REAGANOMICS
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Transcript of REAGANOMICS
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REAGANOMICS
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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."
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“Recession is when your neighbor loses his job. Depression is when you lose yours. Recovery is when Jimmy Carter loses his.”
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1. Restore Laissez-Faire• Deregulation• Tax Cuts• Reduce Federal Spending
2. Military Build-up as Economic Stimulus
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PATCO Walks Out, 1981
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http://www.youtube.com/watch?v=e5JSToyiyr8
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Environmental Regulations Adjusted
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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.
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Deregulation of the Stock Market: Hostile takeovers, junk bond trading, leveragedbuy-outs, etc.
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The Holy Grail
TAX CUTS
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Supply-sideEconomics
David Stockman
Trickle-down“Voodoo Economics”
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Supply Side Economics:
Taxes
Investment Savings
Jobs Income Tax Revenues
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U.S. Department of Labor
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How to Reduce Federal Spending:Dismantle the Welfare State!
• Cuts to Social Welfare Programs• Unfunded entitlements
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“Welfare queens picking up checks in their Cadillacs.”
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“I’m trying to undo the Great Society. It’s the war on poverty that led to this.”
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• 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.)
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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
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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
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Poverty Rate 1978 = 11%Poverty Rate 1985 = 14%
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U.S. Department of Labor
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Defense Spending GrowsFrom 5% to 8% of GDP
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Defense Expenditures as % of GDP
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Impact• Economic Miracle?
• More efficient economy
• 8-year economic expansion
• Based on defense spending
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Uneven Expansion• New breed of billionaire
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Decline of the Middle Class
• Union Busting • wages • benefits • security• Loss of Manufacturing Jobs• Declining Standard of Living
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Poor Bear the Burden of Loss of Services
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The Age of Greed
http://www.youtube.com/watch?v=Muz1OcEzJOs
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If you’ve got it, flaunt it.
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• Protestant Ethic?• Mid-century sense of mutual responsibility?• Hippie anti-materialism?
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U.S. Department of Labor