Post by djxkorean on Aug 26, 2009 5:10:29 GMT -8
40th President Ronal Reagan (1981 – 1989)
I. Conservative Mandate and Reaganomics
A. Ronald Reagan + overwhelming 1980 victory = mandate for conservative economic policies
1. Republicans have control of Senate, and conservative Democrats erase Democrat majority in the House
B. Reagan attacked large government expenditures and federal budget deficits
1. Claimed deficits were from double-digit inflation and promised to reduce deficit; said during the election of 1980
2. In office, Reagan convinced Congress to cut $35 billion from budgets of social welfare programs
a. State and local gov’ts and volunteer efforts should take over social welfare programs instead of federal gov’t.
C. President Reagan endorsed the theory of supply-side economics
1. cuts in income taxes (esp. Americans with higher incomes) stimulate new investments in business
2. cuts in corporate taxes cause businesses to expand production = produce more goods = hire more workers
3. Nat’l economy revived by supply of goods rather than demand : painless way to cure inflation
4. tax cuts + tax incentives = industry restores job and reduce federal deficits (not federal gov’t)
5. Spending cuts in federal gov’t = balance in budget and reduce federal deficits; restraints on gov’t spending + high interest rates = brake on inflation
D. Inflation ends up ending due to gov’t spending cuts and high interest rates, but at the cost of 10% of the labor force (got unemployed)
1. Federal Reserve Board allowed for interest rates to drop, so business and individuals could more easily borrow money
II. Reagan’s Reelection (1984)
A. Republicans: nominate Reagan without challenge
B. Democrats: nominate Former V.P. Walter Mondale with Hew York Congresswoman Geraldine Ferraro
1. First woman on major party ticket – the Dem. campaign was marred by a financial scandal involving Ferraro’s husband
C. Reagan elected in a landslide seeing as how they felt national economy was better in 1984 than in 1980
III. The US Economy
A. Reagan promised to work for balanced budget by 1984 when he took office
1. Congress refused to make deeper cuts in domestic spending in fear of loss of votes in home districts
2. Reagan’s attack on “big gov’t” and policy of cutting taxes offset by increase in defense spending
a. Reagan convinced that greater military preparedness necessary to counter USSR
b. Resulted in most unbalanced federal budget in American history – federal deficit of ~$200 billion
3. Reagan stuck to campaign in refusing to support tax increases
a. would have lowered business investment, consumer spending, and prevented unemployment and recession
B. Problem of federal budget deficit: responsible for turning US into debtor nation by 1985
1. To close gap between income and military expenditures, gov’t had to borrow huge amounts of money by selling gov’t bonds
a. nat’l debt doubled in 4 years
2. Large portion of borrowed money was lent to US by foreign investors – high interest rates + high price of the dollar = good persuasion
a. Because Treasury accepted only dollars, foreign investors have to buy dollars with their currency = high price of dollar
i. overvalued dollar = severe economic problems
ii. American imports more expensive for others to buy so other nations benefit + US jobs and farms lost
C. Economic Growth and Deregulation
1. Economic expansion = Reagan’s solution to federal deficit
a. growth of free-enterprise system loose from gov’t red tape = revenue in taxpayers pockets and Treasury funds
2. Reagan’s economic initiatives aimed at dismantling gov’t programs
a. public outcry at attempts to weaken: Clean Air and Clean Water Acts, Occupational Safety and Health Administration
3. Environmental deregulation halted after nat’l scandal when EPA officials accused of making deals with industry
D. Tax Reform Act of 1986
1. Collection of federal income tax accepted because it was a progressive tax: taxpayer’s earning increase = increase in rate of taxation
2. Tax Reform Act of 1986: range of progressive tax rates on personal income extended from 14% to 70%
a. Act promised to reduce and simplify tax rates – tax money lost because of lower rates made up by closing previous tax loopholes
b. Richest didn’t necessarily pay most taxes = blow at basic concept of progressive nature of personal income tax
c. Various tax loopholes also not closed by 1986 tax law
E. Stock Market Crash (1987)
1. Oct 19, 1987: stock market crashed in worst price collapse since 1929
a. Brady Commission (Jan 1988): immediate cause was use of computerized program trading in stocks and stock-index futures by few investors
2. By spring of 1988, US economy showed continued, steady growth, but lost many jobs in financial community
a. Small investors stayed away from stock market, but stock prices return to normal within a year
F. Organized Labor
1. 1980s: continued decline in membership and power of large industrial unions- nature of work and workplaces changed
a. Fewer factory workers + more service industry personnel = United Auto Workers and United Mine Workers accept diminished contracts
b. Unions gave up wages and benefits for job security
2. Industrial workers and their families also changed: more middle class
G. Reagan’s Economic Legacy
1. Reagan handed successor healthy economy with log period of expansion in which 16 million new jobs created w/o inflationary excesses
a. Reaganomics: cut taxes and civilian spending; est. stable money policy to reduce inflation
b. New populism: gov’t was now the villain; shown through deregulation of industry
2. Federal Reserve System kept money supply from growing too fast and reduced inflation from 13% to 4% in two years
3. Negative impacts
a. Increased cost of interest on debt crowded out other civilian spending
b. Borrowing itself = self-reinforcing pressures for additional spending cuts and deficit reduction
4. Right when Reagan tolerated more borrowing, other nations experienced huge trade surpluses
a. other nations invested in US Treasury bills, stocks, and real estate as a result
b. Reagan was right: as long as US inflation didn’t ruin US dollar value, foreigners would invest their surplus in the US
5. Reagan continued unbalanced budgets: average deficit and debt increased immensely
a. Gramm-Rudman Act: forced some reduction by US had heavy burden of paying the deficit and debt
IV. Changes in the 80’s
A. Reagan rallied the American public to embrace reborn American spirit: patriotism, old-fashioned values, and pride
B. New populism = gov’t as the problem; Reaganism = reduce domestic functions of gov’t by choking off its revenue
1. Reagan administration – slashed $45 billion from health, housing and social service programs
2. Unaware of scandal at HUD, cut off income to poorest Americans, and weakened civil rights enforcement
3. Secretary of Dept. of Education, William Bennet, focused nat’l attention on education reform
a. laws mandating improved education results by end of Reagan’s administration
C. Who gets the money?
1. Wealthiest 20% of the US greater than any time since end of WWII (1988)
a. At same time, poorest 40% fallen to lowest level since 1945; income of top 1% made up 12.5%
b. Reagan’s fiscal policy to blame for polarizing American society
2. Women’s earnings grew faster than men’s = narrowing income gap between sexes
a. Reason: increasing number of women finding work in traditionally male-dominated and high-paying fields (engineering and law)
3. Elderly fared well: rising benefits from Social Security improved income of elderly
4. Children as a group fared worse in 1980s: young parents found only part-time/temporary work
a. Few or no benefits like health insurance, even for families with 2 workers
5. New England and North Atlantic states benefited from rise of computer industry and service industries (banking)
a. Southeast and Rust Belt states of Midwest suffered from decline in manufacturing
6. Although more jobs created, living wage decreased
D. Attempt to assassinate President Reagan + injuring press secretary James Brady = Brady Act (1993) = limit availability of handguns
E. Social Issues
1. Reagan, as a conservative pushed for many conservative ideals (ex. organized prayer in public schools and ban on abortion)
2. 1985: D.o.J. with A.G. Edwin Meese reverses long commitment to affirmative action programs in hiring and promoting minority workers
3. Reagan appointed Sandra Day O’Connor (first female justice) as practical way for women to break down old barriers
a. Done despite Reagan’s opposition to Equal Rights Amendment and economic protection with men
4. During Reagan’s presidency, he appointed for life conservative replacements for 50%+ of federal judges
a. Laws and prior S.C. decisions challenged by more conservative interpretation of conservative courts (i.e. abortion rights)
V.
I. Conservative Mandate and Reaganomics
A. Ronald Reagan + overwhelming 1980 victory = mandate for conservative economic policies
1. Republicans have control of Senate, and conservative Democrats erase Democrat majority in the House
B. Reagan attacked large government expenditures and federal budget deficits
1. Claimed deficits were from double-digit inflation and promised to reduce deficit; said during the election of 1980
2. In office, Reagan convinced Congress to cut $35 billion from budgets of social welfare programs
a. State and local gov’ts and volunteer efforts should take over social welfare programs instead of federal gov’t.
C. President Reagan endorsed the theory of supply-side economics
1. cuts in income taxes (esp. Americans with higher incomes) stimulate new investments in business
2. cuts in corporate taxes cause businesses to expand production = produce more goods = hire more workers
3. Nat’l economy revived by supply of goods rather than demand : painless way to cure inflation
4. tax cuts + tax incentives = industry restores job and reduce federal deficits (not federal gov’t)
5. Spending cuts in federal gov’t = balance in budget and reduce federal deficits; restraints on gov’t spending + high interest rates = brake on inflation
D. Inflation ends up ending due to gov’t spending cuts and high interest rates, but at the cost of 10% of the labor force (got unemployed)
1. Federal Reserve Board allowed for interest rates to drop, so business and individuals could more easily borrow money
II. Reagan’s Reelection (1984)
A. Republicans: nominate Reagan without challenge
B. Democrats: nominate Former V.P. Walter Mondale with Hew York Congresswoman Geraldine Ferraro
1. First woman on major party ticket – the Dem. campaign was marred by a financial scandal involving Ferraro’s husband
C. Reagan elected in a landslide seeing as how they felt national economy was better in 1984 than in 1980
III. The US Economy
A. Reagan promised to work for balanced budget by 1984 when he took office
1. Congress refused to make deeper cuts in domestic spending in fear of loss of votes in home districts
2. Reagan’s attack on “big gov’t” and policy of cutting taxes offset by increase in defense spending
a. Reagan convinced that greater military preparedness necessary to counter USSR
b. Resulted in most unbalanced federal budget in American history – federal deficit of ~$200 billion
3. Reagan stuck to campaign in refusing to support tax increases
a. would have lowered business investment, consumer spending, and prevented unemployment and recession
B. Problem of federal budget deficit: responsible for turning US into debtor nation by 1985
1. To close gap between income and military expenditures, gov’t had to borrow huge amounts of money by selling gov’t bonds
a. nat’l debt doubled in 4 years
2. Large portion of borrowed money was lent to US by foreign investors – high interest rates + high price of the dollar = good persuasion
a. Because Treasury accepted only dollars, foreign investors have to buy dollars with their currency = high price of dollar
i. overvalued dollar = severe economic problems
ii. American imports more expensive for others to buy so other nations benefit + US jobs and farms lost
C. Economic Growth and Deregulation
1. Economic expansion = Reagan’s solution to federal deficit
a. growth of free-enterprise system loose from gov’t red tape = revenue in taxpayers pockets and Treasury funds
2. Reagan’s economic initiatives aimed at dismantling gov’t programs
a. public outcry at attempts to weaken: Clean Air and Clean Water Acts, Occupational Safety and Health Administration
3. Environmental deregulation halted after nat’l scandal when EPA officials accused of making deals with industry
D. Tax Reform Act of 1986
1. Collection of federal income tax accepted because it was a progressive tax: taxpayer’s earning increase = increase in rate of taxation
2. Tax Reform Act of 1986: range of progressive tax rates on personal income extended from 14% to 70%
a. Act promised to reduce and simplify tax rates – tax money lost because of lower rates made up by closing previous tax loopholes
b. Richest didn’t necessarily pay most taxes = blow at basic concept of progressive nature of personal income tax
c. Various tax loopholes also not closed by 1986 tax law
E. Stock Market Crash (1987)
1. Oct 19, 1987: stock market crashed in worst price collapse since 1929
a. Brady Commission (Jan 1988): immediate cause was use of computerized program trading in stocks and stock-index futures by few investors
2. By spring of 1988, US economy showed continued, steady growth, but lost many jobs in financial community
a. Small investors stayed away from stock market, but stock prices return to normal within a year
F. Organized Labor
1. 1980s: continued decline in membership and power of large industrial unions- nature of work and workplaces changed
a. Fewer factory workers + more service industry personnel = United Auto Workers and United Mine Workers accept diminished contracts
b. Unions gave up wages and benefits for job security
2. Industrial workers and their families also changed: more middle class
G. Reagan’s Economic Legacy
1. Reagan handed successor healthy economy with log period of expansion in which 16 million new jobs created w/o inflationary excesses
a. Reaganomics: cut taxes and civilian spending; est. stable money policy to reduce inflation
b. New populism: gov’t was now the villain; shown through deregulation of industry
2. Federal Reserve System kept money supply from growing too fast and reduced inflation from 13% to 4% in two years
3. Negative impacts
a. Increased cost of interest on debt crowded out other civilian spending
b. Borrowing itself = self-reinforcing pressures for additional spending cuts and deficit reduction
4. Right when Reagan tolerated more borrowing, other nations experienced huge trade surpluses
a. other nations invested in US Treasury bills, stocks, and real estate as a result
b. Reagan was right: as long as US inflation didn’t ruin US dollar value, foreigners would invest their surplus in the US
5. Reagan continued unbalanced budgets: average deficit and debt increased immensely
a. Gramm-Rudman Act: forced some reduction by US had heavy burden of paying the deficit and debt
IV. Changes in the 80’s
A. Reagan rallied the American public to embrace reborn American spirit: patriotism, old-fashioned values, and pride
B. New populism = gov’t as the problem; Reaganism = reduce domestic functions of gov’t by choking off its revenue
1. Reagan administration – slashed $45 billion from health, housing and social service programs
2. Unaware of scandal at HUD, cut off income to poorest Americans, and weakened civil rights enforcement
3. Secretary of Dept. of Education, William Bennet, focused nat’l attention on education reform
a. laws mandating improved education results by end of Reagan’s administration
C. Who gets the money?
1. Wealthiest 20% of the US greater than any time since end of WWII (1988)
a. At same time, poorest 40% fallen to lowest level since 1945; income of top 1% made up 12.5%
b. Reagan’s fiscal policy to blame for polarizing American society
2. Women’s earnings grew faster than men’s = narrowing income gap between sexes
a. Reason: increasing number of women finding work in traditionally male-dominated and high-paying fields (engineering and law)
3. Elderly fared well: rising benefits from Social Security improved income of elderly
4. Children as a group fared worse in 1980s: young parents found only part-time/temporary work
a. Few or no benefits like health insurance, even for families with 2 workers
5. New England and North Atlantic states benefited from rise of computer industry and service industries (banking)
a. Southeast and Rust Belt states of Midwest suffered from decline in manufacturing
6. Although more jobs created, living wage decreased
D. Attempt to assassinate President Reagan + injuring press secretary James Brady = Brady Act (1993) = limit availability of handguns
E. Social Issues
1. Reagan, as a conservative pushed for many conservative ideals (ex. organized prayer in public schools and ban on abortion)
2. 1985: D.o.J. with A.G. Edwin Meese reverses long commitment to affirmative action programs in hiring and promoting minority workers
3. Reagan appointed Sandra Day O’Connor (first female justice) as practical way for women to break down old barriers
a. Done despite Reagan’s opposition to Equal Rights Amendment and economic protection with men
4. During Reagan’s presidency, he appointed for life conservative replacements for 50%+ of federal judges
a. Laws and prior S.C. decisions challenged by more conservative interpretation of conservative courts (i.e. abortion rights)
V.