Reaganomics Flashcards
When did Reagan come into power
In 1980
Political reasons as to why Reagan one the election
> Carter was unpopular
people had lost faith in the current government
people believed that Carter was unable to handle the economy
their had been two oil crises one in 1973 and the other in 1979. The first time due to the Arab-Israeli war, both times, the government introduced rationing books, this leading to the public accusing them government of stockpiling the oil
Social reasons as to why Reagan one the election
> he was previously a famous actor and therefore was already well know to the public
he was telegenic, therefore he looked good to the public
he was also characteristic and a great orator, so it was easy for him to draw public interest
-This helping to put faith back into the government. He said things such as ‘make America great again’, and that government was the problem. Whereas, carter would blame the American public for the economic problems
What were the first things Reagan did when in power and why.
> he fired many White House staff and did not replace them. = less government spending = reduced federal deficit
sent him budget for his term as president all at once instead of yearly to congress (because congress has the power of the purse). = this meant that Reagan had political autonomy over government spending for 4 years
What are the 4 pillars of reganomics
> Reduce federal income and capital gains taxes (government not spending money so do not require taking more money)
reduce federal spending (government not spending money so do not require more money)
reduce government regulation on the free market (free market allows business to increase profit and investments)
tighten the money supply to reduce inflation (so they can re-establish the worth of money - which helps helps to re-evaluate cost of goods (living).
When did Reagan pass the two tax bills
One in 1981 and the other in 1986.
What he change taxes from
He change them from over 70% to 23%
Weaknesses of reaganomics
> HE NEEDER TO SAVE $74 BILLION OF GOVERNMENT MONEY, WHICH WAS NOT DECIDED WHERE THAT MOENY WAS GOING TO COME FROM.
cutting federal deficit by 3% only temporarily
it favoured the rich
increases federal deficit, in the long run
there was prosperity but it was only temporary
What did Reagan presidency look like
> he one a ‘landslide’ election
the majority of congress were republic can so he faced on gridlock this meant that he was able to easily pass through legislation
he faced some democrat opposition when passing legislation
What was Reagan’s budget clawed and when was it passed
> The Omnibus Reconciliation Act of 1981
What tax bill did Reagan pass and what did it do
> The Economic Recovery Tax Act in 1981
- it cut personal income the by 28%
- the rich = 70% to 50% and the poor = 14% to 11%.
What was the problem with Reagan’s economic recovery tax act in 1981
> it means that the rich get richer and the poor people poorer
What policy did Reagan believe in, how did you see this in his presidency
He believed in laissez faire.
> he deregulated business and the free market
-his did this using private contacts and reducing social welfare and cut government programmes.
Who did the cuts to social welfare and government programmes affect the most
> it effected minorities the most
What was Reagan’s trickle down economic theory. What did it means. What were the issue
> Cutting tax for business
- this meant that the lower cost of tax for business = they now had more money to invest back into the company = company can expand = increasing wages for the workers
many top business men were keeping the extra money for themselves
