BP5- Reagan

Question 1

Give some similarities between the 1920s government and Reagans 1980s government.

Answer 1

Reduction of ‘big government’ essentially a return to laissez-faire.
-Both anti-union. Union membership fell under both and portrayed union membership as ‘un-American’. E.g Reagan declared strikes illegal.
-Allowed for the creation of big businesses with could monopolise the industry.
-Significant tax reductions. Both reduced top-level personal tax rates.
-New industries flourished e,g cars and computing while farming and mining suffered.
-Wealth concentrated at the top of the economy.
-Encouraged financial speculation which led to stock market crashes.
-Believed in ‘rugged’ individualism.
-Mentally divided the poor into worthy poor and feckless

Question 2

Give some reasons as to why Reagan was elected.

Answer 2

The USA was experiencing a loss of confidence due to:
-USA had lost a war for the first time
-Presidency tarnished by Watergate
-Economy in decline
-Oil crisis of the 1970s
-Reagan came to power promising change and not just crisis management.
-Wanted a shift away from liberal policies that he felt were weakening the USA such as the Great Society.
-The American public felt their children’s lives would be worse than theirs which showed they had no confidence for the future under Carter.

Question 3

What were reagans personal beliefs?

Answer 3

-A committed Christian
-Opposed homosexuality and abortion.
-Prayer in schools.
-Tried to pass a law restricting abortion however Congress did not agree.

Question 4

How did Reagan manage to maintain support despite his controversial personal beliefs?

Answer 4

He always articulated that these were his personal views.

Question 5

What were reagans key aims?

Answer 5

Reagan wanted to control government spending, reduce government involvement and cut taxes.

Question 6

What did Reagan do in his first 3 days?

Answer 6

He sacked many White House officials and introduced a federal government hiring freeze.
He had a department freeze on office furnishing and equipment and they had to cut travel expenses by 15 per cent.

Question 7

What is supply-side economics?

Answer 7

Argued that the economy was not driven by consumer demand but by increasing production and encouraging saving and investment. They believed restraints on production should be removed.

Question 8

What was Reaganomics?

Answer 8

Reagans program for economic recovery.

Question 9

Principles of reagnomics.

Answer 9

Cutting the federal deficit (budget bill): aimed to reduce the federal deficit from 22 per cent of the GNP to 19 per cent by 1986.
-Personal and business tax reductions.
-Deregulation.
-Planned control of the money supply: to keep inflation down while expanding the economy.

Question 10

What is deregulation?

Answer 10

The removal of federal control in industry, state and local government

Question 11

How did Reagan pass legislation easily?

Answer 11

There was a republican majority in the house of representatives.

Question 12

What was Reagans initial budget bill passed as?

Answer 12

The Omnibus Budget Reconciliation Act.

Question 13

When was the Omnibus budget reconcilliation act passed?

Answer 13

1981

Question 14

When was the Economic Recovery Tax Act passed?

Answer 14

1981

Question 15

What did the Economic Recovery tax act do?

Answer 15

Cut marginal income tax by 23 per cent over three years.
-Linked the tax bands to inflation.
-Those paying higher tax benefitted most.
-Allowed all working taxpayers to set up untaxed independent retirement accounts.

Question 16

How much did the omnibus reconciliation act aim to take out of federal spending?

Answer 16

35 billion.

Question 17

When was the Tax equity and financial responsibility act passed?

Answer 17

1982

Question 18

What was the Tax Equity and financial responsibility act?

Answer 18

Made changes to the budget in response to the economic situation. Tightened tax rules and raises taxes on cigarettes and the telephone service.

Question 19

When was the consolidated omnibus budget reconcilliation act passed?

Answer 19

1986.

Question 20

What was the consolidated omnibus budget reconcilliation act?

Answer 20

Revised the budget in many minor ways to save the federal government money. E.g shifts healthcare payments from government to employer.

Question 21

What was the tax reform act?

Answer 21

Revised the tax codes reducing the number of tax brackets.
Aimed to stop tax evasion loopholes and ease the pressure on poorer families.

Question 22

Did reagans policies stop inflation and unemployment?

Answer 22

He put pressure on the Federal Reserve Board to put tighter restrictions on the money supply.
-This led to a sharp rise in interest rates which hurt industries that had to buy supplies on credit or had loans with a long-back pay period as they would be paying more interest on the borrowed money.
Many businesses were badly hit.
Unemployment rose but inflation began to fall.

Question 23

Did reagans policies increase personal wealth?

Answer 23

Tax cuts made the rich people richer.

Question 24

Did reagans policies encourage people to save and invest?

Answer 24

As the economy came out of the 1982 recession, more people began to save and invest.
However, policies to cut down big government involved deregulation and so increased competition led to problems.
Financial organisers took more risks to win more customers.
The financial market became more unsafe and so people lost both savings and investments in the late 1980s crisis. Stock market crash of 1987.
Recovery from this was more rapid than that of wall street due to the FRB encouraging people to not panic.
Individuals and business suffered.

Question 25

When was there a stock market crash in the 80s?

Answer 25

1987.

Question 26

Did Reagans policies reduce the deficit?

Answer 26

1980- it was $59 billion.
1983- $208 billion.
This cost increasingly more to pay off and a lot of this was funded from borrowing abroad. This turned the USA into a borrowing nation instead of a lending one.

Question 27

Why did Reagan not manage to reduce the deficit?

Answer 27

Reagan was so determined to cut taxes.
Federal departments resisted cuts.
Reagan always said that increased defence spending was necessary.
Defence spending rose.

Question 28

Who was president after reagan?

Answer 28

George Bush

Question 29

Why did Reagan want to reduce big government?

Answer 29

Reagan believed that reducing the big government would benefit the USA as it would produce less federal interference in state and local affairs, businesses, finance and all aspects of peoples lives. These measures sounded positive to a nation that had become suspicious of government intervention.
However, they were also interpreted as less funding for state and local government projects so less control over social welfare.

Question 30

How did Reagan reduce big government in the short term?

Answer 30

Reagan saw deregulation as a way of reducing big government.
He cut federal regulations almost in half. Removed 23,000 pages from the Federal Register (contains all federal regulations).
Brought down cost of petrol and heating.
Replaced federal agencies with private sector ones and federal employees with volunteers.

Question 31

Give some problems of deregulation.

Answer 31

When smaller companies struggled, bigger companies could just buy them out.
Bigger companies expanded and small, independent companies struggled.
Saw a rise in conglomerates
Businesses set their own standards of safety below other businesses.
Initially, deregulation brought lower pries through competition however as big businesses grew they fixed a price structure so there was no competition.

Question 32

WHat are conglomerates?

Answer 32

organisations that control several businesses

Question 33

What were the effects of reagans policies on trade?

Answer 33

-Foreign imports became cheaper and so they increased.
-American companies lost business.
-The textile industry was badly affected.
-The USA was a global borrower for the first time.
-American companies were being bought by foreign companies.
-Reagan supporters said that the rise of foreign imports was good as it gave consumers more choice. They said it made the USA an attractive place to trade with and invest in.

Question 34

Did Reagan actually manage to reduce big government?

Answer 34

Not reduced as much as he had hoped.
Congress blocked deregulation in certain areas.
State and local governments were unwilling to take on roles previously held by the federal government. They did not want to pay for something that would otherwise be federally funded.
By the time bush came to power, people were not keen on deregulation.
Many deregulated businesses were more concerned of their own benefit than public benefit. E.g pre-deregulation aeroplanes flew to all over the USA and only half full whereas afterwards they flew less often, to fewer places and were tightly packed.

Question 35

Did the gap between rich and poor increase or decrease under reagan?

Answer 35

Increased and the situation of the poorest American families worsened considerably.
Reagan saw a difference between the deserving poor and welfare scroungers. The scroungers, he said, were not willing to work, they thought the government owed them a living.
His OBRA finance cuts targeted mainly federal spending on projects for the poorer.
Fewer people were eligible for benefits and many payments were capped.
This hit the poorest families hard.

Question 36

Give an example of Reagans welfare cheats.

Answer 36

He repeatedly told a story of a black woman in Chicago who was defrauding taxpayers hundreds of dollars using a variety of names and welfare cards. A press search never found her.

Question 37

Why was Reagan nicknamed the ‘teflon president’?

Answer 37

Anything negative he was accused of or did no criticism actually stuck as he was popular.

Question 38

What was workfare?

Answer 38

Reagan claimed that benefits were buying into dependency. He wanted to change welfare into workfare by requiring at least one working parent before it paid out family benefit. Many single parents found childcare very hard tp find despite government promises of childcare. This made it impossible for them to work.

Question 39

How did Reagan change social housing?

Answer 39

By 1970, there were almost 2.4 million low-income homes available to families that applied for them. By 1985, there were 3.7 million families who qualified but could not move into them as there were none available. This was because Reagans administration slashed federal funding for low-cost housing.

Question 40

Effect of Reagans social housing cuts.

Answer 40

Homelessness.

Question 41

Statistic of federal funding for low cost housing in 1978 and 1988.

Answer 41

-1978- $32.2 billion.
-1988- $9.2 billion.

Question 42

What legislation did Reagan pass on homelessness after he realised he needed to act?

Answer 42

In 1987, Congress pushed a bill through giving some federal help projects for the homeless. Funding for the homeless increased from 1984 ($300 million) to 1988 ($1.6 billion).
-The 1987 McKinney Act set up the Federal Emergency Management Agency (FEMA) which matched state grants to local homeless projects.
The FEMA set up a federal housing project for transitional housing with special emphasis on the elderly disabled, veterans, families with children and Native Americans. Also gave medical care to the homeless and provided education for homeless people.

Question 43

Impact of rising interest rates on home ownership.

Answer 43

Rising interest rates pushed up the price of housing costs, mortgages and rent.
Between 1980 and 1987, the average mortgage debt increased by 30 percent and the rate of foreclosure increased.

Question 44

What is foreclosure?

Answer 44

repossession of a home by a mortgage lender as the borrower can no longer meet the payments.

Question 45

Impact of deregulation on working hours.

Answer 45

deregulation had removed constraints on working hours, workers found themselves having to work longer hours and have less leisure time.
People felt pressured to work even harder due to competition. Reagan put stress on productivity.
It became harder for working mothers to have time off work for a sick child.
Many people moved to part-time work on less wages.
Younger people coming into the workforce were worse off than elders had been.

Question 46

Decrease in leisure time statistic.

Answer 46

Leisure time decreased by 10 hours from 1973 to 1983.

Question 47

What was a two-tier wage system?

Answer 47

There was a two-tier wage system in which established workers kept the wage rates and benefits that were negotiated when they took the job, however the new employees could be offered a lower salary and fewer benefits for doing the same job. This was offered on a take-it-or-leave-it basis.

Question 48

What was the impact of Reagans changes on minorities?

Answer 48

Reagans desire to cut back on federal intervention meant that it was unwilling to extend civil rights legislation.
Reagan vowed he was not racist or sexist but his administration did little to support minority rights. The NAACP pointed out that Reagans inaction was harming all minority groups.
The administration withdrew 40% of its funding for bilingual education as it said it was in the interests of children from minority groups to use English as soon as possible in order to enter the workforce.
The planned shrinkage of inner cities continued and was made worse by the cuts to federal spending on low-cost housing.
Reagan did appoint a woman, Sandra day, to the Supreme Court however women’s rights floundered under him. He did not support the Equal Rights Act and spoke out against abortion.
-Hard-working, well-educated, middle-class black Americans could get ahead however un-educated, young, poor black men often went under. They felt that they always had the pressure of being a minority and being the ‘quota hire’ as opposed to being hired for their abilities.
The civil rights movement was scrambling to regain ground.

Question 49

Reagan and the gay rights movement.

Answer 49

There was disagreement over Reagans reaction to the gay rights movement and especially towards AIDS.
Some people accused him of ignoring the AIDS epidemic until his friend Rock Hudson died of AIDS.

Question 50

Effects of farming industries under reagan.

Answer 50

Farming was badly affected by the high interest rates and federal non-intervention. In the 1970s, the USA had supplied wheat to the USSR and encouraged farmers to expand and grow wheat. When the USSR invaded Afghanistan in 1979, the USA stropped exporting wheat in protest. At the same time interest rates rose and the money supply tightened. There was a drought in 1983. Smaller farms were bought by other businesses.
-The National Save the Family Farm Coalition was set up in 1986 by farmers themselves which organised demonstrations and campaigns to highlight the plight of small family farms.
-In 1983, there were about 500 farms sold every month.

Question 51

What was set up by farmers in 1986?

Answer 51

The National Save the Family Farm Coalition.

Question 52

What was the bi-coastal boom?

Answer 52

The industries that did well in the 1980s, created more employment so people were eager to move to the cities where these industries were located. This resulted in a population shift from the North and East to the South and West.
Those families that could afford to make the move fuelled a growth of the suburbs. People here felt their lives were improving and were more likely to vote for Reagan. For them the administration had worked.

Question 53

Reagans personality.

Answer 53

Reagan was charismatic and had media and popular support.
Reagan became president after the awkwardness of Nixon and Carter and their inability to handle things. People did not trust the government.
Pragmatic and flexible with congress.

Question 54

What was the iran-contra affair?

Answer 54

White House officials had supplied arms to Iran in order to free several US hostages.
The officials used the money from the arms sales to Iran to support Contra revels in Nicaragua who were fighting the existing government. They supplied them with weapons and all of this was done without the agreement of Congress. It was also against the policies of neutrality.

Question 55

Impact of Iran-contra.

Answer 55

This happened after Watergate and so again people were asking themselves the same questions.
Reagans involvement damaged the presidency though he handled it better than Nixon.

Question 56

How many viewers did the Reagan-carter debates have?

Answer 56

80.6 million.