Impact of Reaganomics

  • Created by: lwilson23
  • Created on: 30-03-19 20:27

The Basics of Reagan's Policy

- Reagan won 49/50 states in the 1980 election against Carter - showed desparation for change. Campaign pledges included fixing the economy, lowering taxes and reducing 'Big Government' (focus on social welfare brought in by FDR's new deal).

- upon his inauguration - the Iranian hostages which had plagued Carter's tenure were released - instantly made 'Teflon Ron' a hero - even though he did nothing to warrant this. 

- his conviction in his policy was shown through his firing of 13,000 air traffic controllers who went on strike due to low pay - wouldn't take anything from anyone. 

- he focussed on the theory of 'supply-side'/business economics - help the rich business owners. 

- his Program for Economic Recovery was passed approx one month into his first term - passed quickly due to Republican Congress. 

- believed that deregulation of business would fix the issues of stagflation and inflation. 

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Criticisms of Reaganomics

  • initial sharp rise in interest rates - made the recession worse. 
  • tax cuts often criticised for making the rich richer, and the poor poorer. 
  • deregulation encouraged companises to take risks and exploit workers. 
  • stock market crash occured in 1987 due to deregulation. 
  • reduction of national deficit a failure - $59 bil in 1980, $208 bil in 1983 - due to massive tax cuts and a large amount of defence spending. US now dependent on foreign money. 
  • Added more to the national debt than all of his predecessors combined - by 1989 it had trebled from $1 to $3 trillion.  

- despite this, his policies did technically 'work' - albeit much more in the short than long-term. Some of his policies still endure today to an extent.

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Social Impacts of Reagan's Presidency

- Reagan revitalised presidency - increased public faith in presidency again. 

- poor suffered under Reagan - very hard on 'welfare scroungers' - took $140 bil from welfare during his tenure, and gave $181 to defence. Homelessness became an issue. Workfare. 

- by 1985 - 3.7 mil families who qualified for low-income housing were denied as Reagan had slashed the federal budget by about two thirds

- rise of homelessness tackled by 1987 McKinney Act (Federal Emergency Management Agency) - provided welfare for the homeless and increased federal funding for them from $300 mil in 1984 to $1.6 bil in 1988. 

- closed mental health hospitals - putting ill and potentially dangerous people on the streets. 

- his Christian values meant he didn't tackle the AIDS epidemic until 1985 and didn't support the Equal Rights Act (equal pay for women) despite appointing the first woman - Sandra Day - to Congress. 

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Miscellaneous Aspects of Reagan's Tenure

  • survival in March 1981 assassination attempt showed strength - as well as getting Democrat support from within Congress - popularity shown. 
  • economy thriving by 1984 - inflation falls as low as 2% due to decline in world oil prices. 
  • Reaganomics successfully decreased inflation from 15% to a minimal figure and created 18 million jobs - massively reducing unemployment. 
  • was involved in foreign affairs (i.e. the Nuclear Forces Treaty of 1987) but not in domestic ones, as he promised. 
  • vowed to the American people to 'get the government off our backs' - reduce big government
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