Reaganomics By Carter Olsen and Andrew Orr Mrs

Reaganomics By Carter Olsen and Andrew Orr Mrs. Ganier Period 6

Timeline of the Reagan Era Nov. 4, 1980: Reagan elected to 1 st term; following Jimmy Carter July 1984: Summer Olympics Jan. 20, 1981: “Government is not the solution to our problem. Government is the problem. ” (Inauguration) Oct. 1984: Iran-Contra Affair Nov. 4, 1984: Reagan reelected in historic landslide Mar. 30, 1981: Assassination attempt by John Hinckley July 29, 1981: Congress passes Reagan’s tax bill Mar. 11, 1985: Mikhail Gorbachev becomes General Secretary to Communist party in the Soviet Union Sep. 1981: Reagan appoints Sandra Day O’Connor to Supreme Court Aug. 1985: Arms sent to Iran in hopes to return American hostages Nov. 19, 1985: Geneva Summit 1982: Worst economic recession since the Great Depression Jan. 28, 1986: Challenger disaster Oct. 11, 1986: Reykjavik Summit Nov. 1986: Iran-Contra Scandal erupts; Oliver North (National Security Council) fired Mar. 4, 1987: Reagan (confusing) apology June 12, 1987: “Mr. Gorbachev, tear down this wall. ” Aug. 25, 1982: Marines deployed to Lebanon Mar. 8, 1983: “[The Soviet Union] is the focus of evil in the modern world. ” Mar. 23, 1983: Strategic Defense Initiative proposed Oct. 25, 1983: Invasion of Grenada

“Reaganomics” The term “Reaganomics” is a portmanteau (combination of two or more words and their definitions) coined by Paul Harvey, a conservative radio host for numerous ABC network stations. The idea behind this unique characterization of a president, was to enhance the notion that Reagan’s specific economic policies were the reason that the US capitalist system became so successful. The basic idea behind “Reaganomics” incorporated the Four Pillars (1 - reduce the growth of government spending, 2 - reduce the marginal tax rates on income from both labor and capital, 3 - reduce regulation, and 4 - reduce inflation by controlling the growth of the money supply) which were also associated with supply-side economics, known as trickle-down economics by political opponents and free market economics by advocates. In theory, less government regulation = more spending = more production

The Effects The Tax Reform Act of 1986 simplified the taxing system. Alleviating from the previous 14 -bracket system, Reagan cut the system down to three brackets: 15%, 25%, and 35%. For this reason, many lower to middle-class Americans’ tax rates rose. The upper-class greatly benefited from this act. Federal spending on defense was a huge part of Reagan’s policies. The SDI program took up the bulk of these funds because of its great expenses with regards to necessary equipment.

The Effects Reagan set up an economic environment that was entrepreneur-friendly (establishment of Macintosh, Amazon, IBM, etc. ), advocated for state governments to play a larger role than the federal level, and offered more job opportunities by giving more power to small businesses (in the process cutting unemployment from 9% to 5. 4%). Another policy Reagan sought to carry out was to cut welfare spending. He saw it necessary for citizens to become self-serving and independent rather than relying on the government for all their needs. This did not win him approval among the lower class and did not eventually come to full fruition because Congress was apprehensive about adjusting Social Security and Medicare. When the wealthy had money to speculate with, they invested into new businesses which required work forces. This created jobs and opportunity for lower-class Americans. In the end, Reagan accomplished three of his four “pillars”. He reduced marginal tax rates, regulation, and inflation but failed to reduce government spending as evidenced by the large debt increase.

Skepticism/Disapproval "In spite of the wildly speculative and false stories of arms for hostages and alleged ransom payments, we did not—repeat, did not—trade weapons or anything else for hostages, nor will we. " - Ronald Reagan, denying the Iran-Contra Affair, November 1986 "A few months ago, I told the American people I did not trade arms for hostages. My heart and my best intentions still tell me that's true, but the facts and evidence tell me it is not. " - Ronald Reagan, admitting the Iran-Contra Affair, March 1987 Reagan’s “apology” was not an admittance to fault on his part but rather that his idea of deregulation allowed for those who served under him to act freely. He trusted his advisors in the National Security Council and gave them freedom to do what they saw necessary but in the end it was the Council that made the mistakes and Reagan took the blame.

Questions?

Quiz True or False 1. Ronald Reagan was formerly Democratic but ran on a Republican platform during his presidential campaign. 2. One of the tangents of the Four Pillars included the plan to increase the federal budget. 3. The Strategic Defense Initiative was nicknamed “Star Wars”. Multiple Choice 4. Which event did not occur during 1981? A. Reagan’s first term inauguration C. “Mr. Gorbachev, tear down this wall!” B. Assassination attempt by Hinckley D. Sandra Day O’Connor appointed to Supreme Court 5. When Reagan simplified the tax system, he shortened the previous 14 -brackets into three. What were they? A. 15%, 25%, 35% C. 3%, 4%, 5% B. 20%, 67%, 85% D. 1%, 2%, 3%

Works Cited Niskanen, William. "Reaganomics. " The Concise Encyclopedia of Economics. Library of Economics and Liberty, n. d. Web. 19 Apr. 2014. Polasky, Bill. "Ford/Carter Interlude and Reagan Era, Part 2. " Get. AFive. N. p. , n. d. Web. 21 Apr. 2014. "Reaganomics. " ushistory. org. Independence Hall Association, n. d. Web. 20 Apr. 2014. "Reaganomics and Prudent Taxation. " Matthew Slyman. N. p. , 26 July 2011. Web. 21 Apr. 2014. Shmoop Editorial Team. "The Reagan Era Timeline of Important Dates. " Shmoop. com. Shmoop University, Inc. , 11 Nov. 2008. Web. 21 Apr. 2014. Shmoop Editorial Team. "The Reagan Era Facts. " Shmoop. com. Shmoop University, Inc. , 11 Nov. 2008. Web. 21 Apr. 2014.

Here are the links to some helpful videos on understanding Reaganomics http: //www. shmoop. com/video/reagan-era https: //www. getafive. com/study-room/subjects/us-history/lessons/fordcarter-interlude-and-reagan-era-part-2