Ronald Reagan“The Great Communicator”

Conservatives vs. Liberals• Conservatives • Generally Republicans• Favored limited government involvement in economy• Rely on own national defense & actively fight Communism

• Liberals• Generally Democrats• Favored government involvement in economy (social programs)• International diplomacy to combat Communism

Election of 1980: Carter v. Reagan• Reagan: “Are you better off today than you were four years ago?”

• Reagan wins 489 to 49• The “Reagan Revolution” begins

Reaganomics• Supply-Side economics• Lowered taxes leads to increased spending

• Economic Recovery Act of 1981• Cut taxes by 25%

• Cut nearly $40 billion from federal budget•Most from social programs

• Immediate Effects• Recession from 1980-1982• Unemployment over 10%• The number of poor people increased

Reaganomics….Yes there is More• Deregulation• Reduce gov’t control over industries• Hurt banks in the future

• Budget deficit• Amount of money spent and taken in by the gov’t• $79 billion in 81’ to $221 billion in 86’

• National debt• Amount of money owed to owners of gov’t bonds• Up to $2.5 trillion

Reaganomics Review

Iran-Contra Affair• US sells weapons to Iran in exchange for Iran’s promise to pressure

terrorist groups in Lebanon to release US hostages

• Contradicts Reagan’s policy of negotiating with terrorists

• US uses money from Iran to fund Contras in Nicaragua• Contras: anticommunists in against Communist Sandinistas

• Congress refused to aid Contras• Reagan’s aides still supported

Relations with USSR• Strategic Defense Initiative (SDI)• “Star Wars”• Land and space based lasers would destroy missiles aimed at US

• Reagan wanted to end the Cold War by building up military• Soviets could not afford to keep up