ReaganomicsReaganomicsWhat effect does achanging economy haveon American society?• America’s ChangingEconomy Graphing Activity• Reaganomics decision
America’s ChangingEconomy Graphing ActivityDifferent Types of IndustriesEmployment by Industry graphMain sectors of the economyEmployment by Industry in the U.S. graph
Different Types of Industries Services Considered whitecollar Some jobs require ahigh level of formaleducation Agricultural Considered bluecollar Create productsbased on a farm Little formaleducation needed Manufacturing Considered blue collar Create products byhand or with machines Little formal educationneeded Mining Considered blue collar Remove mineral fromthe ground Little formal educationneeded
Write the following statementsin your notes. Between 1910 and 2010, these industriessaw a decline Between 1910 and 2010, this industry sawan increase
Main sectors of the economyManufacturing Considered bluecollar Create productsby hand or withmachines Little formaleducation neededProfessional andBusiness Services Considered whitecollar Provides services ortransacts businessoperations Formal educationusually required
Write the following statementsin your notes. Between 1951 and 2007, the overall trend formanufacturing employment (increase, decrease or stay the same) The difference in manufacturing employmentbetween 1951 and 2007 was Between 1951 and 2007, the overall trend forprofessional and business employment (increase, decrease or stay the same) The difference in professional and businessemployment between 1951 and 2007?
Reaganomics DecisionDirections1. Read the handout and decide whatyou will do in each of the five areas.2. Fill out handout 2 and decide what youwill do about federal spending. If you are cutting the budget, decidewhere the money will come from.1. Discussion on the budget
Reduce Federal Spending Would you cut the federal budget? Which programs would you cut and why?
Lower income-tax rates forindividual and businesses Would you lower income-tax rates forindividual and businesses? How would this help with the economy?
Decrease governmentregulation of business Would you decrease governmentregulation of business? How would this help with the economy?
Fight inflation by keepinginterest rates high Would you fight inflation by keepinginterest rates high? How would this help with the economy?
Balance the federal budget Would you balance the federal budget? How would this help with the economy?
Read the Reaganomics handoutand answer these questions. Essential Question: What is the proper role ofEssential Question: What is the proper role ofgovernment in people’s lives?government in people’s lives? 1. Did the economy under Reagan improve? Use1. Did the economy under Reagan improve? Usetwo examples from the text to support your answer.two examples from the text to support your answer. 2. According to the article, why did Regan believe2. According to the article, why did Regan believecutting taxes would improve the economy? Explaincutting taxes would improve the economy? Explainat least two reasons in your own words.at least two reasons in your own words. 3. Which action taken by Reagan had the greatest3. Which action taken by Reagan had the greatestimpact on the economy? Use a specific exampleimpact on the economy? Use a specific exampleto support your response?to support your response? 4. Explain why Reagonomics is a good title for this4. Explain why Reagonomics is a good title for thisarticle. Give two reasons to support your response.article. Give two reasons to support your response.
The Conservative(Reagan) Revolution Response to overgrowngovernment entitlementprograms $300 billion annually Goals of conservativemovement Shrink the size of thefederal government andreduce spending Promote family valuesand patriotic ideals Stimulate business byreducing governmentregulations and loweringtaxes Strengthen nationaldefense
Reagan’s GovernmentSpending Policies Made an attempt to cut but was largelyunsuccessful Tried to slow its growth Increased defense spending by $28 billion Possibly led to end of the Cold War Proposed cutting Social Security payments to earlyretirees After pressure, Reagan dropped the idea Formed a commission to study the problem Cuts in education, protection, transportation,and general government Saved only $10 billion Federal budget rose to almost $500 billion
Reagan’s Tax Cuts Congress passed and Reagan signeda law to lower tax rate 5% in 1982 10% in 1983 10% in 1984 Tax rate for wealthiest Americans droppedfrom 74% to 50% Also cut taxes on businesses May have caused the large economicexpansion of the 1980s At the time the longest peacetime expansion inAmerican history
Reduction of RegulationsSome industries benefited Oil and bankingWeakened antitrust laws against largebusinessesPositives- decreased regulation reduced costsand increased investment and expansionNegatives- fewer regulations meant businessescould be riskier or unethical Banking industry had many savings and loanscompanies go bankrupt Cost the government over $500 billion
Interest Rates The percentage that banks chargedborrowers on the unpaid portion oftheir loans High interest rates prevented inflationbut discouraged investment Federal Reserve did not lower them President Reagan did not intervene 1983 economy rebounds and interest ratesfall
Balanced Budget Impossible when government spendingincreases while tax cuts are enacted Deficit What the government still owes after taxesare collected Grows from $79 billion in 1981 to $113 billionin 1982