What impact did the Reagan presidency have on the USA in the years 1981–96? Flashcards
What were Reagans 4 key aims (economics) (4)
-Lowering tax would encourage consumption and hard work
-Reduce the size/role of federal government, cutting $40 billion from the 1981/82 $740 billion budget, and eliminating the welfare state where possible
-Deregulation of state/federal government requirements would allow affluence to flourish
-Increase cold war defences
How did Reagan deregulate the economy/balance the budget (economics) (2,3,2)
-Regulation of industry/business cut 29%
-Reagan made sure to use his power to appoint people to regulatory boards such as the occupational health and safety administration, which would make pro business choices
-In 1983, Reagan inspired congress to ->
-Tax social security benefits
-Delay cost of living increases
-Increased defence spending from $157.5 billion in 1981 to $202.6 billion in 1989 led to the budget deficit soaring
-National debt tripled to $2.6 trillion, as borrowing increased from abroad from places such as Japan and Germany
What did Reagan cut in the 1981 budget, and how did he get support for this (economics) (3,5)
-Cuts were made in the funding of 212 federal programmes
-Most of these federal programmes aided the working poor, including food stamps and student loans
-$280 billion worth of individual and corporate tax cuts (ERTA)
-Reagan knew exactly what he wanted from the off, not confusing anyone
-Reagan worked well with the democrat congress, putting pressure on congressmen through TV ads, thus being able to get his policies through
-High poll ratings (68%) following a failed assassination attempt (march 1981) forced congress to work with him
-He put his full weight behind this budget, frequently appearing on TV
-Reagan made a hefty effort to get media support on his side
What is Reaganomics (economics) (2,5)
-Reaganomics aimed to control government spending, reduce government involvement and cut taxes
-Reaganomics focused on economic growth rather than low unemployment, favouring classical rather than Keynesian economics
-Lower tax = increased incomes = increased spending
-Increased spending = increased revenue = increased investment
-Increased investment = increased output
-Increased output = increased incomes/profit = increased tax revenue = decreased deficit
-Increased output = increased incomes = increased spending
What was some economic legislation passed in 1981 (economics) (2,2)
-August 13th 1981 = Economic Recovery Tax Act (ERTA)
-Reduced marginal income tax bands 23% over 3 years (70-50%, 14-11%), linked tax bands to inflation and offered other minor incentives
-August 13th 1981 = Omnibus Budget Reconciliation Act (OBRA)
-Made $35 billion worth of federal spending budget cuts, as well as tax cuts, although it was originally planned to be $45 billion
What was some of Reagans economics legislation from 1982-1986 (economics) (3,3,3)
-September 1982 = Tax Equity and Financial Responsibility Act (TEFRA)
-Made budget changes in response to the negative economic situation, tightening business tax rates
-Temporarily raised taxes on cigarettes and telephone services
-April 1986 = Consolidated Omnibus Budget Reconciliation Act (COBRA)
-Revised the budget in many minor ways, to save the government money and increase the size of the private sector
-Significantly, shifted the responsibility of many healthcare payments from the government to the employer
-October 1986 = Tax Reform Act (TRA)
-Revises the tax codes, reducing the number of brackets
-Supposed to close a lot of loopholes and ease pressure on poorer families
How did Reagans economic policies impact inflation, unemployment and personal wealth (economics) (2,2,4)
-Inflation fell from 13% in 1980 to 6.2% in 1982
-However, sharp rises in interest rates had negative impact on industries which relied on credit
-Unemployment rates went from 11% in 1981 to 7.5% in 1983 to 4.5% in 1989
-7 million new jobs were created
-Disinflation, tax cuts and deregulation made people richer, mostly the rich richer
-Average family income levels fell, returning to 1973 levels in 1987
-Wages stagnated, negatively affecting lower/middle classes
-Child poverty rates rose to levels exceeding the mid 60s
What were the pros and cons of Reagans policies to encourage saving and investment, and to reduce the deficit (economics) (4,4)
+Businesses began to recover and invest more
+Recovery from 1982 and 1987 recessions rapid, as people still lent/spent
-People lost all savings in the 1987 Savings and Loans crisis
-Higher deregulation lead to higher competition, leading firms to take higher risks
+Balanced budget following the 1991 collapse of the USSR
+Conservatives claimed it was a wartime deficit, worth it with the victory in the cold war
-Budget deficit rose, due to the cut taxes, even though supply side didn’t work and fewer welfare costs happened than anticipated
-Budget deficit grew increasingly funded by borrowing from abroad
What was Reagans economic legacy (economics) (2,5)
-When Bush took office in 1989, he faced a budget deficit which had tripled under Reagan
-Bush was forced to pass the 1990 Omnibus Budget Reconciliation act, cutting government expenditure and raising taxes
-Clinton was a third way politician, in which he and the Democratic Leadership Council aimed to win back while middle class voters
-Clinton raised taxes on the rich and cut spending on the poor
-By 1999, the 1992 $290 billion deficit had been turned to a $124 billion surplus
-The economy was booming, encouraged by low interest, unemployment and low regulation
-From 1981-96, the economy grew by 2.5% per annum, growing in all years bar 1991
How was 1930-1980 the era of big government, and why was Reagan’s election a turning point (big government) (4,4)
-From FDR to Reagan was the era of big government in US politics
-Government would be active to help the disadvantaged with healthy educational and equality issues
-In the 1950s, Eisenhower thought it unwise to oppose this idea
-In 1964, Barry Goldwaters aggressive approach to big government lead to his crushing defeat
-However, the rise of the new right and failings of the 70s paved the way for a new era of government
-The four previous presidents had failed, and there was increasing distrust within the presidency
-Reagan was as right wing as Goldwater, but more politically skilled
-Many felt alienated by the great society, rising welfare costs and affirmative action
What arguments are there for/against reducing big government (big government) (1,2,4)
-Reducing big government included reducing federal legislation, federal agencies, federal taxation and spending, as well as reducing supreme court rulings ad deregulating
+“For government is not the solution to our problem. Government is the problem”
+New federalism would lead to reduced state interference and regulation on state and local affairs, businesses and finances
-Government would have less control over businesses greed and expansion
-Less social welfare provided by government
-Less control over imports
-Less funding for state and local government projects
What were the successes of Reagan’s attempts to reduce big government (big government) (5)
-Reduced social security benefits
-Cuts made in the funding of 212 federal programmes, such as food stamps and student loans, most of which aided the working poor
-Slashed agency budgets, rendering them incapable of enforcing congresss’ regulations
-Reduced department for educatuion staff 25%, cut programmes and decreased education block grants to states 63%
-Devolved power to the states and appointed pro-deregulation people to regulatory boards (James G. Walt = secretary of the interior, opened up conservation lands to oil and timber companies)
What were the failings of Reagan’s attempts to reduce big government (big government) (5)
-Failed to abolish the department for education, which was established by Carter in 1979
-Civilian employment in the federal government rose 3%, partially due to Reagan’s defence build-up, where employment grew 15%
-Pensions and elderly aid, veteran benefits, school lunches and head start (free school breakfasts) left virtually intact
-Reagan deregulation S&L’s and allowing them to make risky investments in 1982 led to the S&L crisis and a $132 billion public payout, the largest financial scandal in US history
-Although Reagan was able to veto the $18 billion clean water act, Congress overrode his veto of the 1987 Water quality control act, which was basically the same thing
What were the positive and negative impacts of deregulation (big government) (4,4)
+Reduced the size/role of government by cutting taxes and programmes
+Halted new deal interventionism, in some cases reversing it
+Challenged assumptions about new deal thinking, and in some casesmany democrats changed their thinking (new democrats)
+Most presidents fail to make such meaningful policy change
-Did not demolish the welfare state, knew attacking social security/medicare would be political suicide
-Federal workforce demoralised and public infastructure started crumbling
-Left the budget debt in a state
-Mobilised the electorate against necessary tax
What did Reagan do in his early tenure to reduce big government (big government) (4,5)
In his first days: Reagan -
-Sacked a large number of white house staff
-Introduced a hiring freeze within the white house
-Ordered government departments to undertake a number of cost cutting measures, such as reducing travel costs 15%
-However, these did little in practice, and rather just appealed to the media
-In 1982, Reagan stated how since he came to power:
-He had cut federal regulation in half, removing 23,000 pages from federal registers
-Removed federal agencies and replaced them with private sector ones
-Help reduce the cost of fuel and petrol through deregulation
-However, Reagan failed to mention how the process of deregulation was started by Carter, through his deregulation of airlines and his trucking bills
What was some significant Reagan deregulation legislation (big government) (7)
-Jan 1981 = Executive order passed by Carter deregulating oil and fuel prices brought forward
-Sep 1982 = Bus regulatory reform act deregulated bus services
-Oct 1982 = Garn St Germain depository institution act deregulated Saving and Loan institutions, allowing them greater freedom to invest
-Feb 1983 = Deregulation of natural gas supplies
-March 1984 = Shipping act loosens regulation on US & foreign shipping
-Oct 1984 = Cable communications act deregulates cable communications
-Oct 1986 = Greater freedom allowed to those working in the trucking industry
What were the positives of deregulation on businesses, banks and trade (big government) (5)
-Initially, deregulation brought lower prices through competition
-When S&L’s were deregulated in 1983, this allowed banks to offer savers high interest rates
-Banks and S&L’s allowed individuals who understood what the various deals were to have more saving/investment options
-Rise of foreign imports gave consumers more choice
-A weak dollar made the US an attractive place to trade/invest in
What were the negatives of deregulation on businesses, banks and trade (big government) (9)
-Business health & safety standards lower than government ones
-Big businesses flourished whilst smaller businesses struggled, and many had to be bought out
-Big businesses started fixing price structures, harming the consumer
-As S&L’s started competing, they made increasingly risky investments
-These risky investments culminated in the 1987 S&L crisis, where S&L’s collapsed, forcing the government to sign the 1987 competitive equality in banking act, providing money to cover losses from S&L’s
-In 1989, Bush signed the Financial Institutions Reform, Recovery and Enforcement Act, costing $150 billion, bailing out failing S&L’s and setting up regulations
-From 1980-1985 250 textile factories shut down as 300,000 lost jobs
-US companies lost business and the US became a global borrower
-Many US firms were being bought out by foreign ones
What were some of Reagan’s social policy legislation (social) (5)
-October 1982 Job training partnership act meant state and private firms had to provide training for their workers, but were allowed to pay below minimum wage
-April 1983 Social Security Reform Bill delayed the link of social security benefits to inflation, made benefits taxable and increased pension payments age from 65-67
-July 1987 Mckinney Act created the federal emergency food and shelter programme, ran by the federal emergency management agency
-October 1988 Family Support Act made it so families could only recieve childcare benefits if one parent worked for 16 hours, as well as it ‘made childcare available’
-By 1988, 42 states had enacted work to welfare programmes
What were the positives and negatives in industry and production (social) (5,4)
+Defence sector did well, with increased government spending
+New services sector did well
+New technologies (computers) did well
+Increases in industries/sectors had a profound impact on migration
+The Bi-Coastal boom led to many moving from the centre to the west coast/NYC, in search of jobs
-Reagan put few tariffs on imports
-Many older manufacturing sectors (cars, textiles), struggled to compete with imports
-Suppliers of raw materials struggled to compete with imports
-Places like Baltimore and Cleveland, strong manufacturing sectors, experienced a decline with 20% of the population living below the poverty line
What were some reasons why black Americans disliked the Reagan administration (social) (9)
-Gave a speech in New York without mentioning civil rights, than refused an offer to speak with the NAACP, as he had a holiday booked
-The leader of the KKK endorsed Reagan
-Once he was nominated as presidential candidate, he gave a speech in Mississippi, on the sight of the unresolved murder of 3 student activists, without mentioning the murder
-‘Government is the problem’ conflicted with affirmative action
-War on drugs disproportionately harmed young black men
-Black prescence still resisted in some institutions, such as white neighbourhoods
-Reagan failed to recognise Charles Pierce at a meeting, his only black cabinet member
-Inequality and wages gap remained constant during his tenure
-However, there was an increasing black middle class, and black people were increasingly getting into positions of influence
How did Reagan impact business/farmers (social) (4,5)
-Deregulation allowed big businesses to be involved in mergers/acquisitions
-Deregulation allowed big businesses to increase profits through lower costs, lower wages and lower working conditions
-Many small businesses failed during the 1981-82 recession, however 1 million businesses were set up in that time
-Small businesses were hit hard by interest rate hikes, and many failed
Farmers suffered as:
-Interest rate hikes hurt farmers who depended on loans
-Bad drought in 1983 led to decreased yield
-Exports fell as the US invaded Afghanistan
-Many small farms went out of business and had to be bought by agribusinesses/big companies (in 1983, 500 farms were sold weekly)
-In 1986, the Save Our Family Farm coalition was created, campaigning against big businesses in farming
What impact did Reagan’s social policies have on living/working conditions and minorities (social) (5,4)
-Rising interest rates led to 30% more mortgage debt from 1980-87
-Single mothers struggled, since the only jobs allowing childcare time were typically low paid, low quality jobs
-Young workers struggled, since a two-tier wage structure came about, where young workers did the same work for less
-Part time/temporary workers were not eligible for benefits
-Weekly leisure time fell from 26 hours in 1973 to 16 in 1987
-Reagan abandoned busing and planned to shrink inner cities (this was started by Carter)
-Reagan withdrew 40% of funding for bilingual education
-Reagan was lukewarm about womens rights, the ERA and anti-abortion, although he appointed Sandra Day O Connor to the supreme court
-Many accused Reagan for ignoring aids/gay rights, until it affected people he knew personally
What was the effect of Reagan’s policies on welfare provision (social) (8)
-Reagan saw a difference between ‘working poor’ and ‘welfare scroungers’
-The idea behind workfare was to have one working parent before family benefits were eligible
-The problem with this idea is jobs paid below minimum wage, and yet families got no childcare even though the government promised it
-Reagan slashed funding for low cost housing from $32 billion in 1978 to $9.2 billion in 1988
-By 1985, 3.5 million families qualified for low cost housing, but couldn’t move into these, since none were available
-In 1984 there was $300 million of federal homeless funding, however this had risen to $1.6 billion by 1988
-1987 Mckinney act set up the federal emergency food and shelter programmes
-These programmes prioritised elderly, disabled, veterans and family with children
