THE PRESIDENCY OF RONALD REAGAN

1
THE PRESIDENCY OF RONALD REAGAN

• The Paradox of Ronald Reagan professed values
  he did not practice (religious, family, economic)
• Master of the media politics of optimism and
  hyper-nationalism (use of flag backdrop)
• Domestic Policies supply side economics, cuts
  in domestic programs, claim to decrease federal
  debt (promised a balanced budget by 1984)
• How to evaluate the effects of supply side
  economics
• Foreign Policies revival of the Cold War,
  increased budgets for defense (Afghanistan,
  Nicaragua, rhetoric of the Evil Empire)
• Iran-Contra

2
ECONOMIC THEORIES

• Supply Side Economics (generally favored by
  conservatives) Tax breaks to the
  wealthycapital accumulationhigher productivity,
  lower pricesjob creationhigher tax
  revenuesreduced federal budget deficits.
  According to its proponents, all social classes
  will benefit from supply side policies.
• Demand Side or Keynesian Economics (generally
  favored by liberals) tax breaks to working,
  middle classes fuel consumption, demand in times
  of recessionhigher productivity, job
  creationhigher tax revenues tax increases if
  economy overheated, deficits as strategy to use
  against a recession

3
HAS SUPPLY SIDE ECONOMICS WORKED?

• How can we know?
• Are we asking the right questions about the
  economy? What data would you use as a barometer
  of Americans economic well-being? (The medias
  favorites are the stock market and the
  unemployment rate. Bush favors statistics on the
  number of jobs created. One could also use wage
  disparities, poverty rates, and others.)

4
MEASURING THE EFFECTS OF SUPPLY SIDE
ECONOMICSTEACHERS SUGGESTIONS

• Are the rich investing their money in US economy?
• Trends in job creation and job loss. Quality of
  jobs wages they compel.
• Savings levels
• Disposable income. Would need an income level by
  family size to reflect discretionary income.
  Sales of vacations, homes, entertainment,
  education. Sales tax revenues.
• Profit margins.

5
USING STATISTICAL EVIDENCE

• Federal deficits first dip in 1970s (spending,
  revenues) huge increases in federal deficits in
  the 1980s as Reagans deficit was higher than all
  previous presidents added together (tax cuts and
  recession decreased federal revenues, 1986 law
  closed corporate tax loopholes and revenues went
  up some high defense spending)
• After-tax family income poor got poorer, rich
  got richer shrinking middle class not trickling
  down general increase in family incomes, but it
  masks disparities
• Supply side partisans say that the poor can still
  participate in the consumer economy rich are
  being rewarded for their success (the economy is
  moral) and were enabled to invest in the future
  top 60 benefitted.

6
SOCIAL EFFECTS

• Women and minorities get paid less
• Disparities among minorities in relative income
  and trends
• No data for Hispanics in 1970
• Increases in ratio of women to men and minorities
  to whites, except for Hispanic men (most of
  declining wage gap between men and women
  accounted for by declining wages for men,
  especially blue-collar men)
• Want to look at data on education, occupation,
  sports data?, unreported income and employment,
  unemployment rates, demographic data.

7
DATA NEEDED TO EVALUATE CLAIMS OF SUPPLY SIDERS

• below the poverty level need for social
  programs
• Balanced federal budget
• Standard of living by socioeconomic classes
  consumption by class
• Credit card debt
• Bank failures solvency of financial institutions

8
HOW TO EVALUATE THE EFFECTS OF REAGANS SUPPLY
SIDE ECONOMICS

• Do all social classes benefit? Data on income
  inequality. Increased substantially in 1980s and
  since 2000.
• What kinds of jobs created? Mostly in service
  sector. True also in 1970s and after Reagan.
  Globalization, sending good jobs abroad. Policy
  of private sector, enabled by most recent
  presidents. Clinton and NAFTA, for example.
• Federal deficits. Totals in Reagan years higher
  than all previous presidents combined. Worsened
  by high defense budgets.

9
HOW TO EVALUATE THE EFFECTS OF REAGANS SUPPLY
SIDE ECONOMICS

• Inflation brought under control (mostly as a
  result of actions of the Federal Reserve Board
  beginning in 1979 it increased interest rates
  and reduced the money supply)
• This caused a severe recession in 1982-1983
• For the rest of the 1980s and the 1990s, growth
  rates were strong (though not as strong as in the
  1960s, when demand side economics was the policy)
• Americans saved less than in the 1970s (Greed is
  Good culture, rising debt)

10
DEREGULATION

• Grace Commission. Met in secret, broadly
  recommended abandonment of regulatory state
  created by New Deal, Great Society, and
  environmental laws of the 1970s.
• When laws could not be changed (civil rights
  laws, environmental), federal administrators
  under Reagan simply refused to act.
• Clarence Thomas and EEOC
• James Watt and the Department of the Interior

11
REAGAN AND FOREIGN POLICY

• Disparaged efforts to negotiate with the Soviets
  over the arms race
• Strategic Defense Initiative (SDI)space-based,
  nuclear-powered, X-ray laser to shoot down Soviet
  missiles Reagan claimed it would make nuclear
  weapons impotent and obsolete
• Criticized as much too expensive, unworkable, and
  likely to prompt the Soviet Union to build many
  new nuclear weapons to overwhelm it. Ultimately,
  20 billion spent for nothing.

12
IRAN-CONTRA

• What was it?
• Sale of weapons to Iran to ransom US hostages
  held in Lebanon and to finance anticommunist
  contra-revolucionarios (contras) in Nicaragua in
  order to depose the Sandanistas
• Illegal because Congress had limited amount of
  aid US could provide (Boland Amendment)
• US sold arms to Iran
• Illegal because he could not sell arms to a
  terrorist state without Congressional approval
• Administration response lied to the press and
  Congress, withheld crucial documents

13
IRAN-CONTRA

• Oliver North shredded many documents
• Convictions of Oliver North and National Security
  Adviser John Poindexter overturned on
  technicalities
• Low-ranking officials convicted, many pardoned by
  Pres. George H. W. Bush in 1993
• North Reagan knew all about it
• Tower Commission critical of Reagan, but public
  did not want impeachment
• Ask students whether it was an impeachable
  offense and why