Reagan - Unit 5 Flashcards
Reagan, 1980 inaugural address quote about government
'’Government is not the solution to our problem. Government is the problem.’’
What economic theory did Reagan agree with?
Supply-side economics
How did Reagan reduce inflation?
1981-83
Backed Chairman Volcker
Raised interest rates to 21.5% to try to cut inflation
What did Reagan’s attempts to reduce inflation cause?
Give unemployment rates
1981-1982 recession
Unemployment levels reached roughly 11%, their highest since the great depression
What did Reagan do within the first three days of becoming president in order to cut government spending?
Sacked certain white house staff and put a hiring freeze in place
Cut travel expenses by 14%
Set up an advisory council to cut big government
CA: These were small financial savings that looked like action but in reality had very little impact
CA: Federal employment rose over the presidency
ORA
Omnibus Reconiciliation Act
13th August 1981
Cut government spending in over 300 programmes, reversing many of Johnson’s Great Society reforms e.g. highway repair, better housing initiatives and educational funding
Spending cuts between 1981-1987 and the growth of federal spending rates
Calculated by the Congressional Budget Office to be around 1,040 billion
Rate of federal spending growth fell from 4% under Carter to 2.5% under Reagan
CA: Federal Budget 2.4% higher than under Carter
What programmes did Reagan criticize and then end up spending a significant amount of the budget on?
Assistance for corportations and agribusinesses - 80 billion by the end of his first term
Social Security and Medicare took up the largest amount of the federal budget initially
How did Reagan increase military spending?
1984 - Strategic Defence Initiative (SDI) - Also known as Star Wars
Cost 26 billion
Overall defence spending increased by approx 126 billion from 1980-1988
ERTA
Economic Recovery Tax Act
13th August 1981
Reduced taxes by 33 billion
Largest tax reduction in American history
Cut marginal income tax rates by 23% and cut capital gains taxes, which benefitted the rich the most
CA: 1982-83 Public and congressional concerns about the building deficit meant that Congress pressured Reagan to undo around 1/3 of the tax cuts from the 13th August 1981 tax acts
As well as the ERTA, what else did Reagan pass that reduced taxes on the rich? And how did this act negatively impact the poor?
1986 Tax Reform Act
Top marginal income tax rates were reduced by roughly 42%
Raised taxes on lower income individuals by 4%
Largest tax increase in American history
How did Reagan help small businesses in regards to tax?
Were allowed to pay personal rather than corporate tax
Give an example of Congress reversing Reagan’s 1981 tax acts
1982
Tax, Equity and Financial Responsibility Act (TEFRA)
Tightened tax rules on businesses
Temporarily raised taxes on cigarettes and telephone services
Give a later example of Congress reversing Reagan’s 1981 tax acts
1985
Gramm-Rudman Act
Raised taxes to try to lower the government deficit
How many times were taxes raised over Reagan’s presidency?
11 times
Were raised more times than they were cut
