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RAH Day 34 Agenda Goal – to understand how Ronald Reagan was both similar to and different from previous presidents. To understand how his views of economic policy differed from others and the effects these policies had. • Complete p 8 re: Reagan’s policies • Review PSSA preparation reading activity packet p 9 and 10 by reading pages 11-16 about the Reagan Administration’s view of government and the economy. • Complete p 20 – analyze the cartoon about Reagan’s policies – answer the attached 3 questions • Complete p 22 and 23 about social situation and foreign policy under Reagan and Bush 41 • Complete p 24 and 25 about the middle east From Hype to Fear Paul Krugman – New York Times, Jan 7, 2008 Not to put too fine a point on it, Barack Obama won his impressive victory in Iowa with a sunny, upbeat message of change. But there’s a powerful political faction in this country that understands very well that any real change will create losers as well as winners. In particular, any serious progressive reform of health care, let alone a broader attempt to reduce middle-class insecurity and inequality, will have to mean higher taxes on the affluent. And members of that faction will do whatever it takes to scare people into believing that change means disaster for the economy. p 8 - Conservative Policies Under Reagan and Bush - Goal: stimulate economy Reaganomics Method: cut gov’t spending on social programs and lowered income taxes Result: Slashed poverty programs like Women, Infant and Child (WIC) program cut even though 22% of all US children lived in poverty, cut school lunch program and student loans. No spending on AIDS research until after 1986 Massive Tax cuts for the rich - top tax rate decreased from 70% in 1980 to 50% in 1982 to 28% in 1988 while the tax rate for the median income 1980 – 28%, 1982 - 29%, 1988 – 28% Gap between rich and poor got wider, cities got poorer Little change in SS & Medicare Recession until 1982, then significant GDP growth to 1989, decrease in inflation, increase in jobs, wages, and confidence in economy Massive increase in national debt and federal government yearly deficits, Trade deficit 1. 2. 3. 4. 5. 6. 7. Reagan’s solutions to the above problems Supply-Side economics = Reaganomics Cut gov’t spending, especially entitlement programs Cut taxes, especially on businesses and the wealthy Simplify the depreciation schedule Cut business regulations including environmental enforcement Improve monetary policy Promote confidence in the US Keynesian policy Cut and limit government activity related to business Government $$$ - welfare, jobs, housing subsidies, food stamps Producer/supplier of goods and services Consumer of goods and services 1. 2. 3. 4. 5. 6. 7. Reagan’s solutions to the above problems Supply-Side economics = Reaganomics Cut gov’t spending, especially entitlement programs Cut taxes, especially on businesses and the wealthy Simplify the depreciation schedule Cut business regulations including environmental enforcement Improve monetary policy Promote confidence in the US Cut and limit government activity related to business Supply side policy Government Business tax cuts, investment tax cuts, Producer/supplier of deregulation, goods and services lower interest rates Trickle $$$ Down Consumer of goods and services p 8 - Conservative Policies Under Reagan and Bush Goal: stimulate economy Method: increase spending on military Result: new weapons systems like MX nuclear missile, the B-1 longrange bomber Plans for the Strategic Defense Initiative SDI otherwise known as Star Wars Huge budget deficits and national debt increases Goal: promote traditional values and morality Method: naming conservative judges to federal judiciary Results: overturned or weakened laws about abortion (but it remained legal today), affirmative action, civil rights for women, criminal rights and discrimination protections (especially for gays and women) Other methods – pushing for tougher laws against drugs, indecency p 8 - Conservative Policies Under Reagan and Bush Goal: reduce the size and power of federal gov’t Method: deregulate savings and loan industry (and other industries) Results: huge screw up in the S and L industry leading to massive bankruptcies of these institutions and the FSLIC bailout of over $200 billion Increases in mergers and acquisitions leading to massive new companies but also new innovations and competition leading to lowered prices and better products Method: cut EPA Result: severe decrease in environmental prosecutions, increased logging, grazing and mining and sale of public lands leading to increased pollution and habitat loss Mean (average) family income in current 2005 $ – Piketty and Saez (2006) compared average income 38,000 37,000 income in 2005 $ 36,000 35,000 average income in 2005 $ 34,000 33,000 32,000 1979 1980 1981 1982 1983 1984 1985 1986 year 1987 1988 1989 1990 1991 1992 bottom quintile mean income 15500 15000 14500 14000 bottom quintile mean income 13500 13000 12500 19 79 19 80 19 81 19 82 19 83 19 84 19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 12000 Bottom Quintile Mean family income -current 2005 $ – US Census Bureau CPS 2nd quintile mean income 34000 33000 32000 2nd quintile mean income 31000 30000 29000 19 91 19 89 19 87 19 85 19 83 19 81 19 79 28000 2nd Quintile Mean family income -current 2005 $ – US Census Bureau CPS middle quintile mean income 19 91 19 89 19 87 19 85 19 83 middle quintile mean income 19 81 19 79 53000 52000 51000 50000 49000 48000 47000 46000 45000 44000 43000 42000 3rd Quintile Mean family income -current 2005 $ – US Census Bureau CPS 4th quintile mean income 19 91 19 89 19 87 19 85 19 83 4th quintile mean income 19 81 19 79 76000 74000 72000 70000 68000 66000 64000 62000 60000 58000 4th Quintile Mean family income -current 2005 $ – US Census Bureau CPS top quintile mean income 160000 140000 120000 100000 80000 60000 top quintile mean income 40000 19 91 19 89 19 87 19 85 19 83 19 81 19 79 20000 0 Top Quintile Mean family income -current 2005 $ – US Census Bureau CPS top 5% mean income 250000 200000 150000 top 5% mean income 100000 50000 19 91 19 89 19 87 19 85 19 83 19 81 19 79 0 Top 5% Mean family income -current 2005 $ – US Census Bureau CPS Comparing Quintiles Mean family income in current 2005 $ – US Census - CPS comparative mean income by quintile lowest 20% 200000 2nd 20% middle 20% 150000 4th 20% 100000 top 20% top 5% 50000 0 19 79 19 80 19 81 19 82 19 83 19 84 19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 current 2004 $ 250000 year Nations Key people Events trends USSR Mikhail Gorbachev Boris Yeltsin Perestroika, Glasnost, START, INF, Fall of USSR Democratization, capitalism, failure of communism, warming of relations Poland New constitution, fall of communism Democratization, capitalism Germany Fall of Berlin wall Reunification Democratization Yugoslavia Slobodan Milosovic Balkanization and 2 civil wars Democratization, capitalism, genocide China Deng Xioaping, Li Tiananmen Square Peng Economic reform Strengthening authoritarianism, capitalism, GDP growth Nicaragua Somoza, Ortega, Civil war, CIA chamorro, contras, activities, aid to Sandanistas contras, Boland A. Democratization, Nations Key individuals events Trends Panama Noriega, Bush drug dealing War on drugs, Invasion of panama, yankee imperialism arrest of Noriega Iran Ayatollah Khomeini, Reagan, Ollie North, Larry Walsh Iran-Iraq War, Lying to Congress, Hostages & civil war law breaking, in Lebanon, trading hypocrisy guns for money for hostages Iraq Saddam Hussein, GHW Bush, Colin Powell, Norman Schwartzkopf War with Iran, War and mistakes money and weapons for Hussein, war against Iraq $ $ Locations of CIA covert operations to overthrow unwanted leftist governments median married family income 40,000 income in current 2004 $ 35,000 30,000 25,000 20,000 Series1 15,000 10,000 5,000 0 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 year Median family income in current 2005 $ – US Census Bureau Current Population Survey