Topic 5: Ronald Reagan's Presidency (1981-1996) Flashcards
Explain the economic issues that plagued 1970s America.
Stagflation created a series of problems for America during the 1970s, with inflation reaching 13.5% whilst wages remained stagnant, reducing living standards. This, coupled with the 20% interest rate, had a significant impact on the livelihoods of many American families who found themselves in another economic crisis. The Oil Crisis of 1979 also contributed to widespread panic due to the shortages of oil coming from the East, as well as businesses increasing prices as a result of the spike in demand. This meant people were waiting in ridiculous queues to purchase oil for their cars in order to go about their days, which meant the shift from ‘American Muscle’ vehicles such as the Mustangs, Cadillacs and Chevrolets to more fuel-efficient makes imported from Japan and Europe.
Explain the social issues that plagued 1970s America.
Society had become disillusioned and fragmented during this period as a result of several factors , including the outcome of the Vietnam War which spanned two decades and was officially ended in 1975. This was the first occasion in which America had lost a war, with the soldiers returning home were not met with the treatment of heroes as in previous conflicts.
Why did confidence in the Executive dwindle during the 1970s?
The Watergate Scandal led to a rapid decline in the trust the public had for the President, which resulted in Nixon’s resignation and near impeachment in 1974. Following the end of Nixon’s presidency, Gerald Ford and Jimmy Carter faced overtly negative media coverage, hence leading to them having unsuccessful times in office prior to Reagan’s terms. Additionally, the loss of the Vietnam after two decades, $168 billion spent and the lives of more than 2 million soldiers on both sides lost, created distrust as the Executives were not always transparent regarding their actions at the time.
Summarise the state of affairs in the USA in 1980
The fallout of the 1979 Oil Crisis was still ongoing, with the public having to queue and pay highly inflated prices to fill their cars. From an economic standpoint, the federal budget deficit was at $59 billion and inflation was at a record high at 13.5%, which led to stagflation plaguing the 1970s and early 1980s. Additionally, the Iran Hostage Crisis, in which 52 US citizens were held hostage for over a year, was unsolved.
Why and how was a different economic approach demanded by the early 1980s
‘One-Eyed Keynesianism’ meant that after borrowing money to boost the economy and implementing welfare programmes, the Executive did not want to cut back on spending to pay back the money in the fear of chasing a recession and ruining their reputation. Along with this, ‘stagflation’ also caused problems as the rate of inflation steadily increased in the 1970s whilst the economy, payment and employment remained similar. Keynesian economics could not solve this dilemma, and therefore a new tactic had to be adopted.
Why was Ronald Reagan elected and re-elected?
Reagan had previously attempted to stand as Republican presidential candidate (1968-Nixon, 1976-Carter) and by 1980, had proven to be a formidable campaigner, earning him the nickname ‘The Great Communicator’. Additionally, the public wanted a return to ‘rugged individualism’ and laissez fairer attitudes that epitomises 1920s Republicanism, which Reagan embodied. A Christian man who was born in the 1910s and experienced in the political scene, opposed the ‘Great Society’ scheme imposed by Johnson, Reagan promised to make changes to America to restore its greatness and appealed to the voters by calling his predecessors (Ford and Carter) ‘weak’ leaders. By 1984, once Reaganomics had significantly improved the economy, the Executive had arguably fixed the problems he promised to fix, which secured his second victory. He asked voters during his campaign whether they felt better compared to four years previous when the country was in economic crisis, which did not require an answer.
What were Reagan’s domestic policies during his presidency?
Reagan promised a return to rugged individualism by significantly reducing ‘Big Government’, slashing ‘Great Society’ programmes and instilling an ‘every man for themselves’ mentality across America. His economic policies, known as ‘Reaganomics’, were built on trickle down theory and supple side economics, and came under four different pillars: reducing tax, reducing federal spending, deregulation of businesses and tightening the money supply. Being true to his word, Reagan made huge reductions in welfare spending and made a transition to ‘workfare’, which was creating rewards for those in employment. Homelessness also became a large problem while Reagan was in power, hence the implementation of the McKinney Vinto Act of 1987.
What were Reagan’s foreign policies during his presidency?
America had rocky relations with the Soviet Union as a result of the Cold War, which was intensified by Reagan referring to their nation as an ‘evil empire’ on two occasions (1982-address to the House of Parliament, 1983-Evangelical meeting). Additionally, during a mic test before making a speech, Reagan claimed “We will begin bombing in 5 minutes” in regards to the USSR, which did not improve relations in the slightest. In 1985, when Gorbachev became the new leader of the USSR, him and Reagan struck up an unlikely friendship and Cold War tensions eased significantly as a result. The Iran-Contra Scandal, arguably one of Reagan’s biggest failures during his presidency, saw $18 million of $30 million worth of supplies were sent to a rebel group in Nicaragua instead of the full amount going to Iran in exchange for hostages, which was against Congress’ legislation. Whilst other Executives could have been impeached because of this, Reagan was able to go unpunished, whereas others involved in the scandal were sacked, proving his image and personality was able to save his reputation from ruin.
State Reagan’s ‘style’ and personality that he expressed during his presidency
Reagan was a charming and charismatic individual which seeped into his popularity in the political sphere, with his background as an actor allowing him to perfect his image and public persona. He also starred in many Western, cowboy films whilst in this profession, which heavily influenced the public’s perception of him as a strong, patriotic leader. Reagan was also rather humorous, particularly following the assassination attempt in March 1981 where he famously said “Sorry honey, I forgot to duck” and when dealing with the tensions between the US and the USSR. He held strong Christian values, but did not implement them into his policies despite publicly stating his views on controversial topics such as abortion. Additionally, his contributions to the ‘New Right’ movement following the ‘New Left’ in a rejection of the Counter Culture and liberalism of the 1960s and a push for the return of Conservatism and traditional values.
Why did the reputation of his predecessors assist Reagan?
Gerald Ford (1974-1976) and Jimmy Carter (1977-1980) we’re considered ‘weak’ presidents and were accused of ‘crisis management’ by Reagan rather than leading the country. On this basis, Reagan came to power promising to ‘make America great again’ and bring change that his predecessors could not. This allowed him to win the 1980 election with 489 electoral college votes to Carter’s 49, and secure 44 out of the 50 states.
How did the Iran Hostage Crisis assist Reagan?
In 1979, 52 hostages were taken from the US Embassy in Tehran and were held in Iran for 440 days. Carter approved a rescue attempt during his presidency; however, this resulted in the crashing of two helicopters and the deaths of 8 US servicemen. This makes Carter look weak and incapable of making good decisions for his country as the Executive and most likely contributed to his 21% approval rating at the end of his term. This was exacerbated when the hostages were released within weeks of Reagan’s presidency, transferring the praise and positive media attention from him to the current President.
How did Reagan win over his critics?
Some voters questioned Reagan’s credentials as a presidential candidate due to his background as an actor during the first half of the twentieth century as some argued his charm and charisma was what people were won other by rather than his policies. Others believed he was too old as he was approaching his 70th birthday when he was elected, making him the oldest President at the time. However, Reagan was quick to implement the policies he had promised to pass in his campaign, emulating FDR’s ‘First 100 Days’ as well as using experience he gained as Governor of California from 1966 onwards.
How did Reagan turn his attempted assassination into a positive?
In March 1981, John Hinckley Jr. attempted to assassinate Reagan and shot him, grazing a rib and narrowly missing his heart. However, Reagan was able to walk in and out of the hospital within 12 days, notably apologising to wise Nancy by saying ‘Sorry honey, I forgot to duck’. The miraculous recovery in the eyes of the American public increased their support for Reagan as they perceived him as a strong leader that took a bullet and was still able to laugh and joke about his misfortunes. He also used the popularity he gained from the assassination attempt to advance politically by exploiting the sympathy of Congress and using the threat of the House losing favour with the public because they rejected his proposals.
According to Reagan, what was wrong with the economy?
Reagan believed that the Democrat Executives that served before him and their welfare programmes such as LBJ’s ‘Great Society’ was weakening America because of the public’s over reliance on government welfare. By returning to the rugged individualism stance held by Republican presidents in the 1920s and early 1930s, Reagan promised a major improvement of the economy that would ensure the shrinking of ‘Big Government’ which was the root cause of the economic crisis.
What were the four pillars of ‘Reaganomics’, Reagan’s proposal to restore economic prosperity?
Reduce income tax and inheritance tax
Reduce federal spending
Deregulation of businesses
Tighten the money supply to reduce inflation
Why did Reagan reduce tax?
Reagan believed in trickle-down theory in terms of economics, arguing that money saved by business owners through lowering taxes would run down to the working classes. Businesses would theoretically increase wages, giving the extra money that would have been spent on paying taxes to their employees, who would then spend the money on food and other ammenities. This money would then go back into the economy, helping it build to great heights as it once was.
Who benefitted from tax cuts and why?
Those in the top tax bracket benefitted the most as their taxes were cut from 70% to 50% in 1981, then to 28% in 1986. Those who were business owners often decided to keep the money for themselves, meaning the rich became richer as a result of the tax cuts.
What were the benefits of cutting taxes?
Cutting taxes would keep the public onside as people are very receptive to this Republican policy due to saving money, particularly in times of economic downfall. People would also be encouraged to work harder as they could use more of their hard-earned money to buy ammenities and even some luxuries, which would go back into the economy. In addition, cutting taxes means that less money would go back into funding government welfare programmes like the ‘Great Society’ that form ‘Big Government’, which gave an excuse to eradicate these schemes.
What were the potential issues with reducing taxation?
Reducing taxes means that less money goes into the government, which could be used to reduce the deficit or support those in America struggling with the economic downturn. The concept of trickle-down economics is also idealistic and arguably too deterministic an approach to solving the economy as most businesses, upon receiving more money from the reduction of taxes, kept it for themselves as opposed to giving it to employees and allowing the economy to improve. Therefore, the intended purpose of reducing taxes has been proven to be unachievable due to the greed of business owners.
Explain the specifics behind the Economic Recovery Tax Act (ERTA) of 1981
Passed on 13 August 1981, ERTA cut marginal income tax by 23% over the course of three years and linked the tax bands to the level of inflation at the time along with other incentives. As of 1981, the top tax bracket rate changed from 70% to 50% and the lowest rate decreased from 14% to just 11%. In total, ERTA made around $33 billion in tax cuts, which to this day is the biggest tax cut in American history.
Explain the specifics behind the Tax, Equity and Financial Responsibility Act (TEFRA) of 1982
Passed on 3 September 1982, TEFRA altered the budgets as the rich were attempting to find loopholes to get out of paying high taxes due to the displeasure of the rates they were fixed at. This was achieved by tightening tax rules, particularly for businesses, to limit the ability to find loopholes as well as temporarily raising taxes on cigarettes and the telephone service to discourage people from purchasing luxury items.
Explain the specifics behind the TRA (Tax Reform Act) of 1986
Passed into legislation on 22 October 1986 during Reagan’s second term as president, the TRA revised the tax codes by simplifying them in an attempt to eradicate any loop holes. In order to simplify them, the act reduced the number of tax brackets and eased pressure on poor families in America in a ‘Republican’ way, reducing the top tax bracket from 50% to 28%.
Was Reagan successful in reducing tax?
Reagan’s policies regarding his first pillar of ‘Reaganomics’ gave individuals and businesses more money each month which allowed for reinvestment and created more jobs. Additionally, the public were granted more spending power which assisted businesses, and poured more money back into the economy. However, this significantly impacted the amount of federal income meaning the government couldn’t provide as much welfare and assistance to those who desperately needed it. The flat tax rate implemented was also more beneficial to the rich, leaving the disadvantaged to fend for themselves.
Why did Reagan want to shrink ‘Big Government’ and how did he propose to do this?
Reagan argued that ‘Big Government’ made passing laws too long and challenging, particularly in crises such as ones faced in the 1970s, and created a ‘clunky’ government that were unable to make changes to combat with current issues. It also meant that the public were becoming heavily reliant on welfare from the government that was increasing the deficit. Reagan wanted to heavily cut social programmes and welfare schemes such as ‘The Great Society’, arguing that due to increasing public reliance of government support. This, he believed, would ensure people learnt to fend for themselves in true Republican, laissez-faire fashion.
What were the benefits of reducing ‘Big Government’?
The reduction of ‘Big Government’ would make decisions easier to pass and quicken the rate at which domestic issues, such as inflation, could be solved. Reagan also believed that the amount of welfare schemes put in place by programmes such as ‘The Great Society’ made the public overly dependent on government assistance.
