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Reagan and Carter's Domestic Policies
Transcript of Reagan and Carter's Domestic Policies
By the 1970s, foreign competition began to take U.S. buyers from domestic markets.
Johnson's financial policies in the Vietnam War (borrowed and printed money excessively), caused high inflation of the U.S. dollar.
Unemployment rose because of newfound dependency on foreign markets.
Three economic problems: Inflation, Unemployment, Energy shortages
Nixon attempted to regulate prices and wages, which he abandoned, raising inflation.
Ford succeeded in lowering inflation but raised unemployment. Maggie Bredehoeft
Zachary Nolen Energy CRISIS Background U.S. dependent on Middle Eastern oil.
Oil producing nations established Organization of Petroleum Exporting Countries (OPEC).
Demanded greater proportion of profits from Western consumers.
OPEC states established an embargo against Israel's allies (including U.S.)
Caused consumers to hoard oil and gasoline.
1974 oil embargo destroyed, but during that time, Americans bought more fuel-efficient foreign cars, increasing unemployment in the U.S. and in turn it's deficit.
Watergate Scandal prevented Nixon from acting on this.
Ford constructed Alaskan pipeline and increased fuel-efficiency standards, but this did little at the time. ThesIs DOMESTIC CHANGES Inflation/Unemployment
Social Issues OPEC increased oil prices from 13 to over 30 dollars/barrel, causing the already inflated US dollar to inflate more.
Industries tried to saving money by "de-industrializing" i.e. outsourcing jobs, automating assembly in order to lower costs for a labor class, but also increasing unemployment.
Carter's plans to limit wages and price increases were rejected by businesses. Economics professor Hans Sennholz stated this as a problem with Carter, that the US economy functions on wages set by the businesses.
New approach: Buy foreign, to increase dollars value; sell gold, to lower its price, and help lower price inflation; increase rate at which banks had to pay back the Federal Reserve.
Carter's plans for lowering inflation required participation of the people and businesses to sacrifice for the public good, this tactic ultimately failed.
Carter appoints Volcker to run Federal Reserve, causes period of increased unemployment and inflation before things can get better. Created the Department of Energy to help government conserve energy.
Signed National Energy Act, which helped to encourage government related energy producers to move towards cleaner renewable energy sources.
Carter focused on reducing pollution and reliance on foreign oil, however
Created the Department of Education.
Amnesty for Vietnam Draft Dodgers.
Supported fulfilling the equal rights amendment and was first president to oppose discrimination based on sexuality by opposing the Briggs Initiative. Carter: Energy CrISIS and SocIal Issues Reagan: Social Issues Reagan: Tax Cuts Carter: Tax Cuts Did little in the way of tax cuts.
Imposed Windfall Profit Tax on domestic oil companies
This tax was to prevent oil companies from taking advantage of domestic oil price deregulation, and increased their business sectors low tax payments. REAGAN: INFLATION/UNEMPLOYMENT CARTER: INFLATION/UNEMPLOYMENT Carter OvervIew Reagan OvervIew 1981: Economic Recovery Tax Act (ERTA) also known at "Kemp-Roth Tax Cut) Cut taxes by 25%. Increase flow of resources into production-increased economic growth.
-1982: Tax Equity and Fiscal Responsibility Act (TEFRA) closed gap between budget to stimulate revenue-enforced tax rules.
1986: Tax Reform Act: cut taxes again. Supposed to stimulate job creation.
Overall tax cuts did not have desired effect but consumer spending increased. Took from poor, gave to wealthy=stimulated investment in companies=
"trickle-down" of prosperity to average workers.
George Bush referred to "supply-side" as "voo-doo economics." He did
not believe cutting wealthy taxes would stimulate economy or create
End of Carter's presidency: 12.5%
End of Reagan's presidency: 4.4%
Stagflation: economic stagnation, high unemployment, high inflation.
high-wage, high-skill manufacturing jobs-became low-wage,
low-pay service jobs.
Paul Volcker: decreased inflation.
Robert Samuelson Video Bibliography Republican. Americans=more conservative.
Promised: reduce taxes, cut gov. waste and bureaucracy,
balance budget and eliminate deficit.
"Supply-Side" econ. program: lower barries on production to strengthen economy. "Cutting taxes without cutting spending."
Positives: Curbed inflation, strengthened economy.
Negatives: Military spending=increased federal deficit. Trade imbalance offset econ. accomplishments.
Robert Samuelson: "How "transformational" was he? Less than you think....Reagan's policies helped end the Cold War. But on government's role, where Reagan's influence is considered greatest, it was actually modest."
Democrat. Americans=were moderate, between Ford and Carter they found Carter to be best as he was a Washington outsider.
Promised: Focus on employment, felt that by decreasing unemployment the economy could .
Energy focus: Heavy focus on oil and energy crisis became Carter's goals as he was very familiar with nuclear energy.
Positives: In the long term his energy policy was a success. First appointed Volcker who would be credited with saving the economy.
Negatives: Very conflicting with Congress, slowing down progress. Increased inflation and unemployment during his term. Cut Social Welfare Programs: such as food stamps-helped struggling mothers.
First few years, cut spending by $20 bill. a year.
Revenue didn't equal spending=borrowed money http://www.investinganswers.com/term/reaganomics-1579 http://reason.com/archives/2008/12/18/lessons-from-the-great-inflation http://millercenter.org/president/carter/essays/biography/4 ttp://www.realclearmarkets.com/articles/2011/02/11/inflation_reagans_singular_economic_achievement_98863.html http://econlog.econlib.org/archives/2004/06/ronald_reagans.html Conclusion Bondi,Victor. American Decades 1980-1989. American Decades. 9, Matthew J. Bruccoli. Detroit: Gale Research Inc., 1996. Jimmy Carter and Ronald Reagan both came into presidency with the same domestic problems. These included inflation, unemployment, and deficit. Both presidents attempted to solve these domestic problems. Carter set his focus on employment, while Reagan focused on curbing inflation and cutting taxes. Carter's attempts had to step through times of worse employment and inflation. Reagan's "Reaganomics" increased deficit further but increased spending leading to growth in the economy. Both Jimmy Carter and Ronald Reagan had plans
to fix the increasing domestic problems, however, Reagan's plans were more effective. Though Carter had plans to lower inflation, they were ineffective due to their requirement of short term sacrifice of profits, which the populace was unwilling to do. The Iranian Hostage Crisis ruined his presidency and left him unable to successfully make many changes to this ineffective domestic policy. Reagan pulled through with stimulation of the economy and a decrease of 8% inflation since Carter's presidency ended.