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Objectives
•
Analyze Reagan’s economic policies as
President.
•
Summarize how Reagan strengthened the
conservative movement.
•
Evaluate the steps taken to address various
problems in the 1980s and early 1990s.
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Terms and People
•
supply-side economics – an economic theory
which holds that the government should increase
the supply of labor and goods, rather than
government spending, to achieve economic goals
•
deregulation – the reduction or removal of
government control over industry
•
budget deficit – the shortfall between the
amount of money spent and the amount of money
taken in by the government
•
national debt − the amount of money the federal
government owes to owners of government bonds
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Terms and People
(continued)
•
Savings and Loan crisis – the failure of 1,000
savings and loan banks in 1989 due to risky
business practices
•
voucher − a government check that could be used
by parents to pay tuition at private schools
•
AIDS − Acquired Immunodeficiency Syndrome, a
disease with no known cure that attacks the
immune system; began spreading in the early
1980s
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What were the major characteristics of
the conservative Reagan Revolution?
Conservatives celebrated the election of Ronald
Reagan to the presidency, referring to it as the
“Reagan Revolution.”
The Reagan Revolution brought a significant shift
in the political direction of the nation.
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Reagan based his economic policy on the theory
of supply-side economics. He believed that lower
taxes would increase spending.
•
His Economic Recovery Act of 1981
cut taxes by 25 percent.
•
He convinced Congress to cut
$40 billion from the federal budget,
largely from social programs.
•
He brought deregulation to many
industries, including banking.
Some people referred to the his
economic policies as Reaganomics.
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In spite of Reagan’s policies, the economy
experienced a severe recession lasting from
1980 to 1982.
More than 10 percent of workers
were unemployed.
Blue collar workers were
especially hard hit.
The number of poor people grew,
while the richest percentage of
Americans became richer.
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The recession ended in 1983. The economy began
to rebound, but other economic problems persisted.
Reagan increased defense spending, but did not persuade
Congress to make huge budget cuts in other areas.
In 1985, Congress passed the Gramm-Rudman-Hollings
Act, requiring automatic cuts in federal spending.
Nevertheless, the federal budget deficit grew from $79
billion in 1981 to $221 billion in 1986.
The national debt rose to $2.5 trillion.
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In 1989, the Savings and
Loan crisis occurred.
About 1,000 banks failed
due to fraudulent behavior
and risky loans.
The federal government
spent more than $200
billion to bail them out.
Many blamed Reagan’s deregulation policies for allowing
banks to make such risky investments.
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Despite the deficit, the growing economy made
Reagan a very popular president who strengthened
the conservative cause.
He appointed
conservative
justices to the
Supreme Court,
including Sandra
Day O’Connor,
the first female
justice.
He promoted
legislation allowing
religious groups
access to public
school facilities.
Reagan easily won reelection in 1984, but the Democrats
retained control of the House of Representatives.
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Reagan’s Vice President
George H.W. Bush
won the presidency
in 1988 by calling for
a “kinder, gentler nation”
and promising not
to raise taxes.
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Challenging
issues from the
1980s would
continue to
confront Bush.
•
the rising costs of Social
Security
•
the budget deficit
•
the failure of public
education
Bush called for community
volunteers to provide
services for the needy.
He supported the use of
vouchers in public schools.
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A new disease appeared in 1981 called
Acquired Immunodeficiency Syndrome
(AIDS).
President Reagan
responded slowly to the
AIDS crisis. Funding for
research on the disease
rose during George H.W.
Bush’s term.
Nevertheless, by 1994,
AIDS had killed more
than 250,000 Americans.
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Section Review
QuickTake Quiz
Know It, Show It Quiz
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