theme 4 - new directions in economic policy Flashcards
(10 cards)
why did Reagan become a Republican?
when he had a career in Hollywood, federal and state taxes took 91% of his income
this created his resentment of high taxation, causing him to become a Republican
how did Reagan’s policies impact families and workers?
budget cuts reduced programmes such as Aid to Families with Dependent Children, negatively impacting many single mothers who depended upon AFDC
high inflation and 10% unemployment created hardship for workers
what successes did Reagan’s policies have?
defence expenditure brought prosperity to regions within defence
after recession within his first term, the US experienced its longest period of economic growth
1980-88: inflation fell from 13.5-4.7%, and unemployment fell from 7-5.3%
what is meant by budget and trade deficits?
budget deficit - expenses exceed income
trade deficit - a nation imports more than it exports
how can Reagan be blamed for the budget deficit?
his tax cuts decreased income for fed govt and his defence expenditure increased
had criticised the 1980 $1trill national debt but it rose to over $2.6trill under his power
majority of Americans also opposed reduction to spending on social programmes
how can other countries be blamed for the trade deficit?
rise of discount stores such as Walmart, which sold cheap goods made in low-wage foreign factories
how did government respond to the trade deficit?
Reagan persuaded Japanese manufacturers to limit exports to the US in 1981
- Japan opened manufacturing plants within the US which increased employment
government imposed 25% tariff on imported trucks and 3% tariff on imported cars
however, trade deficit still grew
how did Bush want to handle the American economy?
his campaign was contradictory
pledged a decrease in $2.7trill budget deficit and its associated $200b annual interest
also promised no new taxes - implies the deficit would be addressed purely. through spending cuts
How did Bush have to handle the American economy?
Bush decided to raise taxes
caused many voters to reject Bush as it did nothing to help workers worries about family incomes
How successful was Bush at solving America’s economic problems?
Bush failed to reign in govt spending and balance the budget
national debt rose from $3t (1989) to $4t (1993)
