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1980’s Reagan and the Resurgence of Conservatism Morning in America In 1980, Census figures confirmed the average American was older and many have moved to either the South or West, bastions of the Old Right. In addition, there movement known as the New Right was emerging, in response partly to the counterculture protests of the 1960’s. Many concerned with cultural or social issues as opposed to economic: Denounced abortion, pornography, homosexuality, feminism, and affirmative action. Championed prayer in schools and tough penalties for criminals. With the New and Old Right, a new powerful conservative movement started to take form in the late 70’s early 80’s Election of 1980 Reagan was a perfect match for the emerging conservative movement: Grew up before the social upheavals of the 60’s, so he naturally sided with New Right on social issues He also chided the activist government of the Great Society and its social engineering Economically speaking, he supported conservative values. Reagan supported the “common man” against the big government Reagan attempted to convince Democratic working class and lower-middle-class white voters that the Democratic party became the party of big government and of minority constituents and no longer supported their cause. President Ronald Reagan The oldest man ever elected to the presidency, Reagan displayed youthful vigor both on the campaign trail and in office. Galen Rowell/ CORBIS Election of 1980 Neoconservatives Group of advisors that Reagan relied on to help develop policy and agendas Neocons championed the following: • • • • • Free market supply side capitalism Harsh anti-Soviet position Questioned liberal welfare programs Questioned affirmative action Called for a return to traditional values of respect for the individual and the importance of family. Election of 1980 Reagan Was an B-list actor in the 1940’s who started out as a sports announcer in Iowa in the 30’s Was president of the Screen Actors Guild, where he purged their ranks of communists. In 1950’s was a spokesperson for GE, and he started to doubt the efficacy of the New Deal and turned to more conservative values He began his political career in 1966 when he was elected Governor of California. Election of 1980 Carter His administration was not looked upon favorably Considered to be bungling and befuddled. Inflation was high, double digit levels Even amongst Democrats, many doubted Carter (ABC’s) Edward Kennedy and Carter slugged it out in Democratic Primaries Election of 1980 Reagan's Attacked Carter’s foreign policy performance Blasted the big government policy of the Democratic party Regan also attacked the fumbling economy, high interest rates, and double digit inflation Carter’s campaign campaign Tied to label Regan as a trigger happy cowboy who would lead US into war Presidential Election of 1980 (with electoral vote by state) This map graphically displays Reagan’s landslide victory over both Carter and Anderson. Also noteworthy, is the Senate was controlled by the Republicans too Copyright (c) Houghton Mifflin Company. All Rights Reserved. Carter’s Legacy Carter tried valiantly as president, but was crippled by his lack of managerial talent and rising inflation, oil costs, and hostage crisis in Iran In his Farewell Address, he noted how he attempted to scale down the nuclear arms race, promote human rights, and protect the environment. Signed bill preserving 100 million acres of forest in Alaska After the presidency, Carter took on the role of unofficial US Ambassador to eh world and championed worthy causes such as humanitarian and human rights. Won Nobel Peace Prize in 2002 The Triumph of the Right, 1980 Republican conservatives scored a double victory in 1980, winning control of both the White House and the Senate. Aided by conservative Democratic “boll weevils,” they also dominated the House of Representatives, and a new era of conservatism dawned in the nation’s capital. King Features Syndicate, Inc. Reagan Revolution Goals: Dismantle the welfare state and reversal of the liberal polices from the previous 50 years. Create a smaller government that is fiscally fit and also financially leaner Government is not the solution to our problems, it is the problem” (Inaugural Address) Compared the New Deal and Great Society federal government to a baby, appetite at one end but no responsibility at the other. Reagan Revolution Why did his conservative message have an audience? Federal Spending rose from 18 percent of GNP to 23 percent of GNP Government shifted from Defense to entitlement programs such as Social Security, Welfare, and Medicare/Medicaid After 4 decades of new Deal and Great Society programs, public turned to a new idea of government Reagan pushed for cuts of 54 billion, mostly to social programs Convinced Southern Democrats known as Boll Weevils to support his policies. Assassination Attempt On March 6, 1981, as Reagan was leaving a Washington hotel, a man shot (John Hinckley Jr) him under his left arm and punctured his lungs. Miraculously, for a man his age, Reagan recovered and was back to work in 12 days. The incident further increased his popularity as he proved to be tough and dedicated to the task at hand. Reagan and the Budget Budget proposal Wanted 25% percent cuts across the board over 3 years 1981, Congress lowered individual tax rates, reduced estate taxes, and created tax-free savings plans for investors Believed budgetary responsibility coupled with tax reductions would stimulate new growth and investment. Eventually, the government would benefit with increased tax dollars from more Americans working. Thus, trickle down or supply side economics. Reagan and the Budget But, at first the supply side economics seemed to be a theory that simply did not work: In 1981, the economy slipped into a deep recession, worst since 1930’s. Unemployment reached 11 percent and banks closed Car companies did horribly Democrats screamed that the budget cuts were focused on poor and handicapped and tax cuts favored wealthy. Wallflowers Reagan’s budget cuts fell almost exclusively on social programs, whereas military outlays increased substantially. Mazzotta/ Ft. Myers News/ Rothco Reagan and the Budget In 1983, the economy started to make a recovery and the supply-siders felt vindicated. However, important to note that the economy of the 1980’s saw a widening gap in wealth distribution Basically, rich got richer and the poor got poorer. Middle incomes stayed relatively the same, with small dips. Reagan and the Budget However, some economists argue it was neither the spending of the wealthy class nor supplyside economics that caused the economy to improve, it was simply military expenditures. Reagan spent 2 trillion dollars on the military in the 1980’s in a desire to win the arms race. As a result, Regan through the federal budget into huge deficits, that made the New Deal seem small. • 100 billion in 1982 and 200 billion each year after. Interest rates high, which caused dollar to soar, which meant exporting was difficult. Consequently, trade deficit also increased and America became heavy borrowers. What? When Interest rates are high, it becomes more expensive to borrow money? So banks lend out less money than before. Less money means less supply of dollars which equals an increase in the worth of the dollar. So, let’s buy some wine in Paris: In 1982, it cost 5 francs for a bottle of wine • Exchange rate was 1 dollar equals 5 francs. So it cost 1 dollar to buy a bottle of wine. • But in 1984, the exchange rate was 1 dollar to 10 francs. So how much does that bottle of wine cost an American tourist in 1984. • $.50 What? However, the opposite hurts American exporters. Parisian wants to buy California wine: In 1982, it cost 5 dollars for a bottle of Californian red, so it France it cost 25 francs But in 1984, with an exchange rate of 1:10, that bottle of wine costs a Frenchman 50 francs. Guess whose wine is not going to be bought. For an American tourist or buyer of foreign goods, high dollar is good But for exporters, it is bad because American goods become more expensive. Thus, the trade deficit in the 80’s Reagan and the Cold War Reagan’s theory: Soviets equal real bad To defeat, need to negotiate from position of strength. Strength comes from military. American economy and system can handle stress of increased military expenditures, so increase arm race and make Soviets spend themselves to death. To avoid economic ruin, Soviets would come to the table to negotiate Star Wars Fantasies President Reagan’s Strategic Defense Initiative (popularly known as Star Wars) evoked extravagant hopes for an impermeable defensive shield, but its daunting physical and engineering requirements also occasioned much ridicule in the scientific The Hartford Courant community. The Middle East A combination of political instability and precious petroleum resources has made the region from Egypt to Afghanistan an “arc of crisis.” Copyright (c) Houghton Mifflin Company. All Rights Reserved. Middle East In 1982, Israel invaded Lebanon to get rid of PLO who made attacks from the South into Israel. Lebanon already was plagued by Civil War and further chaos ensued as a result of the invasion. Reagan obliged to send troops in 1983 as aprt of an international peace keeping force. In 1983, a Marine barracks was attacked by a suicide bomber killing more than 200 Marines. Sandinistas Revolutionaries and leftists in Nicaragua who overthrew the long-time dictator in 1979. Carter did not intervene, but Reagan was not about to have any Commies in his backyard. Accused them of supporting Soviets and Cubans and shipping weapons to El Salvador. Reagan sent troops to prop up the pro-American government in El Salvador Also sent arms to the contra-rebels trying to get rid of the Sandinistas in Nicaragua. Also attacked Grenada because of a Marxist government there. Overthrew the insurgents. So Reagan was very much like TR in regards to Latin America Gorbachev Elected to be leader of Soviets in 1985 Wanted Glasnost and Perestroika • Glasnost-openness, which meant a more open society in the Soviet Union and allowed more free speech and political liberty • Perestroika-restructuring of the Soviet economy, which wanted to allow more free market capitalist ideas. Reagan organizes 4 summits with Gorbachev from 1985-1988 East Meets West President Reagan greets Soviet leader Mikhail Gorbachev at a summit meeting in Moscow in May 1988. Reagan Presidential Library Iran-Contra Affair Lebanon an issue and also Nicaragua. So how are these two connected? Give arms illegally to Iran for their help in getting American hostages released in Lebanon Use money raised from sell of arms to support the Contra-Rebels against the Sandinistas. This by-passed a Congressional freeze on the selling of arms to Nicaragua rebels Point is, the Reagan administration looked bad a result and it made Reagan seem out of touch with policy. Contra Rebel Troops Head for Battle These rebels were long-seasoned and battle-scarred veterans of Nicaragua’s civil war by the time this photograph was taken in 1987. Black Star/ Stockphoto.com The National Debt, 1930–2002 Copyright (c) Houghton Mifflin Company. All Rights Reserved. National Debt World War II provided the first major boost to the national debt. But it was the policies of the Reagan and George H. W. Bush administrations, 1981-1993, that explosively expanded the debt to the $4 trillion level. By the 1990s, 14 percent of federal revenues went to interest payments on the debt. The budget surpluses created by the booming economy of the second Clinton administration (1997-2001) raised the prospect that the debt might be paid off. But the combination of the George W. Bush tax cuts and increased military spending sent the debt soaring again after 2001, though a combination of lower interest rates and a growing economy left federal interest payments as a percentage of GDP at their lowest levels since the 1970s, about 1.4%. (Sources: Historical Statistics of the United States, relevant years; 1996 and 1997 figures from Economic Indicators, Council of Economic Advisors.) Share of Income Received by Families, by Quintile, 1970–2000 Since 1980 the incomes of the lowest 20 percent and the middle 60 percent have been shrinking, while the incomes of the highest 20 percent, and particularly the top 5 percent, have climbed steadily. (Source: Statistical Abstract of the United States, 2003.) Bailing Out the Banks Lax regulation and a booming real estate market imperiled hundreds of financial institutions in the 1980s, necessitating a massive taxpayer-funded bailout. ©Schwadron/ Rothco