reaganomics

what are the 6 pieces of evidence for the argument that reaganomics worked?

1. reagan cut the number of pages in the federal register (which lists all federal spending) by 23,000

2. reagan claimed to have saved $2 billion in six months by preventing fraud and waste

3. in the first few years of deregulation, prices dropped as companies engaged in competitive pricing

4. deregulated interest rates meant that many savers benefited from better interest rates

5. consumers benefited from increased choice in consumer goods

6. businesses were able to set their own standards for safety, and could set prices among themselves

what do pages in the federal register do and what did reagan do to them?

they list all the federal spending - reagan cut the number of the pages by 23,000

reagan claimed to have saved how much money in 6 months as a result of what?

$2 billion - by preventing fraud and waste

what happened to prices in the first few years of deregulation?

they dropped as companies engaged in competitive pricing

what did consumers benefit from?

increased choice in consumer goods

what were businesses now able to do?

set their own standards for safety and could set prices among themselves

what is the 1 piece of evidence for the argument that reaganomics both worked and didn't work?

deregulation allowed larger companies to buy out struggling businesses and expand further

what did deregulation allow larger companies to do?

buy out struggling businesses and expand further

what are the 8 pieces of evidence for the argument that reaganomics didn't work?

1. US businesses needed to be bought out by foreign investors; many claimed the british were reclaiming the empire

2. deregulation of trade meant that foreign goods became cheaper, and so imports increased

3. many savings and loan institutions failed to compete effectively with banks, and made risky investments

4. president carter had started the process of deregulation in airlines, trucking, railways, and some banks

5. reagan deregulated interest rates for savings and loan institutions; this made rates higher for businesses

6. increased imports led to a collapse in demand for US goods and products; 300,000 jobs were lost

7. by the time president bush took power, people no longer supported deregulation as much

8. by 1988, savings and loan institutions had lost roughly $10 billion. A year later, the property market fell

who did US businesses needed to be bought out by and what did many claim that the british were doing?

foreign investors - claimed that the british were reclaiming the empire

what did deregulation of trade mean?

foreign goods became cheaper, and so imports increased

what did many savings and loan institutions fail to do and ended up making?

compete effectively with banks and made risky investments

what did president carter start the process of?

deregulation in airlinesm trucking, railways and some banks

what did reagan deregulate for savings and loan institutions and what did this mean?

interest rates - this made rates higher for businesses

what did increased imports lead to and how many jobs were lost as a result?

a collapse in demand for US goods and products - 300,000 jobs were lost

what happened by the time president bush took power?

people no longer supported deregulation as much

how much money did savings and loan institutions lose by 1988 and what happened a year later?

lost roughly $10 billion - a year later, the property market fell

what are the 3 pieces of evidence agreeing with the claim of 'deregulation improved US economy and created choice' ?

1. first few years prices fell; companies competed with each other over price, meaning people had more choices with affordable goods

2. consumers did get more choice of consumer goods as foreign goods got cheaper as well

3. deregulated interest rates led to more competition and better rates offered to attract customers

why did prices fall in the first few years?

companies competed with each other over price, meaning people had more choices with affordable goods

why did consumers have more choice of consumer goods due to deregulation?

foreign goods got cheaper

what did deregulated interest rates lead to?

more competition and better rates offered to attract customers

what are the 6 pieces of evidence disagreeing with the claim of 'deregulation improved US economy and created choice' ?

1. choice sometimes harmed the US economy; many consumers chose foreign goods, leading to 300,000 jobs being lost

2. trade deficit increased and reagan had to respond by intervening in the economy again

3. 25% tariff on imported goods and 3% on cars​

4. saving and loan institution competition failures

5. 1989 property market fell

6. in some areas choice reduced; larger companies bought out smaller, meaning there was more chance of monopoly

why did increased choice sometimes harm the US economy?

many consumers chose foreign goods, leading to 300,000 jobs being lost

how did reagan respond to trade deficit increasing?

intervened in the economy again

what was the % tariff on imported goods and cards?

25% on imported goods and 3% on cars

when did the property market fall?

1989

what did larger companies buying out smaller ones mean?

there was more chance of monopoly

what are the 3 pieces of evidence agreeing with the claim of 'big businesses benefitted from reagan's policies' ?

1. power was now in hands of the businesses; reagan was anti - union & deregulation allowed businesses to prioritise profit over safety. ​

2. economic growth went up as more goods being made, brought and sold; the economy was generating more money

3. 7 million jobs were created so businesses had more money to invest in jobs

why was the power now in the hands of the businesses as a result of reagan's policies?

reagan was anti-union and deregulation allowed businesses to prioritise profit over safety

why did economic growth go up?

more goods were being made, brought and sold - the economy was generating more money

why did businesses have more money to invest in jobs?

7 million jobs were created

what are the 6 pieces of evidence disagreeing with the claim of 'big businesses benefitted from reagan's policies'

1. fall in incomes; americans prioritised cheaper goods which were often imported

2. fall in american businesses; decreased to 300,000

3. US businesses brought out by foreign investors​

4. rise in trade deficit

5. deregulated interest rates made business rates higher

6. deregulation might increase business costs in the long run if accidents increase

why was there a fall in incomes?

americans prioritised cheaper goods which were often imported

there was a fall in american businesses as they decreased to how many?

300,000

who brought out US businesses?

foreign investors

what happened to trade deficit?

it rose

what did deregulated interest rates result in?

they made business rates higher

why might deregulation increase business costs in the long run?

accidents may increase

what were reagan's 4 aims?

1. tax cuts to revive the economy & encourage people to work harder and buy more

2. reduce size and role of government (thought it subsidies, not solves problems), cut $40 billion from the proposed 1982 federal budget of $740 billion, and minimise and even eliminate the welfare state arrangements where possible.​

3. deregulation of state & federal government requirements would liberate business and allow capitalism to flourish. That would make people more prosperous and allow them to pay more taxes, decreasing the federal deficit

4. build up US' Cold War defences (expensive)

why did reagan want to cut taxes?

to revive the economy

what did reagan want to encourage people to do?

work harder and buy more

why did reagan want to reduce size and role of the government?

he thought it subsidises the problems instead of solving them

how much money did reagan cut from the proposed 1982 federal budget of $740 billion?

$40 billion

what did reagan want to do to the welfare state arrangements?

minimise and even eliminate them where possible

why did reagan want to deregulate state and federal government requirements and what did he think this would result in?

to liberate businesses and allow capitalism to flourish - people would be more prosperous and be able to pay more taxes, ultimately decreasing federal deficit

what did reagan want to build up?

US' cold war defences which was expensive

10 of reagan's policies to do with deregulation

1. january 1981 - executive order to deregulate oil and fuel prices passed by carter is brought forward

2. october 1986 - surface freight forwarder deregulation act allowed greater freedom for people working with trucking companies to bundle part loads

3. january 1981 - executive order to end wage and price regulation

4. october 1984 - cable communications act deregulated cable communications

5. october 1982 - garn st germain depository institution act deregulates savings and loan institutions, allowing them to invest in more ventures and more mortgage lending freedom

6. july 1981 - deregulation of controls on fuel prices

7. february 1983 - deregulation of natural gas supplies

8. march 1984 - shipping act loosens regulations on US and foreign shipping

9. august 1988 - foreign trade and competitiveness act allowed the president more rights in making trade treaties to benefit the US

10. september 1982 - bus regulatory reform act deregulates bus services

what did the 2 executive orders in january 1981 do?

1. deregulated oil and fuel prices - this was passed by carter

2. ended wage and price regulation

when was the surface freight forwarder deregulation act?

october 1986

what did the surface freight forwarder deregulation act do?

allowed greater freedom for people working with trucking companies to bundle part loads

when was the cable communications act?

october 1984

what did the cable communications act do?

deregulated cable communications

when was the garn st germain depository institution act?

october 1982

what did the garn st germain depository institution act do?

deregulated savings and loan institutions, allowing them to invest in more ventures and more mortgage lending freedom

what happened in july 1981?

deregulation of control on fuel prices

what happened in february 1983?

deregulation of natural gas supplies

when was the shipping act?

march 1984

what did the shipping act do?

loosened regulations on US and foreign shipping

when was the foreign trade and competitiveness act?

august 1988

what did the foreign trade and competitiveness act do?

allowed the president more rights in making treaties to benefit the US

when was the bus regulatory reform act?

september 1982

what did the bus regulatory reform act do?

deregulated bus services

2 of reagan's policies to do with welfare

1. august 1981 - economic recovery tax act, cut marginal income tax by 23% over three years, linking tax bands to inflation

2. july 1987 - mcKknney vento homeless assistance act set up the federal emergency management food and shelter program to be run by FEMA

when was the economic recovery tax act?

august 1981

what did the economic recovery tax act do?

cut marginal income tax by 23% over 3 years, linking tax bands to inflation

when was the mckinney vento homeless assistance act?

july 1987

what did the mckinney vento homeless assistance act do?

set up federal emergency management food and shelter program to be run by FEMA

4 of reagan's policies to do with cutting spending

1. march 1981 - executive order establishing the president's economic policy advisory board with economic experts to advise the president

2. april 1981 - executive order that set up the presidential advisory committee on federalism

3. april 1986 - consolidated omnibus budget reconciliation act, revised the budget in several minor ways to save money and move costs to states and private bodies, including healthcare

4. october 1986 - tax reform act, revised the tax codes, reducing the number of tax brackets, which was supposed to cut tax evasion

what did the 2 executive orders in march 1981 do?

1. established the president's economic policy advisory board with economic experts to advise the president

2. set up the president's council on integrity and efficiency

what did the executive order in april 1981 do?

set up the presidential advisory committee on federalism

when was the consolidated omnibus budget reconciliation act?

april 1986

what did the consolidated omnibus budget reconciliation act do?

revised the budget in several minor ways to save money and move costs to states and private bodies, including healthcare

when was the tax reform act?

october 1986

what did the tax reform act do?

revised the tax codes, reducing the number of tax brackets, which was supposed to cut tax evasion

when was the tax equity and financial responsibility act?

september 1982

what did the tax equity and financial responsibility act do?

made changes to the budget in response to the economic situation - tightened tax rules and raised taxes on cigarettes

7 of reagan's policies to do with cutting spending and welfare

1. april 1983 - social security reform bill delayed the linking of payments to inflation and raised the amount the government took from wages to cover the benefits

2. october 1982 - job training partnership act shifted job training from federal hands to state and private schemes and removed obligations towards a minimum wage

3. june 1981 - executive order setting up the president's commission on housing, set up to investigate all aspects of housing including saving money on low cost housing

4. march 1981 - executive order sets up the president's council on integrity and efficiency

5. august 1981 - omnibus budget reconciliation act; proposed a variety of tax cuts that took $35 billion out of spending

6. october 1988 - family support act; a family was only to be eligible for benefits if at least 1 parent was working for at least 16 hours a week. Single parents had to finish education and training

7 april 1983 - social security reforms study tested the idea of running the social security agency as a private company. Also changed means test, taxed benefits payments and changed retirement credit

when was the social security reform bill?

april 1983

what did the social security reform bill do?

delayed the linking of payments to inflation and raised the amount the government took from wages to cover the benefits

when was the job training partnership act?

october 1982

what did the job training partnership act do?

shifted job training from federal hands to state and private schemes and removed obligations towards a minimum wage

what did the executive order in june 1981 do?

set up the president's commission on housing to investigate all aspects of housing, including saving money on low cost housing

when was the omnibus budget reconciliation act?

august 1981

what did the omnibus budget reconciliation act do?

proposed a variety of tax cuts that took $35 billion out of spending

when was the family support act?

october 1988

what did the family support act do?

a family was only to be eligible for benefits if at least 1 parent was working for at least 16 hours a week + single parents had to finish education and training

what did the social security reforms study do in april 1983?

- tested the idea of running the social security agency as a private company

- also changed means test, taxed benefits payments and changed retirement credit

what are the 2 pieces of evidence agreeing with the claim of 'reagan's policies stopped inflation and unemployment' ?

1. restricting money supply led to inflation fall from 13.5% to 6.2%

2. while unemployment did peak, it fell below 1981 levels in 1985

what did restricting money supply do to inflation?

made it fall from 13.5% to 6.2%

while unemployment did peak, what happened in 1985?

it fell below the 1981 levels

what are the 3 pieces of evidence disagreeing with the claim of 'reagan's policies stopped inflation and unemployment' ?

1. restrictions in money supply increased interest rates and restricted access to loans

2. unemployment went from 7.1% of population available to work to 9.6% in 1986​

3. when unemployment did start falling, a lot of it was part time; not always enough for peoples needs

what did restrictions in money supply do to interest rates and access to loans?

increased interest rates and restricted access to loans

what happened to unemployment in 1986?

it went from 7.1% of population available to work to 9.6%

even when unemployment did start falling, what was still the issue?

a lot of it was part time and not always enough for peoples' needs

what are the 3 pieces of evidence agreeing with the claim of 'reagan's policies increased personal wealth' ?

1. many people were richer due to tax cuts​

2. as businesses start to recover from recession, deregulation and tax cuts give more profit; invest back into company, resulting in a fall in unemployment

3. tax cuts e.g. economic recovery tax act

many people got richer due to what?

tax cuts

as businesses started to recover, what did deregulation and tax cuts do?

gave more profit so they were able to invest back into the company, resulting in a fall in unemployment

what are the 4 pieces of evidence disagreeing with the claim of 'reagan's policies increased personal wealth' ?

1. later taxes harmed more; 1986 tax reform act raised bottom tax rate and cut top ​

2. deregulation encouraged low pay / businesses responded to recession with underemployment; not trickled down

3. welfare cuts harmed income of poorest e.g. social security reform act

4. average family income fell

why were later taxes, such as the 1986 tax reform act, harmful?

it raised bottom tax rate and cut top

what kind of pay did deregulation encourage?

low pay