REAGANOMICS

"Individual freedom and the profit motive were the engines of progress which transformed an American wilderness into an economic dynamo that provided the American people with a standard of living that is still the envy of the world."

“Recession is when your neighbor loses his job. Depression is when you lose yours. Recovery is when Jimmy Carter loses his.”

1. Restore Laissez-Faire• Deregulation• Tax Cuts• Reduce Federal Spending

2. Military Build-up as Economic Stimulus

PATCO Walks Out, 1981

http://www.youtube.com/watch?v=e5JSToyiyr8

Environmental Regulations Adjusted

Banking Deregulation

Distinctionsbetween savings banksand commercialbanks blur in

terms of who gets credit, how much, in what formand for how long. Impacts commercial lending, credit cards, checking accounts, etc.

Deregulation of the Stock Market: Hostile takeovers, junk bond trading, leveragedbuy-outs, etc.

The Holy Grail

TAX CUTS

Supply-sideEconomics

David Stockman

Trickle-down“Voodoo Economics”

Supply Side Economics:

Taxes

Investment Savings

Jobs Income Tax Revenues

U.S. Department of Labor

How to Reduce Federal Spending:Dismantle the Welfare State!

• Cuts to Social Welfare Programs• Unfunded entitlements

“Welfare queens picking up checks in their Cadillacs.”

“I’m trying to undo the Great Society. It’s the war on poverty that led to this.”

• Reduced Federal Spending• Under-Funded Entitlements (e.g., Medicare, Social Security, etc.)

• Unfunded Mandates (e.g., education, welfare, ESL, Psych treatment)• Degraded Infrastructure (e.g., airports, highways, parks, etc.)

• Cuts in R&D (e.g., science, humanities, etc.)

Starve the Beast Theory(Moynihan Theory)

Step 2: Now there is no money for servicesStep 3: Underfunded government functions poorlyStep 4: “Government isn’t thesolution; government is theProblem.”

Step 1: Cut taxes

Step 5: Cut taxes further…..Step 6: Confidence in government plummets

Reduced Federal Allocations to the States• Unfunded mandates• Burden shifts to states on

• Education• Infrastructure• Social Welfare

Regressive state taxes (e.g., sales, property,licensing, etc.) favor the rich

Poverty Rate 1978 = 11%Poverty Rate 1985 = 14%

U.S. Department of Labor

Defense Spending GrowsFrom 5% to 8% of GDP

Defense Expenditures as % of GDP

Impact• Economic Miracle?

• More efficient economy

• 8-year economic expansion

• Based on defense spending

Uneven Expansion• New breed of billionaire

Decline of the Middle Class

• Union Busting • wages • benefits • security• Loss of Manufacturing Jobs• Declining Standard of Living

Poor Bear the Burden of Loss of Services

The Age of Greed

http://www.youtube.com/watch?v=Muz1OcEzJOs

If you’ve got it, flaunt it.

• Protestant Ethic?• Mid-century sense of mutual responsibility?• Hippie anti-materialism?

U.S. Department of Labor