Transcript Reaganomics: The Real Story

The 1980s
Dealing with the Soviet Union
• ~ Policy of containment
• ~ More aggressive approach towards dealing
with the Soviet Union
• ~ First Reagan accepted the
• possibility of working with the
• Soviet Union in the interests
• of peace.
Reduce Nuclear warheads
~ 1982-Reagan and Soviet Union began strategic
arms reduction talks
-reduce each country’s nuclear warheads by one
third
~1985-Fireside Summit in Geneva
~1987-Washington Summit
Star Wars
~1983 Reagan delivered a national televised speech
proposing the Strategic Defense Initiative (SDI) to
protect the United States from Soviet missiles.
~Media called this plan “Star wars”
http://www.youtube.com/watch?v=2U8cHj
The Outcome
~ “Arms race”
~ 30 Billion dollars
~ The U.S economy was able to support all of the
spending and building
~ The Soviet Union economy was unable to support the
spending … economy collapsed.
Collapse of the Soviet union
• The liberalization of the people led to some
nationalist movements that caused ethnic
disputes
• More pressure was put on Gorbachev to give
greater freedom to the people
• The Soviet Union was renamed Russia, and
Russia now had the control of its nuclear
weapons. It marked the end of a Marxist
Leninist gov’t. The only two countries with this
type of government were Cuba and North Korea
Collapse of the Soviet Union – continued
• The Soviets underestimated the degree to which non
Russian ethnic groups would resist being
assimilated into a Russian State
• Additionally their economy was devastated from the
fact that they used a ton of money to compete with
the United States in a nuclear arms race. The people
were not happy about this
• Third the people did not like communism and never
truly adopted it in their hearts
• When Gorbachev decided to finally let the people
speak their minds they let out a ton of pent up
anger, demanding change immediately
Presidents –part one
• Jimmy Carter
• Created two new departments: the department
of education and the department of energy
• Won a Nobel peace prize for solutions to
international conflicts, and promoting human
rights
Presidents – part two
• Ronald Reagan
• Well known for his significant improvement of
the economy, popularly known as Reaganomics
• His defense policies contributed to the downfall
of the Soviet Union
• He is ranked as one of the most popular
presidents of all time
Presidents – part three
• George HW bush
• Was dedicated to lowering the national debt
• Signed many bills helping the environment and
promoting cleaner air
• Tried to run a second time but was defeated by
bill Clinton
Reaganomics
Source: University of
Connecticut/various
government websites
The Economic Problems
• The inflation creep of the 1970s had resulted in an
enormous increase in tax burden through “bracket
creep”.
• Social security tax and Medicare had also increased
the personal tax burden.
• According to Boston College economist Barry
Bluestone, 31 million jobs had been destroyed
between 1978 and 1982.
• Fully one-third of all private sector jobs that existed
in 1978 had disappeared by 1982.
What Reagan Faced:
Defense Issues
• Defense spending had declined from 9.6% of GNP in FY1962 to
5.5% of GNP in FY1981, a decline of 43%.
• More of the defense spending in 1981 was directed toward
salaries and pensions than in 1962.
• CIA reports showed that defense expenditures in the Soviet
Union were twice as high (as a percent of output) than U.S.
defense expenditures, implying that the U.S.S.R. was spending
45% more on defense than the U.S.
• Reagan’s solution…..Reaganomics
What is Reaganomics?
• Based off of supply-side economics, Reaganomics
sought to stimulate the economy through tax cuts
and deregulation. The idea was to provide heavy
income tax cuts to the wealthy, enabling them to
invest in companies and create businesses/jobs.The
government began to eliminate federal regulations
on things such as drilling for oil and gas, as well as
restrictions on coal mining. By reducing
governmental interference and controlling the
money supply there would be an explosion of
economic growth.
Reagan’s FY1982 Budget Proposal
Reagan’s Proposal
ERTA (What He Got)
1
30% cut in personal taxes
25% cut in personal marginal tax
rates
2
Accelerated depreciation for
capital in business
Got it!
3
9% increase in defense spending
per year for 5 years
Got it!
4
$50 billion cut in non-defense
spending in 1982, growing to
$100 billion in 1986
No!
5
Additional cuts of $30 billion in
1983, $40 billion in each of the
next 3 years
No!
6
Indexing of personal exemptions
and brackets, starting in 1985
7
Elimination of the “marriage
penalty”
All of the following were part of
Reaganomics EXCEPT
A. cuts of benefits from Medicare and Social Security to seniors
B. a dramatic reduction in personal income taxes
C. deregulation of business and industry
D. tough stand against federal labor unions
E. the theory of supply-side economics
Results
• Despite the tax cuts of 1981, federal tax revenues
nearly doubled in the Reagan years. (Washington
Times, 8/25/1992)
• Real inflation-adjusted manufacturing output rose
to its highest point of the post-WWII period.
• In 1989, capital goods production was 38% of total
manufacturing production, as compared with 1967
when it was 28%.
• In 1989, exports of capital goods were 45% of total
capital goods production, compared to 20% in 1967.
Results
• Domestic-based manufacturing employment fell
from 20.3 million in 1980 to 19.2 million in
1990, a decline of 6%, probably as a result of
productivity gains.
• U.S. exports of manufacturing goods grew by
90% between 1986 and 1992
Results
• The U.S. raised its share of the world’s
manufacturing exports from 14% in 1987 to 18%
in 1991.
• In 1990, the U.S.’s share of world
manufacturing exports was the same as in 1975.
Results
• More than 18 million new jobs were created in the
1980s in the U.S.—this was more than Japan,
Britain, and Germany combined.
• 82% of the jobs created were high-pay, high-skill
managerial and technical positions. 12% were lowskill service jobs.
• While real wages declined from $11.41 per hour in
1978 to $10.02 per hour in 1990, workers’ total
compensation increased as workers demanded
increased benefits.
Results
• The tax breaks and deregulation only "trickled down" to
reach the upper and middle-class citizens and, due to the
cuts in social welfare programs and the like, the very
poor suffered and grew poorer. On the other hand, the
income of the very rich more than doubled during the
1980s due to the largest reduction of taxes. Additionally,
the decline of power of labor unions led to decreased
wages.
Results
U.S. Real Income Growth, 1983-1989
Quintile
Real Income Growth
Lowest 20%
11.1%
Second 20%
10.1%
Third 20%
10.7%
Fourth 20%
11.6%
Highest 20%
18.8%
Was “Reaganomics” successful in
stimulating the economy?
• In a very narrow sense, yes, the policy of
Reaganomics did stimulate the economy in
lowering the unemployment rate (7% to about
5%) as well as the inflation rate (10% to 4%);
however, the public debt rose to 2.6 trillion
dollars from less than a trillion and caused a lot
of other problems as well. The lack of
deregulation caused the savings and loan
industry to collapse under fraud and
mismanagement and the failures in the airline
industry increased prices for consumers.
1980s Music
•
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Pop
Rock
Pop Metal
Alternative Rock
Soft Rock / Singer Songwriter
Electronic
Pop
• Teen Pop acts
▫ New Kids on the Block, Debbie
Gibson, Tiffany, Tommy Page, New
Edition, Stacey Q, The Bangles,
Olivia Newton-John, and others
▫ Cyndi Lauper voted the “Voice of
the MTV Generation”
• Prominent American Urban pop
acts
▫ Tina Turner, Lionel Richie, Whitney
Houston, and Deniece Williams
Pop: Michael Jackson
• 1980s was the
reinvention of Michael
Jackson
• In 1984 he won:
▫ 7 Grammys &
▫ 8 American Music
Awards
• The Award of Merit
▫ youngest artist to ever
receive the award
Pop: Michael Jackson
• November 30,1982 release of Thriller
▫ Best selling album of all-time
▫ Reported to have sold as many as 110 million
copies worldwide.
• August 31,1987 release of Bad
▫ Sold over 30 million copies worldwide,
 Only 8 million of those copies went to the United
States.
▫ Album had 5 songs to reach number 1 on the
Hot 100, the first album to ever do so
Pop: Madonna
• November 12, 1984 release of
Like a Virgin
▫ First number 1 album and was
a commercial success
▫ Considered to be a part of teen
pop’s first wave in the music
industry
▫ Album sold 21 million copies
worldwide,
 10 million in the United States
Rock
• Starting in 1983 and peaking from 1986-1991 the
music industry saw a boom in hard rock.
• Some bands
▫ Queen, Def Leppard, Motley Crue, Bon Jovi, Quiet
Riot, Europe, Twisted Sister, Van Halen, and
others
Rock
• Many bands from the rock trend of the 1970s
carried over into the 1980s as well including
▫ Styx, Rush, Journey, Foreigner, REO Speedwagon, ZZ
Top, and Aerosmith
• Thrash Metal also broke out into the
mainstream with
▫ Metallica, Slayer, Anthrax, and Megadeth
Hip Hop / Rap “The Golden Age”
• The 1980s marked a big change in the Hip Hop
genre. More sub-genres were created, while
innovative styles of music were founded.
• “When it seemed that every new single
reinvented the genre.” –Rolling Stone
Hip Hop / Rap
• Some popular rap and hip hop artists
▫ Grandmaster Flash and the Furious Five, Run
DMC, Public Enemy, N.W.A., Eric B. & Rakim, LL
Cool J, Beastie Boys and others
• Gangster Rap is often credited to N.W.A. and
Ice T
▫ 1986 release of “6 in the Mornin”
▫ 1988 release of Straight Outta Compton and the
controversy of the song “F*** Tha Police”
Hip Hop / Rap
• Beastie Boys
▫ Original group consisted of 4
members as a hardcore punk
band
 Michael Diamond, Adam Yauch,
John Berry*, Kate Schellenbach*,
and later Adam Horovitz
• Adam “MCA” Yauch
▫ August 5, 1964 – May 4, 2012
 Died after a 3 year battled against
throat cancer
Woman Fashion
~Madonna
~Lace
~Big tops
~Leggings
~Big hair
Aerobics
http://www.yout
ube.com/watch?v
=Yh_XgYuCZ28
Tanning
Men Fashion
~Big Pants
~Big Shirts
~Big hair (mullets)
MTV
~Started in 1981
~Big impact on the Music industry
-Music
~Slogans “I want my MTV”
http://www.youtube.com/watch?v=9tkpoeF9a2s
Cable TV
~ABC, NBC, CBS
~1985 68% of all American Household had cable
~Soap operas (Guiding light)
~Full house (1987-1995)
~The Crosby Show
~Golden Girls
~Happy Days
Popular Movies
~The Breakfast Club
~Rain Man
~E.T
~Back to the Future
~http://www.youtube.com/watch?v
=dkX8J-FKndE
1980 Summer Olympic boycott
• December 24, 1979 Soviet
Union’s 40th army was
deployed into Afghanistan
• Carter gave the Soviet’s an
ultimatum to leave
Afghanistan in 1 month or the
United States would boycott
the Moscow Summer
Olympics
1980 Summer Olympic boycott
• Other countries joined the United States
including:
▫ Japan, West Germany, China, the Philippines,
Argentina, and Canada
▫ Some countries allowed their athletes to decide if
they wanted to compete
▫ Remaining countries competed in the Olympic
Boycott Games in Philadelphia
Sports
• Michael Jordan- “Air Jordan” received his
nickname from the dunks he preformed from the
free throw line
• Averaged almost thirty points per game
• Wowed everyone with his ability
• Widely considered to be the best player to live
• Brand of Air Jordans
Sports
• US Hockey underdogs defeat the Soviets during
the Cold War
• Source of pride for the Americans
• A “blow” against communism
• http://www.youtube.com/watch?v=n2VV
CRJ-688
• Movie “Miracle on Ice”
Sports
• Wayne Gretzky began his career in 1979 and reached his
prime during the 1980s
• Called the “Great One”
• The hockey equivalent of Michael Jordan
• Known for “Gretzky’s Office” behind the net
• Gretzky captured nine Hart Trophies as the most
valuable player, ten Art Ross Trophies for most points in
a season, five Lady Byng Trophies, five Lester B. Pearson
Awards, and two Conn Smythe Trophies as playoff MVP.
• Also four Stanley Cup Championships during this time
• www.youtube.com/watch?v=XFX0dVXNDXw
Compact discs
• The first device that could store large amounts of
information
• By 2007 over 200 billion have been sold
The Internet
• Was a small scale Computer Network, however
the average person could add to it
• As people continued to add to it, it became what
is known as the modern Internet
Windows operating system
• Started out as a simple set of software and items
such as a calculator, calendar, card file,
clipboard viewer, clock, control panel, notepad
and a primitive word processor known as
“write”
• Obviously became very successful over time
First cell phones
• First commercially available cell phone was
introduced by Motorola
• It was dubbed “the brick” because it weighed 2
pounds
• It had just ½ hour of talk time per charge
• It cost $3995
• It could not do anything except talk
CNN
• First news story was about seven people dying
from food laced with potassium cyanide
• It’s sensational stories have made it extremely
popular
• Second most popular news network - behind
yahoo news
Disposable contacts
• Created because people found them more
comfortable than wearing glasses
• Even people with the eye problems managed to
use them with little discomfort
• Very popular with people who think they are
ugly when wearing glasses
Human genome project
• International project to figure out the sequence of
chemical base pairs which encode humans
• There are approximately 20,000 to 25,000 genes in the
human body
• They have found that only about 8% are relative and
individual, the other 92% are standard in every human.
So we are all 92% the same and only 8% different
• The Supreme Court has ruled that it is possible to patent
gene sequences because it is possible to make a
manmade bacteria. Therefore it is possible for
corporations or people to own the very sequence of genes
that make up the human body
Just say no
• A movement in the eighties and early nineties
which was created to stop children from
participating in recreational drug use
Medicare
• The government’s Health Care System that is different
from privatized Health Care in the sense that it does not
manage individual risk portfolios
• Many people are critical of the Medicare program due to
the fact that it costs I and wonderful check this out boy
the way extreme amount of money to the taxpayers
• The republicans often oppose this gov’t program as it
benefits people of lower income levels more than people
of higher income levels, they say it takes people’s
initiative away and they will just try to get the gov’t to
pay for their laziness and unwillingness to save money
• Democrats say it is necessary because many poor people
would die without this program
Drug use in the 1980s
• In 1985 1/3 Americans reported that they had
tried or used marijuana at some point in their
lives
• It was estimated in the 1980s that crack was
more of a problem than alcohol despite the fact
that many more people were abusing alcohol
than crack
• President Reagan signed the anti drug abuse act
of 1986. This imposed a minimum sentence for
people using drugs, including marijuana
The Vietnam memorial
• It receives around three million visitors each
year
• It holds about 58,000 names on it
• It is described as “ a wound that is closed and
still healing”
• Some call it a “wall of shame” because the U.S.
Is often criticized for not finishing the war
The Exxon Valdez Oil spill
• An oil tanker with 119,000 meters cubed of crude oil struck a
reef as it was traveling to California
• This was the largest oil spill in history, before the 2010 deep
water horizons spill caused by BP – Which released 780,000
meters cubed of crude oil
• It is ironic because this reef was about the worst place to
dump crude oil in terms of habitat destruction
• It was also ironic because the titanic incident set a standard
for all ships to have monitoring equipment that could detect
large objects in the way of ships
• Exxon Valdez spent two billion dollars to clean up the spill
and another one billion to settle charges
• The spill affected the wildlife of Alaska so much that one
former mayor of a town near this spill commit suicide
Sandra day O’connor
• First female supreme court justice
• It was controversial because the people thought
she would not be as good of the judge as the man
• She quoted that because the job of a judge is to
be impartial she would just be following the job
description
• Cartoon is on page 1050 of textbook, yes its is a
little blurry.