Transcript Reagan, Bush and Neo-Conservatism

Reagan, Bush and Neo-Conservatism
The 1980s
The Neo-Conservative Coalition
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Religious conservatives
decried loss of traditional
Judeo-Christian moral
consensus
Social conservatives
resented paying for
programs they disliked and
that seemed not to work
Economic
conservatives wanted a
return to laissez-faire
economics
1980 Election Results
Ronald Reagan
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United Neo-Conservative
coalition
Countered Carter’s talk of
malaise with the rhetoric of
relentless optimism
Optimism was basis for
deregulation: if people are
basically good, government
controls are unnecessary
Supply-Side Economics
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Lowering taxes encourages the
wealthy to invest, creating more
jobs
More poor are working, and
therefore will spend & save more
Increased economic activity will
generate more than enough
revenue to cover cuts
Cuts in welfare programs
necessary as incentive
Cutting Taxes
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Economic Recovery Tax Act (1981) cut all income
taxes 25% over 3 years
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Highest rate went from 70% to 50%
Lowest rate went from 14% to 11%
Corp., capital gains, gift & inheritance taxes also cut
Tax Reform Act (1986) simplified tax structure &
closed most loopholes
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Highest rate went from 50% to 28%
Corp. rate reduced from 48% to 34%
Income tax eliminated for 6 million working poor
Legislated Tax Changes by Congress &
Ronald Reagan, 1981 – 1988
Tax Cuts
Economic Recovery Tax Act of 1981
Interest and Dividends Tax Compliance Act of 1983
Federal Employees’ Retirement System Act of 1986
Tax Reform Act of 1986
Total cumulative tax cuts
Tax Increases
Tax Equity and Fiscal Responsibility Act of
1982
Highway Revenue Act of 1982
Social Security Amendments of 1983
Railroad Retirement Revenue Act of 1983
Billions of Dollars
-264.4
-1.8
-0.2
-8.9
-275.3
Billions of
Dollars
+57.3
+4.9
+24.6
+1.2
Deficit Reduction Act of 1984
Consolidated Omnibus Budget
Reconciliation Act of 1985
Omnibus Budget Reconciliation Act of 1985
+25.4
+2.9
Superfund Amendments and Reauthorization
Act of 1986
Continuing Resolution for 1987
Omnibus Budget Reconciliation Act of 1987
+0.6
Continuing Resolution for 1988
Total cumulative tax increases
+2.4
+2.8
+8.6
+2.0
+132.7
Source: Office of Management and Budget,
Budget of the United States Government,
Fiscal Year 1990 (Washington: U.S.
Government Printing Office, 1989), p. 4-4.
The Rich Get Richer . . .
Growth of Single-Parent Families
Effects of “Reaganomics”
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Economic boom: GNP increased 25%
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Federal Reserve lowered interest rates, increasing money
supply
Inflation cut from 10.4% in 1981 to 3.7% in 1987
14.5 million jobs created, but mostly in lower-paying
service sector
Junk-bond mergers followed by “down-sizing,”
especially middle management
Many companies moved manufacturing overseas
because of cheaper labor
Savings rate at all-time low of 4%, while consumer
debt rose 9.5% per year
Job Creation, 1979 – 1987
Deficits & Deregulation
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National debt rose from $935 billion to $2.7 trillion
& budget deficits rose from $74 billion to $200
billion, 1981-89
Deregulation & lax enforcement backfired with
Savings & Loan bailout in 1989 – est. $500 billion
over 30 years
Oct. 19, 1987 stock market crash cost investors $1
trillion
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Average share price dropped 22.6%
New Deal safeguards prevented Depression
U.S. National Debt, 1791 – 2011
Reagan’s Foreign Policy
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Copyright 1997, Prentice-Hall
Actually began under Carter,
following Soviet invasion of
Afghanistan & 1980 Olympic
boycott
Military build-up intended to
strengthen U.S. & bankrupt
U.S.S.R. if it tried to keep up
Nuclear arsenal nowhere
near all-time high of 1960s,
however
U.S. & Soviet Nuclear Arsenals
Copyright 1997, Prentice-Hall
Reagan & Gorbachev
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Mikhail Gorbachev (198591) introduced glasnost &
perestroika to end
totalitarianism & fulfill
Marxist vision
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Glasnost = openness
Perestroika = restructuring
1987 INF Treaty eliminates
all intermediate-range
nuclear missiles (4%)
Reagan & Gorbachev at 1985
Summit in Geneva, Switz.
The End of the Cold War
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Copyright 2000, Bedford/St. Martin’s
Soviets withdrew troops
from E. Europe in 1988
Soviet satellites revolted
in 1989
Germany reunited in
Oct. 1990
Soviet Union collapsed &
dissolved in 1991
Yugoslavia also dissolved
in 1991
U.S. Involvement in the
Middle East since 1948
The Iran-Contra Scandal
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Oct. 1983 bombing of Marine barracks in Beirut led Reagan to
vow never to negotiate with terrorists
Boland Amendment (1984-86) outlawed funding of Contra
rebels in Nicaragua
NSC Advisor Robert McFarlane & aide Oliver North began
secret arms sales to Iran in exchange for Iranian pressure on
Hezbollah to release Beirut hostages
North & new NSC Advisor John Poindexter diverted profits
from arms sales to Contras
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Also solicited donations from Middle East countries & private U.S.
citizens
Created “The Establishment” with Swiss bank accounts & dummy
corporations to launder money
Iran-Contra Scandal (cont.)
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Exposed in fall 1986
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Tower Commission faulted Reagan’s “lax
management style”
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Article published in Lebanese magazine
Pilot Eugene Hasenfus shot down & captured
by Sandinistas
Reagan confessed, recanted, then confessed
again
Diaries reveal his active involvement
Special Prosecutor Lawrence Walsh got
convictions of Poindexter & North (latter
overturned)
Pres. Bush’s Domestic Policy
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Signed Clean Air Act (1990) into law, reducing
pollution further
Signed Americans with Disabilities Act (1990)
into law, securing legal right to public access &
accommodations for disabled
Appointed Supreme Court Justices David Souter &
Clarence Thomas
Broke “No New Taxes” pledge to negotiate deficit
reduction package with Democratic Congress in 1990
– angered conservatives & cost him reelection
Bush’s Foreign Policy
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Negotiated North
American Free Trade
Agreement (NAFTA) with
Canadian Prime Minister Brian
Mulroney (signed by Clinton &
ratified by Senate in 1993)
Invaded Panama in Dec. 1989
to capture erstwhile ally
Manuel Noriega to stand
trial for drug trafficking
The First Iraq War (1991)
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Saddam Hussein invaded &
conquered Kuwait in Aug. 1990
Bush crafted coalition of European
& Arab allies with UN support
Congress narrowly pre-authorized
war
Air campaign began Jan. 16, 1991;
ground campaign Feb. 24-28
Hussein not overthrown because
allies opposed
350 American & 100,000 Iraqi
deaths