980**: $699.1b - **1987**: $859.3b

Question 30

# the budget and trade deficits budget deficit in constant dollars was

Answer 30

over 5x that of his predecessors

Question 31

# the budget and trade deficits what did congress pass to try to ensure a balanced budget?

Answer 31

Balanced Budget and Emergency Deficits Control Act **1985**

Question 32

# the budget and trade deficits though, how did the USA remain an 'economic giant'

Answer 32

- 5% of the worlds population - 25% of its goods in **1990** - though Reagan left it economically weakened with a massive budget deficit and huge national debt

Question 33

# the budget and trade deficits however, how was it not *all* Reagans fault: 2 other factors

Answer 33

- most americans didnt want to reduce spending on social programmes, and congress defended them. These contributed greatly to the deficit - american consumers preferred cheap imported goods to domestic products made more expensive by higher labour costs. this contributed to the trade deficit

Question 34

# the growth of the trade deficit why did the negative trade balance develop?

Answer 34

- changing consumer spending - New discount stores such as Walmart which were very popular - cheap goods made in low-wage foreign factories - this contributed to the loss of jobs in the US manufacturing industry and the trade deficit

Question 35

# the growth of the trade deficit deficit **1982** vs per year in the later **1980s**

Answer 35

- $38b in **1982** - over $150b per year by the second half of the decade

Question 36

# the growth of the trade deficit during the Reagan-Bush years, american consumers spent how much more on imported goods?

Answer 36

- $2b more on imported goods than foreigners spent on goods made in the US

Question 37

# Government action what did Reagan persuade Japan to do? how did they respond?

Answer 37

- limit their exports to the US in **1981** - they opened manufacturing plants in the US, which employed thousands of Americans

Question 38

# Government action government tariffs on trucks and cars

Answer 38

- 25% on trucks - 3% on cars

Question 39

# Government action nevertheless: budget deficit with Japan in **1985**? how did AMericans rspond?

Answer 39

- passed $50b in **1985** - many americans in the **1990s**were accusing Japan of launching a n edocnimic offensive against the USA

Question 40

# Reagans legacy Reagan's failures.

Answer 40

- did little about the mounting trade deficit - dramatically increased national debt - social and taxation deregulation had an adverse effect on workers and their familie

Question 41

# Reagans legacy nevertheless, how was he influential?

Answer 41

- created a new public philosophy - generally considered unwise to continue to increase spending on social welfare

Question 42

# BUSH: lower taxes versus balanced budget how was Bush's presidential campaign based on contradictory promises?

Answer 42

- pledged a decrease in the $2.7 trillion deficit, where $200 billion interest was being paid annually - but also promised no new taxes

Question 43

# BUSH: lower taxes versus balanced budget Why was Bush's decision to raise taxes significant: what did it say about his beliefs about government spending? what did it demonstrate in terms of the country? who did it anger? who rejected him?

Answer 43

- he believed government had spent beyond its means so he did nothing to help workers worried about family incomes - demonstrated the difficulties of a **nation** living beyond its means. Politicians in search of votes made **promises they could not keep** - Bush also refusd to promote a socially conservative agenda, whcih further **infuriated conservative republicans** who weakened Bush's bid for re-election - tax rise also caused **many voters to reject Bush**. Clinton was elected in **1992**

Question 44

# problems for american workers in the Bush years big 3 car manufacturers fired how many workers in **1990**

Answer 44

- 60,000

Question 45

# problems for american workers in the Bush years summer **1991** unemployment?

Answer 45

- 7.8% (:0)

Question 46

# problems for american workers in the Bush years administrations closure of **31** military bases from **1991** cost how many people their jobs/

Answer 46

- 70,000

Question 47

# problems for american workers in the Bush years what did Bush's conservativism cause him to veto? 3 main bills

Answer 47

- family and medical leave legislation - civil rights bill to counter racial discrimination in employment - bill that siad he would give the unemployed excessive benefits