REAGANOMICS
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Transcript of REAGANOMICS
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