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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." .

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"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.”


Restore Laissez-Faire

• Deregulation

• Tax Cuts

• Reduce Federal Spending

Military Build-up as Economic Stimulus



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



Banking

Deregulation

Distinctions

between

savings banks

and commercial

banks blur in

terms of who gets credit, how much, in what form

and for how long. Impacts commercial lending,

credit cards, checking accounts, etc.


Deregulation of the Stock Market: Hostile

takeovers, junk bond trading, leveraged

buy-outs, etc.


TAX CUTS

The Holy Grail


Supply-side

Economics

David Stockman

Trickle-down

“Voodoo Economics”


Supply Side Economics:

Taxes  

Savings 

Investment  

Jobs  

Income  

Tax Revenues 



How to Reduce Federal Spending:

Dismantle the Welfare State!

• Cuts to Social Welfare Programs

• Unfunded entitlements



“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 1: Cut taxes

Step 2: Now there is no money for services

Step 3: Underfunded government

functions poorly

Step 4: “Government isn’t the

solution; government is the

Problem.”

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%



Defense Spending Grows

From 5% to 8% 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



The Age of Greed

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



• Protestant Ethic?

• Mid-century sense of

mutual responsibility?

• Hippie anti-materialism?



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