The New Outlook of the The New Outlook of the Reagan YearsReagan Years

1981-19881981-1988

Chapter 21Chapter 21

Section 1Section 1

Jimmy Carter was defeated for Jimmy Carter was defeated for reelection in 1980 by a former reelection in 1980 by a former movie star and two-term governor movie star and two-term governor of California, Ronald Reagan. of California, Ronald Reagan.

Reagan was elected governor of Reagan was elected governor of California in 1966 and reelected in California in 1966 and reelected in 1970.1970.

Reagan won the Republican Reagan won the Republican nomination easily in 1980 and nomination easily in 1980 and went on to defeat the Democrats’ went on to defeat the Democrats’ choice, President Carter, in a choice, President Carter, in a landslide victory.landslide victory.

Reagan proved to be an Reagan proved to be an extremely popular president. extremely popular president. (One of the most popular in (One of the most popular in American history)American history)

As an experienced entertainer, As an experienced entertainer, he knew how to use the TV he knew how to use the TV medium to project a pleasing medium to project a pleasing personality to a mass audience.personality to a mass audience.

Unlike Jimmy Carter, Reagan Unlike Jimmy Carter, Reagan took a firm stand on domestic took a firm stand on domestic issues.issues.

He believed in He believed in reducing taxes, reducing taxes, reducing government reducing government spending on social spending on social programs, and programs, and increasing increasing government government spending on defense.spending on defense.

His policies had a His policies had a positive effect on the positive effect on the business and middle business and middle classes and a classes and a negative effect on negative effect on the poor.the poor.

Reagan- The New Federalism Reagan- The New Federalism and Growth of Conservatismand Growth of Conservatism

A major issue that arose A major issue that arose under the Reagan presidency under the Reagan presidency was whether it was primarily was whether it was primarily the job of the federal the job of the federal government or of the state government or of the state government to combat crime, government to combat crime, reform schools, and provide reform schools, and provide for general welfare.for general welfare.

The Republican presidents elected in The Republican presidents elected in the 1970s and 1980s (Nixon, Ford, the 1970s and 1980s (Nixon, Ford, Reagan, and Bush) believed that the Reagan, and Bush) believed that the chief responsibility for social welfare chief responsibility for social welfare lay with the state and local lay with the state and local authorities.authorities.

Nixon used the term New Federalism Nixon used the term New Federalism to describe his plan for giving the to describe his plan for giving the states freedom to decide how to use states freedom to decide how to use federal grants.federal grants.

Reagan adopted the same policy and Reagan adopted the same policy and urged the states to take more urged the states to take more responsibility for solving social and responsibility for solving social and economic problems.economic problems.

Supply-Side Economics Supply-Side Economics

The US inflation rate increased to 13 The US inflation rate increased to 13 percent under President Carter.percent under President Carter.

The problem was partly the result of The problem was partly the result of government spending on the government spending on the Vietnam War.Vietnam War.

It was also the result of high oil It was also the result of high oil prices caused by the Arab oil prices caused by the Arab oil embargo.embargo.

The failure for Carter to find a cure The failure for Carter to find a cure for inflation was one reason why he for inflation was one reason why he was not elected for a second term.was not elected for a second term.

Reagan’s efforts to deal with Reagan’s efforts to deal with inflation solved this problem only inflation solved this problem only to create huge budget deficits.to create huge budget deficits.

Reagan’s approach to the muddle Reagan’s approach to the muddle was based on a theory called was based on a theory called supply side economicssupply side economics..

Conservatives who supported this Conservatives who supported this theory believed that the economy theory believed that the economy would benefit if government spent would benefit if government spent less money and businesses spent less money and businesses spent more.more.

Best way to accomplish this is to cut Best way to accomplish this is to cut federal taxes.federal taxes.

Businesses would then have more Businesses would then have more money to invest in productive money to invest in productive enterprises, and consumers would enterprises, and consumers would receive more income from this receive more income from this economic boom to buy goods and economic boom to buy goods and services.services.

At the same time, the government At the same time, the government would make cuts in welfare would make cuts in welfare programs, which were considered programs, which were considered wasteful by Reagan and other wasteful by Reagan and other conservatives.conservatives.

The inflation rate dropped to 6 The inflation rate dropped to 6 percent in 1982 and less than percent in 1982 and less than 4 percent in 1983. 4 percent in 1983.

Prosperity returned in 1984 Prosperity returned in 1984 and continued for the rest of and continued for the rest of the decade but staggering the decade but staggering budget deficits were a new a budget deficits were a new a problem.problem.

Tax Reform Act in 1986Tax Reform Act in 1986

Reagan reformed the tax system during Reagan reformed the tax system during his second term.his second term.

Congress passed the Tax Reform Act in Congress passed the Tax Reform Act in 1986.1986.

Previous tax laws had divided taxpayers Previous tax laws had divided taxpayers into several brackets, according to their into several brackets, according to their earned income.earned income.

The higher the taxable income, the higher The higher the taxable income, the higher the percentage of income paid in taxes.the percentage of income paid in taxes.

Trickle Down EconomicsTrickle Down Economics

People with very high incomes People with very high incomes benefited most from this benefited most from this reform law.reform law.

Instead of being taxed at a 50 Instead of being taxed at a 50 percent rate, as formerly, percent rate, as formerly, they paid just 28 percent.they paid just 28 percent.

Thus a millionaire was in the Thus a millionaire was in the same tax bracket as a person same tax bracket as a person earning $30,000 a year.earning $30,000 a year.

QuestionQuestion Why did Reagan and the Why did Reagan and the

Conservatives feel the Trickle Down Conservatives feel the Trickle Down Economics would help the American Economics would help the American Economy?Economy?

Budget DeficitBudget Deficit If the government spends more than it If the government spends more than it

collects in taxes, it ends the year with a collects in taxes, it ends the year with a deficit.deficit.

The opposite result more money received The opposite result more money received than money spent is known as a surplus.than money spent is known as a surplus.

To make up the difference between To make up the difference between expenses and income, the government expenses and income, the government had to borrow millions and even billions had to borrow millions and even billions of dollars each year. of dollars each year.

In other words the government went In other words the government went heavily into debt.heavily into debt.

The debt was kept at a The debt was kept at a reasonably manageable level reasonably manageable level through the early 1960s.through the early 1960s.

After the Vietnam War, After the Vietnam War, however, the national debt however, the national debt exceeded $500 billion and exceeded $500 billion and rapidly climbed to nearly $1 rapidly climbed to nearly $1 trillion when Ronald Reagan trillion when Ronald Reagan submitted his first budget to submitted his first budget to Congress in 1981.Congress in 1981.

United States National Debt United States National Debt ClockClock

http://www.brillig.com/debt_clock/http://www.brillig.com/debt_clock/

Effects of “Reaganomics”Effects of “Reaganomics”

Critics of President Reagan’s Critics of President Reagan’s economic policy warned that economic policy warned that “Reaganomics” (as they called the “Reaganomics” (as they called the supply-side theory) would result in supply-side theory) would result in huge deficits.huge deficits.

Reagan’s tax cuts of 1981 mean Reagan’s tax cuts of 1981 mean lower government revenues.lower government revenues.

At the same time, increased At the same time, increased government spending for defense government spending for defense meant higher government meant higher government expenditures.expenditures.

Many economists were alarmed by Many economists were alarmed by these run away budget deficits.these run away budget deficits.

They pointed out that, as deficits They pointed out that, as deficits rose, so did the burden of paying rose, so did the burden of paying interest on the national debt.interest on the national debt.

By 1990 interest payments cost the By 1990 interest payments cost the government about $150 billion government about $150 billion annually.annually.

Partly because of the debt burden, Partly because of the debt burden, the government was less able to the government was less able to spend adequate sums for urgent spend adequate sums for urgent national needs such as highway national needs such as highway repair and health care.repair and health care.

Deregulation of BusinessDeregulation of Business

Deregulation meant removing Deregulation meant removing many governmental rules that had many governmental rules that had limited and controlled business limited and controlled business competition.competition.

The Reagan years saw a huge The Reagan years saw a huge increase in business mergers increase in business mergers because little was done to enforce because little was done to enforce the antitrust laws because he cut the antitrust laws because he cut back the rule making to allow back the rule making to allow businesses greater freedoms.businesses greater freedoms.

Environmental and Civil RightsEnvironmental and Civil Rights

President Reagan’s belief in reduced President Reagan’s belief in reduced involvement by the federal government involvement by the federal government led to decreased support for environment led to decreased support for environment measures during his administration.measures during his administration.

Reagan believed that environmental Reagan believed that environmental efforts would lead to higher costs for efforts would lead to higher costs for business and higher prices for business and higher prices for consumers.consumers.

Reagan signed into law to have Martin Reagan signed into law to have Martin Luther King Jr,. Day be a national holiday.Luther King Jr,. Day be a national holiday.

Effects on MinoritiesEffects on Minorities

President Reagan’s policy of President Reagan’s policy of reducing government spending reducing government spending on social programs represented on social programs represented a setback for the poor during the a setback for the poor during the 1980s.1980s.

Major cuts in welfare and other Major cuts in welfare and other social services in which many social services in which many minorities were a part of were minorities were a part of were greatly effected.greatly effected.

Engel v. Vitale Engel v. Vitale

Engel v. VitaleEngel v. Vitale (1962), was a (1962), was a landmark United States Supreme landmark United States Supreme Court case that determined that it is Court case that determined that it is unconstitutional for state officials to unconstitutional for state officials to compose an official school prayer compose an official school prayer and require its recitation in public and require its recitation in public schools. schools.

In violation of the principle of In violation of the principle of separation of church and state.separation of church and state.

Abington School District v. Abington School District v. SchemppSchempp

Abington School District v. Schempp was a Abington School District v. Schempp was a United States Supreme Court case argued on United States Supreme Court case argued on February 27–28, 1963 and decided on June 17, February 27–28, 1963 and decided on June 17, 1963. 1963.

In the case, the Court decided 8-1 in favor of In the case, the Court decided 8-1 in favor of the respondent, Edward Schempp, and the respondent, Edward Schempp, and declared school sponsored Bible reading in declared school sponsored Bible reading in public schools in the United States to be public schools in the United States to be unconstitutional. unconstitutional.

The case was part of a string of Supreme Court The case was part of a string of Supreme Court cases ruling on the place of religion in public cases ruling on the place of religion in public schools, and was both condemned by some schools, and was both condemned by some religious conservatives and celebrated by religious conservatives and celebrated by those who supported constitutional separation those who supported constitutional separation of church and state. of church and state.

Tinker v. Des Moines Tinker v. Des Moines Independent Community School Independent Community School

DistrictDistrict Petitioners, three public school pupils in Petitioners, three public school pupils in

Des Moines, Iowa, were suspended from Des Moines, Iowa, were suspended from school for wearing black armbands to school for wearing black armbands to protest the Government's policy in protest the Government's policy in Vietnam. Vietnam.

The Supreme Court decided that students The Supreme Court decided that students could not be penalized for wearing black could not be penalized for wearing black armbands to school to protest the armbands to school to protest the Vietnam War.Vietnam War.

It argued that students do not “shed their It argued that students do not “shed their constitutional rights to freedom of speech constitutional rights to freedom of speech or expression at the schoolhouse gate.” or expression at the schoolhouse gate.”

New Jersey vs. TLO (1985) New Jersey vs. TLO (1985)

In this case, a high school freshman In this case, a high school freshman in New Jersey had been found in New Jersey had been found smoking in the school bathroom. smoking in the school bathroom.

She was made to open her purse.She was made to open her purse. In her purse, school officials found In her purse, school officials found

wrapping paper for tobacco or wrapping paper for tobacco or marijuana, a list of students who marijuana, a list of students who owed her money, and a substantial owed her money, and a substantial amount of cash.amount of cash.

The student was found to be The student was found to be delinquent and sentenced to delinquent and sentenced to one-year probation.one-year probation.

The Supreme Court ruled that The Supreme Court ruled that the school acted reasonably to the school acted reasonably to maintain order and discipline. maintain order and discipline.

It held that reasonable suspicion It held that reasonable suspicion for searches and seizures in for searches and seizures in schools need not be based on schools need not be based on the “probable cause” provision the “probable cause” provision of the Fourth Amendment.of the Fourth Amendment.

Vernonia School District v. Acton Vernonia School District v. Acton (1995)(1995)

In this case, the Supreme Court In this case, the Supreme Court ruled that a school district has the ruled that a school district has the right to institute a student athletic right to institute a student athletic drug policy that includes the drug policy that includes the random testing of urine for drugs.random testing of urine for drugs.

The Court held that the policy did The Court held that the policy did not violate the Fourth Amendment not violate the Fourth Amendment right to privacy of the students.right to privacy of the students.

It notes that students athletes are It notes that students athletes are already required to take medical already required to take medical tests prior to approval for student tests prior to approval for student teams.teams.

Thus, the addition of a drug test Thus, the addition of a drug test need not be based on suspicion of need not be based on suspicion of drug use among individual students.drug use among individual students.

The Court held that the state may The Court held that the state may exercise a greater degree of exercise a greater degree of supervision over students in public supervision over students in public schools than it could exercise over schools than it could exercise over adults.adults.