The impact of the Reagan presidency, 1981-96
Reaganism and Reaganomics – a new departure?
Reduction of ‘big government’ that Reagan wanted to strip away interventions
made by successive liberal governments – a return to laissez-faire
Hard line anti-union
o Union membership fell
o Union membership – ‘un-American’
Allowed for the creation of big business corporations which could then
monopolise areas of industry
Significant tax reductions
o Reduced top level personal rates from 70% to 25%
o Made business tax concessions
New industries flourished
o Farming and mining suffered
Created economies where the wealth was concentrated at the top
Encouraged financial speculation
o Led to stock market crashes
Believed in rugged individualism
o Created an economy where such people could flourish
Mentally divided the poor into ‘worthy’ poor and ‘feckless’
Backlash against liberalism helped Reagan come into power.
The political scene where Reagan came to power
1979 opinion poll – majority of Americans thought their children’s lives would
be worse than their own
People doubted the gov. and the future as well
Carter’s outlook was pessimistic
Reagan – stressed what the USA had achieved before and what it could
again
Reagan’s beliefs
Was a committed Christian
Significant amount of support from the religious right:
o Christians who believed in traditional values
o Compulsory prayer in schools
o Opposed homosexuality and abortion
o Opposed most forms of birth control
Reagan spoke out against abortion
Gave jobs in the White House to members of the religious right
Tried to pass a law restricting access to abortion
His government was not as conservative as his supporters of the religious
right hoped
, What effect did Reagan’s economic policies have?
Immediate action
Earlier presidents felt obliged to keep up federal involvement in social welfare
o Funded it with higher taxes and federal borrowing
Reagan wanted to control gov. spending and cut taxes
o Influenced by ‘supply-side’ economic theories
3 days in he sacked many White House staff
o Put a freeze on government hiring
Told departments that there was freeze on office furnishing and equipment
o Had to cut their travel expenses by 15%
Used executive orders to set up advisory groups
o Which reported right to him on how to cut down ‘big government;
The plan for reform
Wanted to present his whole budget through to 1984 as a single bill when he
met with Congress on 18 February
o Wanted to present a tax bill at the same time
His Council of Economic Advisers (CEA) had no time
Congress had to vote on the whole package of spending cuts
o So, the administration would have approval for all measures
Reaganomics
Cutting the federal deficit. Accompanied by a budget bill and proposal for
cuts on domestic spending. Aimed to reduce the federal deficit from 22% to
19% in 1986.
Personal and business tax reductions. Accompanied by the Economic
Recovery Tax Act of 1981
Deregulation. Removing federal control in industry, state and local
government
Planned control of the money supply to keep inflation down while
expanding the economy
Came entirely from federal grants for specific projects, set up under Johnson’s
‘Great Society’ reforms
Included grants to state and local government bodies for slum clearance and
highway repair
Included local initiatives in education, housing and the provision of various
services, such as the Aid to Families with Dependent Children (AFDC)
programme
Getting the legislation passed
The White House only had to win the support of 26 Democrats in the House to
pass legislation
The budget was now a law – Omnibus Reconciliation Act of 1981 (ORA)
Tax legislation was harder to pass
o Senate passed it put cut the tax reduction for personal tax from 30% to
25%
o Democrats felt they were being manipulated
Reaganism and Reaganomics – a new departure?
Reduction of ‘big government’ that Reagan wanted to strip away interventions
made by successive liberal governments – a return to laissez-faire
Hard line anti-union
o Union membership fell
o Union membership – ‘un-American’
Allowed for the creation of big business corporations which could then
monopolise areas of industry
Significant tax reductions
o Reduced top level personal rates from 70% to 25%
o Made business tax concessions
New industries flourished
o Farming and mining suffered
Created economies where the wealth was concentrated at the top
Encouraged financial speculation
o Led to stock market crashes
Believed in rugged individualism
o Created an economy where such people could flourish
Mentally divided the poor into ‘worthy’ poor and ‘feckless’
Backlash against liberalism helped Reagan come into power.
The political scene where Reagan came to power
1979 opinion poll – majority of Americans thought their children’s lives would
be worse than their own
People doubted the gov. and the future as well
Carter’s outlook was pessimistic
Reagan – stressed what the USA had achieved before and what it could
again
Reagan’s beliefs
Was a committed Christian
Significant amount of support from the religious right:
o Christians who believed in traditional values
o Compulsory prayer in schools
o Opposed homosexuality and abortion
o Opposed most forms of birth control
Reagan spoke out against abortion
Gave jobs in the White House to members of the religious right
Tried to pass a law restricting access to abortion
His government was not as conservative as his supporters of the religious
right hoped
, What effect did Reagan’s economic policies have?
Immediate action
Earlier presidents felt obliged to keep up federal involvement in social welfare
o Funded it with higher taxes and federal borrowing
Reagan wanted to control gov. spending and cut taxes
o Influenced by ‘supply-side’ economic theories
3 days in he sacked many White House staff
o Put a freeze on government hiring
Told departments that there was freeze on office furnishing and equipment
o Had to cut their travel expenses by 15%
Used executive orders to set up advisory groups
o Which reported right to him on how to cut down ‘big government;
The plan for reform
Wanted to present his whole budget through to 1984 as a single bill when he
met with Congress on 18 February
o Wanted to present a tax bill at the same time
His Council of Economic Advisers (CEA) had no time
Congress had to vote on the whole package of spending cuts
o So, the administration would have approval for all measures
Reaganomics
Cutting the federal deficit. Accompanied by a budget bill and proposal for
cuts on domestic spending. Aimed to reduce the federal deficit from 22% to
19% in 1986.
Personal and business tax reductions. Accompanied by the Economic
Recovery Tax Act of 1981
Deregulation. Removing federal control in industry, state and local
government
Planned control of the money supply to keep inflation down while
expanding the economy
Came entirely from federal grants for specific projects, set up under Johnson’s
‘Great Society’ reforms
Included grants to state and local government bodies for slum clearance and
highway repair
Included local initiatives in education, housing and the provision of various
services, such as the Aid to Families with Dependent Children (AFDC)
programme
Getting the legislation passed
The White House only had to win the support of 26 Democrats in the House to
pass legislation
The budget was now a law – Omnibus Reconciliation Act of 1981 (ORA)
Tax legislation was harder to pass
o Senate passed it put cut the tax reduction for personal tax from 30% to
25%
o Democrats felt they were being manipulated
