Theme 5: Reagan

Question 1

Reagenomics (revitalise economy)

Answer 1

• Trickle down economics - lower taxes using economic recovery tax act (highest income tax band fell 70%-50%, 23% cut in individual tax rates over 3 years ) to then allow people more money to spend and increase innovation.

Question 2

What happened in the 1981 budget? (big government)

Answer 2

Cuts made in 212 federal programmes - most of which aided the working poor, including food stamps, student loans and child nutrition programmes

Question 3

What happened to government spending?

Answer 3

Shifted from programs to defense causing federal debt to triple from $997bil to $2.857tril

Question 4

How much did Reagan increase government spending a year?

Answer 4

2.5% mainly for defense

Question 5

What did the Garn St. Germain Depository Institutions Act 1982 do? (revitalise economy)

Answer 5

Allowed savings and loans companies to make bigger risks on who they lent to. Depsoits for houses went from 20% to 5% meaning housing market boomed

Question 6

Big Government reduced in short term (big government)

Answer 6

• Removed 23,000 pages from the Federal Register (contains all federal regulations)
• Brought down cost of fuel and petrol by deregulation
• Created federal strike force to combat government fraud and waste that saved $2bil in 6 months
• Replaced federal agencies with private sector ones and federal employees with volunteers

Question 7

Problems with deregulation (big government)

Answer 7

Rise in monoplies, as businesses grew they would fix prices so didn’t have too comepete. Many businesses cut services to max profits.

Question 8

What happened when Reagan asked the Federal Reserve Board to tighten the money supply? (Unemployment/revitalise economy)

Answer 8

Unemployment went up from 7.1% to 9.6% in 1983
Inflation reduced from 13.5% to 6.2% in 1983

Question 9

Arguments for Reagan lowering unemployment

Answer 9

In 1979 unemployment was 7.2%, by 1988 it was 5.2%

Question 10

Arguments against Reagan lowering unemployment

Answer 10

The percentage of people in part time work had risen - people are employed but not at the maximum capacity
The amount of people not in unemployment figures (deemed unemployable, drug use or chose to register etc.) had risen to 34.5% of the population in 1988

Question 11

Viewing figures in debates with Reagan compared to 1970s (revitalised politics)

Answer 11

1970s - around 60 million
Reagan Vs Carter debate - 80.6 million
1984 - 67.5 million