USA Chapter 5

What did Reagan want to do with Government Financials

Control spending

Reduce involvement

Cut taxes

What was Reagan influenced by

“Supply-Side” economic theories

What were \n “Supply-Side” economic theories

Economy was driven by keeping production up and encouraging saving. “Trickle down” economics

What did Reagan do 3 days after taking office

Fired white-house staff and put a federal government hiring freeze in place.

What did Reagan want to do with his whole budget policy

Wanted to put his whole budget in a single bill

What was Reaganomics

His plan for economic recovery

What were the 4 parts to Reaganomics

1. Cutting the federal deficit
2. Personal and Business Tax Reductions
3. Deregulation
4. Planned Control of the Money Supply

How did Reagan plan to cut the federal deficit

A budget bill that aimed to reduce the deficit

What did the budget bill aim to reduce the budget from in 1981 and to in 1986

1981: 22%

1986: 19%

What did Deregulation do

Removed federal control in industry, state and local government

What kind of majority was in the House of Representatives

Republican Majority. Only needed 26 Democrats to pass legislation

What is the ORA

Omnibus Reconciliation Act 1981

What was the change made to Reagan’s tax act

Cut the tax reduction from 30% to 25%

After some back and forth what is the ERTA

Economic Recovery Tax Act 1981

What did the ERTA do

Cut marginal income tax by 23%

Linked tax bands to inflation

What were Reagan’s policies of tax cuts and money supply control meant to do

Stop inflation

Reduce unemployment

Increase personal wealth

Increase productivity

Federal spending and deficit to fall

What did unemployment increase to by 1983 compared to 1980

1980: 7.1%

1983: 9.6%

What did inflation decrease to by 1982 compared to 1980

1980: 13.5%

1982: 6.2%

What do historians believe about the increase to personal wealth

Some believe the rich got richer.

Some believe that tax cuts hurt the rich the most

What did increased competition lead to in the financial sector

Problems as financial companies took increasingly bigger risks to gain customers

How did poor management of savings and loans come to a head in the 1980s

People began to lose savings and investments due to a crisis and the stock market crash in 1987

What was one of Reagan’s most notable failures

Failure in the reduction of the deficit

What was the deficit in 1980 compared to 1983

1980: $59 billion

1983: $208 billion

What did America become for the first time because of Reaganomics

A borrowing nation, instead of a lending nation

What caused the switch to a borrowing nation

Reagan’s determination to cut taxes

How did the spending of the government reverse from the 1970s

Reagan increased defence spending at the detriment to human resources

What was the % of the budget reserved for human resources in 1980 compared to 1987

1980: 28%

1987: 22%

What was the % of the budget reserved for defence in 1980 compared to 1987

1980: 23%

1987: 28%

What happened to Reagan’s policies after he had left office and was replaced with Bush

Became less popular as their long-term effects and limits became clear

Who was in control of both houses of Congress after Reagan left

Democrats

What would New Federalism do to the USA

Produce less federal interference in state and local affairs, business and finance

What could New Federalist policies be seen as

Less funding for state and local government projects and less regulation for business expansion

What did Reagan say he did to Federal Regulations

Cut them almost in half. Removing 23,000 pages

How many pages of federal regulations were there when Reagan came to power

87,000

What did Reagan say deregulation helped with

Bringing down the cost of petrol and heating fuel

What did Reagan create to combat government fraud

A federal strike force

How much did Reagan’s federal strike force save

$2 billion in 6 months

What did Reagan replace Federal agencies with

Private sector ones

What does the rising deficit show about Reagan’s control over the budget

He was focused on the small details instead of the rising overall debt

What was a main problem with deregulation

When smaller companies were struggling big companies could buy them out

Before deregulation of Savings and Loans Institutions what did they offer

Mostly provided mortgage loans at regulated interest rates

What happens to S&Ls when they began competing with other institutions

They had to make increasingly risky investments

lend at low interest rates

What act did the government have to pass as a result of money lost by S&Ls

Competitive Equality in Banking Act

How much had Savings and Loan Institutions lost by 1988

$10 billion

What happened in 1989 which made Savings and Loans losses worse

Property Market Collapse

What happened to foreign imports as the value of the dollar weakened

Imports became cheaper so the amount of imports rose

Between 1980 and 1985 how many textile plants were forced to close

250

What did Reagan see a difference with for poor people

Welfare Scroungers and Deserving Poor

What did he believe welfare scroungers were

They weren’t willing to work and they thought the government owed them a living

What did Reagan’s OBRA finance cuts mainly target

Federal projects aimed to help the poorest

What did OBRA do to the Aid to Families With Dependent Children (AFDC)

Fewer people were eligible and payments were capped

What did Reagan want to change welfare into

Workfare

What did Workfare require

Required at least one working parent before it paid out family benefits.

What did many single parents find hard to find

Childcare so working became impossible

By 1987 how many states were running welfare work programmes

42

How many families qualified for low-income and how many houses were available

2\.4 million

3\.7 million

What happened to the Federal funding for low-cost housing projects

It was slashed from $32.2 billion in 1978 to $9.2 billion in 1988

What did the 1987 McKinney Act setup

Federal Emergency Management Food and Shelter Program

What did the Federal Emergency Management Act setup

Federal housing project for transitional housing

What did the average mortgage debt increase by

30% and the rate of foreclosure quadrupled

What was the impact of removal of federal regulations on working conditions

Longer hours, less leisure time

How much Leisure time did workers have 1973, 1987

1973: 26 hours /week

1987: 16 hours /week

Why did workers think that they had to work more

Constant competition to be the most productive

What emerged which made it worse for young people entering the workforce.

Two-tier wage structure:

established workers kept the wages and benefits they gained when they took the job

New workers could have a lower salary for the same job

What was the impact of the cutdown of federal involvment on Civil rights

Unwilling to extend civil rights legislation or push for affirmative action

How did Reagan’s policies lead to segregated schooling

Virtually guaranteed that children in the poorest areas would have to attend schooling there

What did the Reagan Administration do to bilingual education

Withdrew 40% of its budget: Minority children should learn English

What happened to Women’s rights under Reagan

Reagan did not support the Equal Rights Act and spoke out against abortion

What was Reagan’s reaction to the gay rights movement and the AIDS epidemic

Accused him of ignoring it until his friend (Rock Hudson) died of AIDS

Even though Reagan was against “Big government” what was he for

Big business

What did big businesses profit from

Reduced federal regulation over wages, working hours and working conditions

What did deregulation mean for businesses

Buy up or merge with businesses

What was farming affected by in the 1970s and 1980s

High interest rates and federal non-intervention

In the 1970s who did the US supply with wheat

USSR

How did the US encourage farmers to grow more wheat

With bigger loans to expand their farms and wheat subsidies

What happened after the USSR invaded Afghanistan

USA stopped exporting wheat

Why was farming hit especially bad in the 1980s

High interest rates, USA stopped exporting wheat, bad drought in 1983

What happened to many smaller farms that had failed

They were bought out by agri-businesses or companies that didn’t farm at all

What percentage of farmers were getting what percentage of subsidies

17% were getting 60% of subsidies

Who set up the National Save the Family Farm Coalition in 1986

Farmers

What did the National Save the Family Farm Coalition do

Organised demonstrations and campaigns to highlight the plight of small family farms

How did the National Save the Family Farm Coalition do their demonstrations

Slow moving tractorcades in cities

In 1983 how many farms were sold each month

500

What was the rate of farmer suicide in 1983

4x higher than other workers

What other industries apart from farming were being hit bad in the 1980s

Car and textiles

Why were the car and textile industries doing bad in the 1980s

Foreign exports could be made more cheaply

Why was Detroit hit bad by the impacts to the car industry

Car manufacturers were the main employer

What cities were 20% of the population living below the poverty line

Baltimore and Cleveland

What had happen to the defence industry under Reagan

There was increased spending on defence

Where did most people move from and too because of the new growing industries

From North and East, To South and West

Why did the people who could afford to migrate still vote for Reagan and then Bush

They felt that the Reagan policies were working for them

In 1987 what were the rates of unemployment in the in California compared to the rest of the country

5\.6% compared to 7.8%

What was the state of the presidency prior to Reagan

Many didn’t trust the president due to the Watergate scandal and what had followed

How did Reagan change the view of the Presidency

He promised to make big changes and then continued to do so

How did the first few years of Reagan’s presidency help him down the line

The first few years setout how people viewed him for the rest of his presidency

How was the slowdown in change hidden from his supporters

The way he projected his presidential image and his foreign affairs successes

How were Reagan’s followers less able to prevent people from seeing their slowdown

Weren’t as good as Reagan at projecting his image.

Bush didn’t get re-elected despite having a higher approval rating (61%)

Clinton had 55% approval rating

What had happened to Reagan’s successes in Congress

They were not repeated with many of his religious right legislation being blocked by Congress

What is another reason some of Reagan’s legislation was not put into place other than Congress

He was prepared to be pragmatic and listen to advice