The impact of the Reagan presidency 1981-96 Flashcards
Which pre-Reagan events led to people looking back at the 70s as a bad time?
Loss of war for first time in Vietnam, Watergate and inability to fix economy and fuel shortages
What was Reagan’s view on TUs?
Hardline anti, as shown with sacking 12,000 air traffic controllers in 1981 who went on strike
How was business similar under Reagan as in the 20s?
Creation of monopolies, tax reductions of 75% to 25% for top rate, wealth concentrated at the top, more financial speculation and crashes, and rugged individualism where new industries grew (Gates and computing)
Why was the future an issue in the 1980 election?
As the majority of people saw their children’s future would be worse than their own, people liked Reagan’s personal campaign to bring back the good times rather than Carter’s all together campaign
What did Reagan do when entering the White House to show a rejection of government spending?
Sacked some White House employees, put a freeze on federal hiring and new office furnishings, told staff to cut travel expenses by 15% and set up a board reporting on how to cut down on big government
What was Reagan’s economic strategy called?
Program for Economic Recovery
What were the 4 tenets of Reagan’s economic policy?
Cutting federal deficit, reducing tax rates, deregulation and planned control of money supply
What was the name of Reagan’s first budget and what did it do?
Omnibus Reconciliation Act of 1981, cuts in Great Society reform package worth $35bn
What was the tax bill which Reagan passed and what did it do?
Economic Recovery Tax Act of 1981, income tax down 23% over 3 years, bands linked to inflation, with Independent Retirement Accounts (without tax) and business rates and taxes reduced, tax breaks offered businesses, in particular small and innovative
What were the desires of Reagan’s economic policy?
Stop inflation, reduce unemployment, increase personal wealth and productivity, more personal saving and investing, decrease federal spending
What did Reagan do with the Federal Reserve Board?
He encouraged them to tighten control on the money supply, which they did more than asked for, and then Reagan kept this set up even when employment rose
How did a tight monetary flow affect industry?
Increase in interest rates hurting companies that bought on credit or had long pay-back periods like construction, deepening the crash
Unemployment in 1980 and 1983
7.1% and 9.6%
What was inflation in 1980 and 1982
13.5% down to 6.2% and remained around 5% onwards
What is the historical debate on personal wealth?
Some see it as only helping richest, while others say it helped poorest most
How did productivity change in the first term of Reagan?
It went into the negative (both labour output and GNP) in 1982, before booming in 1983/4 and remaining more steady but strong after
How did saving and investing change under Reagan?
It was encouraged, but was put into a more dangerous place due to deregulation as show by savings and investment losses in late 1980s which FRB had to step in to control, with bankers lending to each other and reassuring the financial sector
Deficit and interest payments as a percentage of federal spending in 1980 and 1983
$59bn and 9% then $208bn and 14%
How did Congress cause issues for the deficit?
Planned cuts on welfare were watered down
How did Reagan change the human/defense spending set up?
Since the 60s and 70s defense budget was cut to increase human spending, but under Reagan 28% down to 22% on human and 23% up to 28% on defense
How did Bush affect spending policy?
He was less popular as smaller mandate and with Democratic Congress so was unable to carry on the spending cuts and of course no new taxes
How did Clinton act as a ‘New Democrat’ affected by Reagan/
Economy-focussed campaign (it’s the economy, stupid) with plans for low inflation, high unemployment, reduced deficit and no tariffs
Why was big government reductions supported?
New Federalism was supported by those who didn’t trust government and wanted it out of state and business interests
How many pages out of how many did Reagan cut from the Federal Register by 1982?
23,000 out of 87,000
What success of deregulation and reduction of big government did Reagan cite in 1982?
Reducing prices of petrol and heating, federal strike force had saved $2bn in 6 months and federal agencies turned to private sector with volunteer support
How did Reagan’s deregulation play the system well?
The small changes, while ineffectual, were seen by the population as key and insightful
How did Carter start deregulation?
Deregulation of airline as well as drafting laws on trucking, railway and finance deregulation
How did Reagan change deregulation?
It included working conditions and environmental deregulations
How did deregulation affect businesses of different sizes?
Small ones were bought up by larger ones, such as General Electric, which was able to decrease safety standards and, after a monopoly was reached, set prices and cut services (in particular rural)
When were Savings and Loan Institutions deregulated?
1983
Why were deregulations in the Savings and Loan institutions dangerous?
The people who ran them were used to safe, regulate rate of interest investments, while under deregulation they were able to make much riskier investments, many of which failed due to incompetence of the lender
What was passed in 1987 and 1989 to fix the S&Ls crisis?
Competitive Equality in Banking Act, and then FIRREA ending with $150bn bill
What was the result of a weakening dollar and no government investment on trade?
US went from world banker to a borrower, with imports rising as they were cheaper than the many closing industries (such as textiles) and US companies being bought by foreign investment
What was the upside and downside of foreign investment?
It gave consumers choice and made the US attractive for international trade and more investment, but the profits of investment were re-invested abroad
Example of successful and failed deregulation in Congress
Oil prices deregulated by Congress, but pollution and working conditions in nuclear power plants not
Why did the states not help deregulation?
They did not want to have to pay for services that would normally be under federal control, and often services collapsed, particularly with rural services for the poor (transport, communications, roads)
