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Economic Crisis and the Reagan Revolution

Economic Crisis and the Reagan Revolution. Oil Crisis. Yom Kippur War Oil Crisis Imported 33% of our oil OPEC (Organization of Petroleum Exporting Countries) – embargo Impact 1974 – embargo lifted when Israel withdrew from occupied territory Auto makers in trouble. Ford’s Presidency.

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Economic Crisis and the Reagan Revolution

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  1. Economic Crisis and the Reagan Revolution

  2. Oil Crisis • Yom Kippur War • Oil Crisis • Imported 33% of our oil • OPEC (Organization of Petroleum Exporting Countries) – embargo • Impact • 1974 – embargo lifted when Israel withdrew from occupied territory • Auto makers in trouble

  3. Ford’s Presidency • OPEC continues to limit exports, driving prices up, creating shortages • Chief issue: inflation – prices go up and value of dollar decreases • WIN (Whip Inflation Now)

  4. Carter Adminstration • Causes of Economic downturn • energy shortage • Companies got big and did not respond well to changing technology • Stagflation • Spending on social programs increased creating a 72 billion dollar deficit by 1980. • Top tax bracket 70% • Discussed lowering taxes, but doesn’t do anything • Energy alternatives failed

  5. American Concerns • American Concerns… • Social change • Loss of American power and influence in world • Reagan pitched • Conservative ideas • Big government is the problem, not the solution

  6. Why Reagan Wins • People dissatisfied w/ Ford/Carter presidencies • Return of values from evangelical Christians • Moral Majority – challenge abortion, feminist movement, sex education in schools • Middle class/working class – did not approve of tax increases of 60s/70s • Reagan’s primary goals • stimulate the sagging economy • cutting both government programs and taxes

  7. Supply Side Economics • Lower taxes = more money in pockets • More money in pockets = increased spending/investing • increased spending/investing = economic growth • economic growth = more earnings for Americans

  8. Reaganomics • Reduce Growth of Government spending. • Reduce Income Tax and Capital Gains Tax. • Top tax bracket – 28% • Reduce Government regulation. • Control the money supply to reduce inflation • IRAs • Deficit spending • Opponents called it “voodoo economics”

  9. Stagflation Defeated • Broke cycle of stagflation, how? • Increased interest rates – less borrowing • Inflation dropped (helped by falling oil prices) • Unemployment reached 10% • Growth started in 1983 • Unemployment dropped to 5.3% • Tax cuts and military spending increased the deficit and shot down goal of balanced budget

  10. The Great Communicator • Compelling speaker • mixture of folksy wisdom, empathy, and concern while taking humorous digs at his opponents. “we need to cut social programs to save the good ones” • He will make cuts to Aid to Families with Dependent Children (AFDC), food stamps, rent subsidies, job training programs, and Medicaid • Survived assassination attempt in 1981 helped his popularity • Congress passed his Economic Recovery Tax Act

  11. Deregulation & Unions • Reagan deregulated industry, financial services, • Professional Air Traffic Controllers Organization (PATCO) • 12,000 striking ATC fired by Reagan • Saw a more hard line attitude towards unions.

  12. Culture - Yuppies • Hippies were the youth of 1970s who reflected the culture • Yuppies were the youth of 1980s who reflected the culture

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