Reagan revision
Reaganomics
4 main aims of economic policy
- Tax cuts
- Less gov expenditure
- Deregulation
- Stimulate the economy – successfully fixed the economy? - measures –
GNP and GDP growth, unemployment, inflation
Successes and failures of Reaganomics
Tax cuts
- OBRA – passed budget quickly
- ERTA – cut tax rates by 23% on avg across all bands, lowered top tax
rates from 70-50%
- Wealthy benefit most from tax cuts but all receive benefits
- Allowed untaxable retirement savings
- Business taxes were reduced – aimed to help out small businesses in
particular
- Tax reform act 1986 – revenue enhancement – top bracket rates
lowered from 50-28% while bottom bracket tax rises 11-14% –
negatively impacts the lower income households – NEGATIVE – tax cut
impact led to budget deficit increases which forced later tax rises
- Consistently the rich benefitting more from tax cuts
Less gov expenditure
- Welfare, social security, lower income housing support – cut welfare
spending
- Gov spending still increases if defence spending is ignored
- Amount of federal employees increases
- Defense spending increases by the greatest amount in American
history
- America became a borrowing nation – mainly from Japan and Germany
– becomes net borrower and deficit spending
Deregulation
- Allow businesses to do as they wish – more laissez faire policies
, - Regulatory departments and agencies cutback on staff – avg 29%
decrease and included 38% at the consumer product safety
commission
- Allow businesses to flourish by decreasing regulation
- Favoured bigger businesses as they hv the capital to take adv of it
- Conglomerate corporations while smaller businesses closing – greater
inequality and increasing concentration of wealth at the top – widening
inequality
- Deregulate the banking industry – 87 S&L industry crash – speculation
and stock market crash – 87 recession – quick fix
Stimulating the economy
- Unemployment around 8% at Carter – end of Reagan abt 5.3% -
decreased unemployment
- Inflation – from 6.2% in 1982 to about 4.5% between 1984-89 –
inflation lowered
- Inflation during carter consistently in double figures – lowered and
brought under control
- Over 7.5m new jobs created
- GNP remain steadily high after 1982 recession
- Bi-coastal boom – middle America losing out
- Shift from manufacturing to servicing – working class blue collar
impacted more
- Manufacturing industry moving oversees like clothing and cars moving
to Japan
- Unemployment figures questionable – included part time and temp
workers
- Over 1/3 of the population counted as unemployable – thus excluded
from unemployment figures – questionable
- Deregulate the banking industry – 87 S&L industry crash – speculation
and stock market crash – 87 recession – quick fix
- Deficit increase
Reduction in big gov
Reduced
- Cut some federal programmes – but less than what he wanted
- Reduced benefit levels and range of benefits
- Cut to Aid to families with dependent children
Reaganomics
4 main aims of economic policy
- Tax cuts
- Less gov expenditure
- Deregulation
- Stimulate the economy – successfully fixed the economy? - measures –
GNP and GDP growth, unemployment, inflation
Successes and failures of Reaganomics
Tax cuts
- OBRA – passed budget quickly
- ERTA – cut tax rates by 23% on avg across all bands, lowered top tax
rates from 70-50%
- Wealthy benefit most from tax cuts but all receive benefits
- Allowed untaxable retirement savings
- Business taxes were reduced – aimed to help out small businesses in
particular
- Tax reform act 1986 – revenue enhancement – top bracket rates
lowered from 50-28% while bottom bracket tax rises 11-14% –
negatively impacts the lower income households – NEGATIVE – tax cut
impact led to budget deficit increases which forced later tax rises
- Consistently the rich benefitting more from tax cuts
Less gov expenditure
- Welfare, social security, lower income housing support – cut welfare
spending
- Gov spending still increases if defence spending is ignored
- Amount of federal employees increases
- Defense spending increases by the greatest amount in American
history
- America became a borrowing nation – mainly from Japan and Germany
– becomes net borrower and deficit spending
Deregulation
- Allow businesses to do as they wish – more laissez faire policies
, - Regulatory departments and agencies cutback on staff – avg 29%
decrease and included 38% at the consumer product safety
commission
- Allow businesses to flourish by decreasing regulation
- Favoured bigger businesses as they hv the capital to take adv of it
- Conglomerate corporations while smaller businesses closing – greater
inequality and increasing concentration of wealth at the top – widening
inequality
- Deregulate the banking industry – 87 S&L industry crash – speculation
and stock market crash – 87 recession – quick fix
Stimulating the economy
- Unemployment around 8% at Carter – end of Reagan abt 5.3% -
decreased unemployment
- Inflation – from 6.2% in 1982 to about 4.5% between 1984-89 –
inflation lowered
- Inflation during carter consistently in double figures – lowered and
brought under control
- Over 7.5m new jobs created
- GNP remain steadily high after 1982 recession
- Bi-coastal boom – middle America losing out
- Shift from manufacturing to servicing – working class blue collar
impacted more
- Manufacturing industry moving oversees like clothing and cars moving
to Japan
- Unemployment figures questionable – included part time and temp
workers
- Over 1/3 of the population counted as unemployable – thus excluded
from unemployment figures – questionable
- Deregulate the banking industry – 87 S&L industry crash – speculation
and stock market crash – 87 recession – quick fix
- Deficit increase
Reduction in big gov
Reduced
- Cut some federal programmes – but less than what he wanted
- Reduced benefit levels and range of benefits
- Cut to Aid to families with dependent children
