The REAGAN/BUSH Years

REAGANOMICS “Our government is too big and it spends too much”. - Reagan Reaganomics consisted of three parts: 1. Budget cuts 2. Tax cuts 3. Increased defense spending

BUDGET CUTS Reagan’s strategy for downsizing the federal government included deep cuts in government spending on social programs. People argued that Reagan’s spending cuts focused on programs that affected the poor: urban mass transit, food stamps, welfare benefits, job training, Medicaid, school lunches, and student loans. Reagan had to convince Congress to pass his budget cuts and his tax cuts.

TAX CUTS Reagan believed in supply-side economics. This theory included several steps: (1) Cut people’s taxes; (2) people have more money to spend/save; (3) people take their money and use it to buy goods or (4) banks could loan more money to businesses to spur productivity. Reagan’s economic policies were also called “trickle-down” economics because the largest tax cuts went to those with the highest incomes. Reagan argued that the economic benefits of these cuts would then “trickle-down” to the middle class and the poor. In reality, during the 1980s, the rich got richer and the poor got poorer.

INCREASED DEFENSE SPENDING In 4 years, Reagan doubled the budget of the defense department. Reagan’s most ambitious, and most criticized program, was the Strategic Defense Initiative (SDI). The goal of this initiative was to create a satellite defense system that could be launched into space and would be able to shoot down Soviet nuclear missiles. Critics called it the “Star Wars” defense system. Over 10 years the government spent $25 billion – but the program was never successful.

DEREGULATION Reagan achieved one of his most important objectives – reducing the size and power of the federal government – through cutting spending and through deregulation. Deregulation is the cutting back of federal oversight of industry. His deregulation policies included removing price controls on oil and deregulating the airline industry and savings and loan industry. Reagan also cut the budget of the Environmental Protection Agency (EPA) in an effort to deregulate this federal agency.

THE REAGAN ECONOMIC LEGACY Reagan’s economic policies took time to work, but he was able to claim success for the following things: (1) a decline in interest rates; (2) a steep drop in inflation; (3) a surge in stock market growth; (4) a significant drop in unemployment. Critics argue that Reagan’s large tax cuts mixed with massive defense spending contributed to a large rise in our national debt. Critics also argued that his policies only benefited the wealthy, while forgetting about the poor.

CONSERVATIVE MOVEMENT AND THE SUPREME COURT Reagan and Bush made one of their lasting conservative marks on the make up of the U.S. Supreme Court. Reagan and Bush nominated Justices Sandra Day O’Connor, Antonin Scalia, Anthony Kennedy, David Souter, and Clarence Thomas to the Supreme Court (Scalia, Kennedy, and Thomas are still there today). David Souter is the only justice of this group to be considered “liberal”. The rest were conservative. Sandra Day O’Connor was the first woman to ever serve on the U.S. Supreme Court. These appointments shifted the balance of power on the Court. Sandra Day O’Connor, the first female Supreme Court justice appointed by Reagan in Clarence Thomas, the second African- American to serve on the Supreme Court, appointed by Bush in 1991.

1984 ELECTION Reagan was extremely popular when he ran for re-election in His coalition included businesspeople, Southerners, Westerners, and “Reagan Democrats” – Democrats who agreed with Reagan on limiting the federal government and thought the Democratic Party had moved too far left. Democratic nominee Walter Mondale nominated Geraldine Ferraro to be his Vice-Presidential candidate, the first woman to be nominated to a national party ticket. Reagan won re-election by a landslide, winning every state except Minnesota and Washington D.C. Geraldine Ferraro, the first woman to ever be nominated to be Vice- President of the United States.

1988 ELECTION The 1988 election proved to be closer than many expected. George Bush ran for President for the GOP, while Massachusetts Governor Michael Dukakis ran won the Democratic nomination. Bush was more of a moderate Republican compared to Reagan. To appease his conservative base, Bush made the following promise at the 1988 Republican National Convention: “Read my lips. No new taxes”. Bush also ran a very negative campaign against Dukakis, painting him as soft on crime and weak on national defense. Voter turnout was extremely low in this election, but Bush won 53% of the vote, and a large majority of electoral votes. Bush’s “Read my lips” speech.