BIG GOVERNMENT Flashcards
What were reagan’s aims in reducing big government
-wanted to shrink the size and scope of the government
-thought the american dream was that people should get on and improve their own lives and that the government wasn’t responsible for that (coined this ‘new federalism)
-wanted america to focus on individual liberty and entreprenureship
-thought cutting back gov would help Us finances alongside his tax cuts
what did reagan say in his inaugural adress in 1981
‘Government is not the solution to the problem, government is the problem’
background context of increasing gov before Reagan was inaugurated
-there was increasing government intervention and involvement from 1900
most important increases of intervention up to 1980 (more in note:
-during ww1 wilson managed to pass measures to coordinate war effort (however laissez faire gov after wilson reduced government intervention in response)
-FDR’s new deal increased size and scope of gov through alphabet agencies
-after ww2 increasing gov intervention (even when eisenhower, a republican was elected, he saw it as politically suiciudal to cut back the sie of the government- he raised the minimum wage and expanded social security)
-under LBJ’s great society a whole raft of federal gov depertments were made due to his declaration of war on poverty
how did reagan use a series of executive orders when he became president to reduce big gov
used a series of executive orders to set up new advisory groups, reporting directly to him on how to cut down ‘big government
what was deregulation
removing federal control in industry, state and local government
deregulation in the financial sector
increased competiion led to problems as financial organisations took increasingly dangerous risks to win more customers
what did reagan see as the key tool in reducing big government
deregulation
why was reagan successful in reducing big government
wasnt the first republican who wanted to cut down big government but…
-he was a much better communicator than republican who had come before him (charisma and charm made people trust him)
-the economic stagnantion that had occured before 1980, and the gov’s inability to deal with it effectively had led to people losing faith in the government
-the cost of gov departments and programmes were becoming increasingly higher (american’s thought their taxes were being misused)
what did reagan say he had done to reduce big government by 1982
-cut federal regulations by almost half (by removing 23,000 pages from the federal register, which origionally had 82,000 pages)
-helped helped bring down the cost of petrol and fuel by deregulation
-created a federal strike force to combat gov fraud and waste (that had saved 2 billion)
-replaced federal agencies with private ones and federal employees with volunteers
who began deregulation before Reagan
Carter- had deregulated airlines, drafted bills on deregulating trucking, railways and some areas of finance like banks
BUT ALSO INTRODUCED MORE REGULATIONS on environment and working conditions
what did reagan successfully do to reduce big government from 1980-89)
what did reagan successfully do to reduce big government from 1980-89)
what happened to civilian employment as a result of deregulation
-rose overall by 3%
why did Reagan appoint James G. Watt, and what did james G.watt do
-appointed to make cuts on federal gov
-James saw regulations to protect the environment as extra ciosts to businesses
-he opened federal land to exploitation by coal and timber companies and blocked any creation of new wilderness areas
(cuts on big gov had bad impact on environment)
why did environmentalists hate Reagan
-tried to veto the clean water act
-said trees cause pollution
-didn’t see protecting the enivironment as a big issue
-blocked creation of new wilderness areas
-made 1 m acres of offshore land for oil companies
-opened federal land up to exploitation by coal and timber companies
why did reagan ignore the environment
-was much more focused on the economy, reduced government spending and schemes on environment in order to improve the economy
reagans deregulattion of savings and loans businesses context
-reagan administration applied carters deregulation on banking to savings and loans companies
-meant that becuase banking restrictions were lifted, banks could offer high interest rates on savings
good for savers, bad for businesses and people with long-term loans (who couldnt switch to the emerging lower interest loans)
What Act deregulated Savings and Loans institutions?
Garn St Germain Depository Institution Act, 1982
problems with reducing big government via deregulation on Savings and loans companies
-S & L’s had to make increasingly risky investments as they were now competing with banks (lend at low rates and offer high rates of savings to savers)
-authorised a wide range of risky investments
- and gambled and stole (including the industry leaders)
-by 1988 s&l’s had lost 10 million
-needed £132 billion bailout from public funds
what did the federal government have to do in response to the collapse of s&l’s
forced to pass the competetive equality in banking act in 1987
bailout of 132 billion of public funds
what did senator Earnest Holling’s say about the economic impacts of reducion of big government
said reagan had ‘dealt Uncle Sam a crippling blow’
-said that national debt was now so big that no one would be able to start another major programme without rising taxes
impacts of reagan’s reductions on the us (overall)
overall, reagan was successful in reducing the size and scale of the US federal government, but perhaps not as much as he hoped
the cutting of gov programmes and regulations did not have a lasting impact on the Usa
what were the problems/ failures of removing controls (deregulating) to reduce big government
BIG COMPANIES VS SMALL
-big companies were very successful, but normally at the expense of smaller ones (when small companies began to fail, bigger companies would buy them up)
-this saw a rise in conglomerates (huge companies that controlled businesses in multiple fields)
UTILITY/ SERVICE COMPANIES
-many utility/service companies (water, electricity, phone, transportation etc) began to reduce services to unprofitable areas (especially rural regions-which suffered) to save money
ENVIRONMENT
-environmental issues suffered as gov and businesses took little interest in ‘green’ issues and focused on the economy
BORROWING NATION
-usa went from being the worlds ‘biggest banker’ to a borrowing nation as trade shifted against the usa and imports began to rise (created more competition and led to cheaper goods for consumers BUT also hurt american businesses who couldn’t compete with cheaper foreign products)
examples of successes of reagan’s reductions
FEDERAL REGISTER
-had cut the federal register by 23,000 pages (was 87,000 when reagan started in 1980)
BIG COMPANIES
-many big companies were successful (at expense of smaller ones ) rise in conglomerates
What is New Federalism?
This would produce less federal interference in state and local affairs, business (including world trade), finance and other aspects of people’s lives.
What is the negative impact of deregulation?
Less funding for state and local government projects and less regulation of business expansionism
In the first year of his presidency, Reagan created a strike force to do what?
Combat government fraud and waste, this had saved $2billion in six months.
What Act deregulated Savings and Loans institutions?
Garn St Germain Depository Institution Act, 1982
How much money had S&Ls lost by 1988
10 billion
What is one example of a Conglomerate?
General Electric
What did Bush sign in order to save many banks following Reagan’s deregulation?
Financial Institutions Reform, Recovery and Enforcement Act (1989)
cost 150 billion
Which American industry was hit particularly hard by the new foreign competition following deregulation (that could have been saved by gov intervention)?
American textile industry
250 textile plants were forced to close and over 300,000 workers lost their jobs
Which nation made advances into the American car and technology industries as a result of deregulation?
Japan
How did Reagan respond to bills passed in Congress to introduce regulations to help the failing textiles industry?
Used the Presidential veto
What is an example of deregulation not benefitting American consumers?
De-regulation of the aviation industry, as prices rose, destinations fell and flights were less frequent
Why did Reagan not reduce medicare?
They benefitted key voting groups such as the elderly and veterans
increase of defence spending (failure in reducing big gov)
rose from 23 to 28 percent 9hwever always said this was important)
federal spending on human resources reduction
28 percent of federal spending in 1980, and by 1987 was 22 percent
less federal government expenditure failures
-federal expenditure increased from 699.1 bn in 1980 to 859.3 bn in 1987
-defence spending almost doubled from 157 bn in 1981 to 303.6 bn in 1989
-national debt tripled to 2.6 bn (and became gov’s third highest expenditure)
-protected popular domestic programmes like medicaid and funding to these programmes actually increased in 1980s
less federal government expenditure successes
-1981 ORA bill saw $35 b worth of cuts across 212 gov departments
-government spending on human resources was 28 percent of federal spending in 1980, and by 1987 was 22 percent
