1. What economic problems was America facing in the 1970’s? How can the government help get us out of a problem like this?

2. Wonka Chocolate Company Who would like to be Willy Wonka? Oompa Loompas – You will cut out one Wonka Bar at a time and deliver it to the customers You need to complete your deliveries by the end of the song

3. “Reaganomics” Also known as “Supply-Side Economics”

4. The Tax Problem Wealthy people run or own some of the largest businesses/corporations in our country – High taxes on wealthy people/corporations keeps them from being able to: Pay their workers more Expand their business to hire more workers If workers can’t find jobs or don’t get pay raises, they can’t spend money that goes back to businesses

5. The Tax Solution Lower taxes on wealthy people & corporations – They keep more $ which can be used to: Pay workers more Expand their business and hire new workers Workers get more jobs or higher pay which they spend on stuff they buy from businesses Also known as “trickle- down” economics Let’s try to make Wonka Bars again

6. The Spending Problem Lower taxes means the government collects less tax money – Less money for the government to spend (defense, welfare programs, education, etc) We have to borrow money to pay for these things – Puts us into debt

7. The Spending Solution Cut government spending – Less money for welfare programs (Medicare & food stamps) – Less money for student loans – Less money for unemployment assistance

8. Did it work? By 1984 (3 years after Reagan took office), the U.S. experienced its largest economic expansion in history Average family income increased by 15 percent between 1983 and 1989 5 million new businesses were created 20 million new jobs created Unemployment fell to 5.5% (lowest in 14 years)

9. Quick Review 1.Why did Reagan believe that high taxes on the wealthy were hurting the economy? – They own businesses which can’t hire workers if they are paying high taxes 2.What did Reagan believe would happen if taxes on the wealthy were lowered? – They would hire more workers 3.How did Reagan make sure that the lower taxes didn’t lead to higher debt? – Cut government spending

10. Reaganomics: What could go wrong? Organize yourselves into your typical groups of 3 or 4 and get out a half-sheet of paper for the entire group (put your names on it) Brainstorm in your groups ways in which Reaganomics could backfire or could create new problems List these issues on your half-sheet