32.2 The Domestic Mission

🧠 Core Themes

  • Supply-side economics dominates Republican policy

  • Growing economic inequality

  • Efforts to reform education system

  • Government struggles during crises

  • Financial system instability leads to Great Recession

💸 Economic Policy

Supply-Side Economics

  • Tax cuts → especially for wealthy

  • Goal: increase investment, stimulate economy

Reality

  • Wealth gap increases

  • Wages stagnate

  • Rich gain more influence

📊 Inequality

  • Top earners gain majority of income growth

  • CEOs earn hundreds/thousands times workers

  • Middle/lower classes struggle more

🎓 Education Reform

Problems Identified

  • U.S. students lag globally

  • Racial achievement gaps

Solutions

  1. No Child Left Behind (2002)

    • Standardized testing

    • Accountability system

    • Penalties for low-performing schools

  2. School Choice

    • Charter schools

    • Vouchers for private education

🗳 2004 Election

  • Bush reelected despite:

    • Iraq War criticism

    • No WMDs found

    • Prison abuse scandals

  • John Kerry fails to strongly challenge Bush

🏛 Second Term Challenges

  • Failed domestic reforms:

    • Social Security privatization

    • Estate tax repeal

  • Immigration conflict:

    • Harsh laws proposed

    • Massive protests

🌪 Hurricane Katrina

  • Massive destruction in New Orleans

  • Poor populations most affected

  • FEMA response widely criticized

  • Symbol of inequality + government failure

📉 Economic Problems

Early Issues

  • Recession (2001)

  • Outsourcing jobs

  • Corporate fraud scandals

🏦 Financial Crisis Causes

  • Easy credit

  • Subprime mortgages

  • Securitization (CDOs)

  • Credit default swaps

  • Housing bubble

💥 Great Recession (2008)

Events

  • Housing market collapse

  • Bank failures

  • Financial panic

Government Response

  • $700 billion bailout (TARP)

  • Aid to banks + auto industry

📉 Effects

  • Massive job losses

  • Foreclosures

  • Stock market crash

  • Global economic slowdown

⚖ Big Takeaways

  • Free-market faith weakened

  • Inequality became more visible

  • Government seen as:

    • Ineffective (Katrina)

    • Biased toward wealthy (bailouts)