REAGANOMICS Flashcards
(52 cards)
Which pre Reagan events led
to people looking back at the 70s as a bad time?
backlash against liberalism of 60s and 70s helped reagan to power
public believed there was too much federal expenditure and involvement
Loss in Vietnam, Watergate scandal and inability to fix economy and the ongoing fuel shortages.
how were reagans presidency and the republican gov of the 1920’s similar
-reduction of big government theory was a return to ‘laissez faire’ (stripping of gov interventions)
-they were both hardline anti-union (union membership fell under both governments)
-both allowed for creaton of big businesses that could monopolise areas of industry
-both believed in significant tax reductions
-new industry flourished
-wealth concentrated at the top in both economies
-believed in ‘rugged individualism’, an economy where the poor who ‘werent lazy’ could flourish
who did reagan appeal to
-voters who resented high taxes, affirmative action programmes, rising crime and challenges to traditional values
who was Reagan
-controversial polarising figure in politics
-presented himself as a committed christian
-liberals very critical of Reagan whilst conservatives revere him as a hero
-his presidentcy was significant and influential
-had careers in 3 forms of media-radio, movies and television
Reagan major dates
1980- elected as president
1981- inaugurated as president
March 1981- survived assassination attempt
Aug 1981- major economic reform bills passed and signed into law
Jan 1982- Social security reform act signed
dec 1985- congress mandated cuts to balance the budget by 1991
Nov 1986- iran contra contraversy uncovered
feb 1987-tower commission criticises reagans management
oct 1987- Bork rejected for Supreme Court
what did reagan do to reduce big government 3 days after his inauguration
-sacked many white house staff members and put a federal government hiring freeze in place
-cut federal gov travel expenses by 15%
-used a series of executive orders to set up ‘advisory groups’ reporting directly to him on how to cut down big government
what was the theory of supply side economics
-argues that if taxes are cut then people would have more money to invest in the economy
-called supply side economics because the gov cared less about the demand of the public and instead focused on caring about businesses
-believes that if tax for corporations was reduced they would have more money left from their profits to invest in their businesses meaning that companies would expand and employ more people (higher wages)
-with more employmentt and higher wages people can use money to spend in the economy by buying property and products
-this would then help companies have more money
what theory did Reagan use to control government spending, reduce gov involvement and cut taxes
‘supply-side’ economics
what was the criticism of supply-side economics
-corporations and shareholders tend to keep more profits than its worth, they can reinvest into their business and wider economy
-creates wealth divide between the rich and poor
-less taxes= less gov spending on welfare programs for the poorest
what was the reaganomics plan for economic growth and its 4 parts
-reagan’s program for economic recovery (his economic strategy)
-the plan had 4 parts and stressed the importance of fast legislation:
cutting federal spending
tax cuts
deregulation
control the money supply (keep inflation down)
why was deregulation in the reaganomics four point plan
the deregulation of federal and state requirenents would allow for businesses to flourish, and their increased profit would mean more tax revenue for the government (which would pay off the deficit)
why did reagan introduced reaganomics
-reagan blamed Keynesian economics for the state of the US and wanted a more conservative approach
-wanted incentives for people to work harder
what actually happened under regonomics
-tax cuts
-deregualation
-limited government spending
-increased spending
-federal reserve controlled inflation by contollong the money supply
-mid decade boom helped re elected reagan in 1984
-huge trade deficeit with cheap imports and expensive export
when was reagan reelected
1984
what was the laffer curve
-at the sweet point in this laffer curve the cutting of taxes and getting rid of regulations/bureaucracy led to companies using extra income to invest, innovate and expand
-this would lead to more money and less taxes =increased sales and profits
-neo liberals believe cutting regulations on businesses and slashing corporate taxes would make companies more competitive and therefore able to make more profits
what did reagan want to achieve economically speaking
-tax cuts to revive the economy
-wanted to cut 40 billion from the proposed budget
-deregulation=increased
profits=government would get more tax
-wanted his whole economic plan to be passed through as a singular peice of legislation alongside a new tax reform bill
what was the omnibus budget reconciliation act (ORA) and when was it
-1981
-reagans first proposed budget
-white house initially wanted 45 billion worth of cuts on federal spending
-following negotiations managed to cut 35 billion (across 212 federal programmes)
What was the tax bill which Reagan passed in 1981 and what did it do?
-ECONOMIC RECOVERY TAX ACT 1981
the ERTA bill in august 1981 ushered huge tax cuts for the american people, totalling cuts of around 23% over the next 3 years
Linked tax bands to inflation
highest income tax rate fell from 70 to 50 percent and the lowest fell from 14 to 11 percent
business tax rates cut and various business tax breaks were offered
reagan’s tax cuts successes
SUCCESSES
-the ERA bill in august 1981 ushered huge tax cuts for the american people, totalling cuts of around 23% over the next 3 years
-second major peice of legislation, the 1986 tax reform act: closed loopholes and made the federal tax system a lot easier for americans
-reduced the number of different tax brackets from fourteen to just three
-also further decreased the top rate of tax from 50 to 28 percent
-exempted 6 million of poorest americas from paying any federal tax at all
what did the 1986 tax reform act do
-closed loopholes and made the federal tax system a lot easier for americans
-reduced the number of different tax brackets from fourteen to just three
-also further decreased the top rate of tax from 50 to 28 percent
-exempted 6 million of poorest
americas from paying any federal tax at all
what did regan reduce the number of tax brackets to and how did he decrease the top rate of tax in 1986
-reduced the number of different tax brackets from fourteen to just three
also further decreased the top rate of tax from 50 to 28 percent
ow many poor americans did reagan exempt from paying any tax in 1986
-exempted 6 million of poorest americas from paying any federal tax at all
what were reagan’s tax cuts failures
-after a brief recession in 1981/82 reagan had to make some money for the gov…. ended in him reversing some of the tax cuts for businesses and increased taxes on ciggarettes and airline tickets
-reagans administration put a 25% tarrif on imported goods and a 3% tarriff on imported cars
less federal government expenditure successes
-1981 ERTA bill saw 35 billion worth of cuts across 212 government departments
-under Reagan government spending on human resources dropped from 28 percent of the federal busdget in 1980 to 22 percent by 1987
