Notes regarding: What impact did the Reagan presidency (1981–89) have on the USA in the years 1981–96?
Part of A-Level History Paper 1, Option 1F: In search of the American Dream: the USA, c1917-96
Reagan
KQ1: The Effect of Reagan’s economic policies
AIMS:
- Tax cuts
- Reduce size and role of government (cut $40 b from proposed 1982
federal budget of $740 billion and minimise and eliminate welfare state
arrangements
- Deregulation of state and federal government requirements
INFLUENCES
- Supply side economics
- Economy wasn’t driven by consumer demand but by keeping up
production and encouraging saving and investment
- Trickle down theory
REAGAN’S ACTIONS
In first 3 days
- Put federal government departments on hiring freeze
- Ended depts of freeze on office furnishing
- Sacked White House staff
- Reduced travel expenses by 15%
- Set up new advisory groups
- Cuts made in funding of 211 federal programmes
His budget
- His budget was passed as a whole bill when he met with Congress on
18 Feb 1984
- Usually put through as a series but instead passed it as a whole, which
forced Congress to approve of the whole thing
- Able to do so because
o Administration handled Congress well
o Cultivated a swing voters in the House
o Increased pressure on Congressmen
o Willing to compromise
o High poll ratings due to the attempted assassination in 1981
ECONOMIC POLICIES AIMS
- Cutting the federal deficit
o Accompanied by budget bill + proposal for domestic spending
cut
o Plan put together quickly and included footnote of not yet
identified cuts of $74 billion
o Wanted to reduce federal deficit from 22% of GNP in 1981 to
19% in 1986
- Personal and business tax reductions
o Accompanied by Economic Recovery Tax Act
- Deregulation
, o Wanted to remove federal government control
o Cut expenditure and decrease size of ‘big government’
o Cut backs averaged 29% and included 38% cut in number of
personnel of Consumer Product Safety Commission
- Planned control of Money
o Keep inflation low while expanding economy
o Cuts in domestic spending
o From welfare and federal grant projects set up under LBJ Great
Society
- Increase defence spending
o Decreased federal spending on human resources from 28% in
1980 to 22% in 1987
o Increased defence spending from 23% in 1980 to 28% in 1987
ECONOMIC POLICIES
Omnibus Reconciliation Act
- 1981
- Cut tax reduction for personal tax fro m30% to 25%
- Democrats felt manipulated and saw as fight of control
- WH offered tax concessions to sway Democrats
Economy Recovery Tax Act
- 1981
- Cut marginal income tax band rate by 23% over 3 years
- Reduced highest tax band rate from 70% to 50%
- Reduced smallest tax band rate from 14% to 11%
Tax Reform Act
- 1986
- Increased permissible amount of tax free income
- 6 million removed from tax rolls
(Passing bills was made easier as Reagan had ‘reaganised’ the judiciary and
only needed the support of 26% democrats to pass bills and policies)
EFFECTS OF ECONOMIC POLICIES
Unemployment rates
- 1980: 7.1%
- 1983: 9.6%
Inflation
- 1979: 11.3%
- 1980: 13.5%
- 1982: 6.2%
Personal wealth
- Rich became richer
- Taxes paid were less
- Increased number of millionaires
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller grace301. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for £5.49. You're not tied to anything after your purchase.
